Out on the bleeding edge of tech hardware with Broadcom's CEO (interview)

Broadcom sells billions of dollars worth of chips in networking, consumer electronics, and communications infrastructure markets. But it’s trying to move beyond that to dominate the market for chips for the “internet of things,” or bringing smart connectivity and sensors to everyday objects.

Scott McGregor, chief executive of Irvine, Calif.-based Broadcom, has more than 12,000 engineers working on chips that will form the backbone of future tech products. And he’s encouraging them to join the movement of hardware hobbyists, known as “makers.” McGregor is encouraging them to experiment with new kinds of hardware devices that tap the power of connectivity and the powerful underlying silicon chips that Broadcom produces.

Broadcom wants to arm all sides in the rush to produce products for the internet of things.

We caught up with McGregor for a recent interview. Here’s an edited transcript.

VentureBeat: What’s new?

Scott McGregor: We recently announced a new switch chip that is pretty fast. It’s 3.2 terabits per second. It’ll do 32 ports of 100 gigabits per second data. It’s going to go into the massive data centers, cloud data centers and stuff like that. It’s a bigger chip than you might normally see, about 3,000 pins, more than 7 billion transistors. More than one for every person on the planet. The speed of this, if you think of a video feed from Amazon or Netflix, this can do one million of those simultaneously.

VB: Who’s in this space? Are you competing head to head against anything?

McGregor: Not many people in the space. Occasionally startups or other companies, but Broadcom is the primary supplier of this technology today.

VB: Is this getting closer into the optical realm?

McGregor: This will do 100 gigabits per second, so that’s all optical. It would have 32 optical connections coming out of that chip. It would go right to optical fibers. It’s in an end of row, top of rack, or core aggregation switch. It’s not in the individual compute things. It’s much too fast for that. It’s the fastest chip that would be in the data center. If you had a huge data center, whether it’s Facebook or Google or Amazon or Alibaba, in their fastest switches, this would be the thing that powers it.

VB: I was just at the 49ers stadium the other day and saw their data center. I think they had 40 gigabits coming into it?

McGregor: They had a challenge, because one of the problems, if you’re going to a stadium and you take a selfie or you want to even send a tweet to someone, getting the data out of the stadium is very hard. You can get it to the cell tower or the wi-fi connection, but then the stadium clogs up and it’s hard to get it out of there.

This is for applications even larger than that. 3.2 terabits per second is two orders of magnitude faster than what you were looking at in the stadium. This would be if you’re Facebook and you have a huge data center somewhere. The thing that whole data center funnels into that then talks to the internet, that’s this kind of chip.

VB: What else is on your mind lately?

McGregor: We have some stuff on wearables that’s fun. We have this thing we do called WICED Sense. It’s 20 bucks, and this is what you get – this little tag and a battery and a USB cable. You get all the source code for an iPhone app and an Android app. You get all the hardware materials and manufacturing Gerbers. For 20 bucks you can be in the business of creating a wearable.

This has a bunch of sensors in it. It’s Bluetooth, FCC certified. It has gyroscopes and barometers and thermometers and a compass and all sorts of accelerometers. I was talking with Quentin. We challenged him to think of something for it, and he said, “Well, you could attach it to a skateboard! Or your kid’s football helmet. You could figure out what the highest impact was.”

There are two things I think are really interesting. One is that this reduces the cost of creating an app and being in the business of creating a product, such that almost anybody can afford, if they have a credit card to charge it, the cost of starting a business. The software is relatively easy to change. There are no license fees. The device is cheap. We give you the source of all the things you can build, and you go into business.

The combination of that and the fact that you now have access to worldwide markets—If you create a niche app, like a skateboard app with this sensor, 10 years ago you weren’t able to reach all the skaters on the planet. If we can build the dev kit for that much, you can build the product for close to that. We think this is going to enable an explosion of devices.

