Cost may doom Bluetooth

Bluetooth devices are beginning to appear on the market in volume, but the chips may never cost less than the $5 price tag widely touted as the sweet spot for the technology to really take off.

Martin Croome, general manager of Socket UK, said: "The Bluetooth Special Interest Group was stupid to put out the $5 price point in the first place." Socket makes a Bluetooth plug-in for PDAs, which sells for around $150.

Nick Hunn, managing director of TDK UK, which makes Bluetooth plug-ins for Palm handhelds, agreed.

He told silicon.com: "For many applications Bluetooth chips will never cost less than $5."

Bluetooth was meant to be a low-cost, ubiquitous replacement for cables in a range of applications. Five dollars has been widely quoted as the price at which it becomes economic to put Bluetooth chips in almost every electronic device. However, prices have failed to fall.

Hunn said: "There's a lot of smoke and mirrors here. We generally pay more than the headline prices quoted today."

Cambridge Silicon Radio (CSR), which currently supplies 49 per cent of the world's Bluetooth chips, still insists that it will be able to sell chips for less than $5.

CSR quotes prices of $8 per chip for a million unit order - a slightly ridiculous figure as few devices are made in million-unit quantities. Smaller orders are of course more expensive.

"It seems to be a rolling deadline," said Hunn. "The $5 price is always going to happen 18 months from now."

The only area where a million-unit order would be feasible is mobile phones, which are made in huge volumes. Bluetooth circuits can be easily included on the chip that is already in the phone, making Bluetooth-enabling a phone handset very cheap.

Very simple Bluetooth devices for wireless headsets may also fall below $5, said TDK's Hunn, but Bluetooth chips for laptops, PDAs and other devices would almost certainly not, he added.