A lot of them will be lame, sure, or excessively niche. It’s like Kickstarter. You look at Kickstarter and there’s a bunch where you say, “Wow, I’d like that!” and a bunch more where you say, “Ehh.” But I think it’s going to be interesting. That’s going to have a follow-on effect of creating an amazing amount of data on the web. Big data is becoming much more interesting. It’s also good for us because it’s going to drive more data through these other chips.

VB: At CES I was asking about the underlying tech behind the internet of things. What’s your assessment of that?

McGregor: People need to be more precise with technologies. I separate the concept of a wearable from the internet of things. I believe a wearable is a smartphone accessory. It’ll typically be tethered to a smartphone for either its application or its access to the internet. It will communicate through Bluetooth. Low energy, low power, coin cell or rechargeable.

Internet of things is more an appliance – a thermostat or a smoke detector or refrigerator or smart meter. It typically communicates through an access point. It uses wi-fi, more likely. It has much more capability. It might be a device itself, visible on the internet, that you can see, like a camera. You can address a camera on the internet.

Those two markets, a lot of people are imprecise and they lump them together. But I believe they’ll develop independently.

VB: That requires different silicon?

McGregor: Different silicon, different range. Often those are plugged in. The power characteristics are different. The bandwidth is different. The wearables are going to be about sensing or about I/O – visible displays or buttons or things like that. They interact with humans. The internet of things interacts more with devices.

VB: A couple of solutions are coming where you don’t have to replace batteries.

McGregor: They harvest energy or whatever, yeah. It would be very simple to do a version of this and put a solar cell on it. They use very little power. A combination of a solar cell and a tiny ultra-capacitor, probably ambient light is enough for many applications.

VB: That makes them disposable. Is that the way to go for a lot of things?

McGregor: For some things they’ll be disposable. A great example of that is what’s called a pill camera. For diagnostic purposes, people will swallow a device that has Bluetooth and a camera in it, with a little LED light, and it goes through your GI tract. That would be disposable. But a lot of them, if you can make them reusable it’s fine. It’s just a cost question.

If you go to a hospital right now and they put a cardiac monitor on you, they stick all these things all over your chest, and that connects to this big wiring harness that goes to a tree. That goes to all the monitoring equipment. If you want to go to the bathroom or go get some fresh air, you have to haul this tree and all the equipment with you. That’s dumb. Why not put little wireless tags on these things? It frees the patient to move around, and they don’t have to re-use a wiring harness that’s been exposed to a guy with a staph infection. Why not use sterile disposable tags for this? You can make that easily work.

VB: What do you see generating more interest or large chip markets?

McGregor: I see so many things. It’s all in this feedback loop cycle. The cost of wearables and the amount of data they create and the data being created by the internet of things and cameras—We can drive the build materials of an internet-connected camera down to five dollars or less. If you could buy cameras for $10 or $20, you’d sprinkle them all over. If you want to see how your cat’s doing when you’re away, why not? Or your plants when someone’s watering the plants. If you want to see if your kids are studying, put a camera up there. That’s going to generate incredible video traffic on the web. Security cameras are going to be a huge opportunity for all kinds of applications, and also for generating web traffic. That’s going to sell more of these for cameras and more of these for data.

VB: So the end-to-end strategy is what you guys have now?

McGregor: Our view is, we’re a communications company. We do everything to do with communications. From the original devices that connect to humans or sensors or whatever, all the way through the infrastructure side. We’re the plumbers of the internet, a bit. We do all the pipes and connections and stuff like that.

VB: There’s all this competition in the space. Everybody’s announcing different internet of things processors. How do you assess that?

McGregor: If you announce an internet of things processor, you’ve already lost. Internet of things will be one device. It has to do all the wireless connectivity and power management and processing and sensor hub. If that’s not on one chip, you’ve probably already lost.

VB: So then an internet of things SOC or something?

McGregor: It’s a perfect SOC market, yeah. That’s a core strength of our company. We have all the pieces. The good news is that it’s such a big opportunity. There are so many new things out there. It’ll shake out over time.

The people who are going to win are the ones who can create complete solutions at super low cost, super low power. Form factor is a big issue. People want to make these things tiny. Whoever can do best at those things will succeed. That’s what we do.

VB: You guys are engaging with the hardware hobbyists somewhat. How’s that going?

McGregor: It’s going well. Our first engagement was the Raspberry Pi. We worked with a foundation in the U.K. and the goal was to put computing in the hands of every person. If you could afford a $25 or $35 computer, you wouldn’t worry that you broke it. You wouldn’t take your laptop apart to hack it, because it’s not very friendly inside. We wanted to make that market work.

The Raspberry Pi Foundation has done a tremendous job creating an ecosystem around that and getting people interested. A lot of people are now creating the do-it-yourself market. A lot of 3D printers are based on Raspberry Pi. All kinds of stuff is getting based on Raspberry Pi.

We see this WICED Sense as the next step in that. Raspberry Pi is aimed at people who want to do computing and video processing. This is aimed at people who want to create wearable devices.

VB: How are you going to measure the success there? The number of developers using an API?

McGregor: Our goal is not to make a lot of money on this device. This is a development kit. Our goal is for people to get this and have it inspire them to create a device, and ideally use some of our chips when they create it. That’s our motivation. Just to lower that barrier and make it really easy to do.

Typically a small company gets stuck on things like FCC certification. That takes some expertise and it’s a pain. We eliminate that issue. As long as you use that module you’re good. Integration of sensors, that’s hard. Just putting together the whole system. I think anybody who’s programmed or done other things, it’s so much easier to start with something that works and modify it to be what you want it to be, rather than have a bag of parts and start from scratch.

This is a complete working solution. You get all the hardware and all the source code, the manufacturing Gerbers, the build materials list, everything. You could instantly start manufacturing this exactly as it is, or you could start making changes to it and create your own product.

VB: Have you thought about getting your own engineers to do this?

McGregor: Funny that you mention that. About a week or so ago I announced that every employee at Broadcom is going to get one of these for their personal hacking. We’ll have some hackathons inside Broadcom. We’re going to give those applications that people create to our customers and inspire them, inspire the do-it-yourself market, and maybe one of those becomes a big business.

VB: Intel has gone to the extent of creating this new products division that has product designers. They expect to launch Intel-branded products.

McGregor: I don’t agree with that. Competing with your customers is not a good strategy. Our goal is to enable customers, not compete with them.

VB: If it’s more in the hardware hobbyist space, though, is that something that’s just plain fun for your employees to do?

McGregor: Absolutely, but a lot of stuff starts in the hobbyist space. GoPro started as a hobbyist project, because a couple of guys liked to do extreme sports. That’s a billion-dollar business today. I’m reluctant to diss something as a hobbyist thing, because quite often that’s the genesis of a big business.

VB: How many engineers do you have now?

McGregor: We have about 12,000 employees, and I think about 80 percent are engineers, so we have about 10,000 engineers in the company. We’ve gotten a huge amount of feedback to the idea of hackathons. People are raring to go. We wanted to make sure that we got these things out into the distribution channels. Customers got the first ones. It’s fun for schools and things like that, because you can immediately start doing stuff. But the employees are next.

We had one employee take one of these home, duct tape it to his washing machine, and use the accelerometers in it and hack the software a little so that it would beep his phone when the washing machine stopped. He was able to do that in a couple of hours.

What you could do is, you like games and stuff like that. You could get 10 of these things and put them all over your body. Now you have a game controller. You get the software for it and now you can move your hands, move your head, turn your head up and down. It’s all sensored. Put it on your feet. That was one of the things I liked about the original Wii product. It got kids up off the sofa. I don’t know about you, but you play one of those Wii games, you’re winded at the end of it.

VB: What do you think of the Apple Watch? Is that going to kickstart a bigger market?

McGregor: I haven’t seen one yet, so I’ll reserve judgment. Apple is pretty good at creating new product categories, so I wouldn’t count them out. I thought it was interesting that they have a model in gold. Most people under 30 don’t wear a watch at all. They just look at their cell phone. Most people over 40, if they wear a watch it’s gold and has a Swiss brand on it. It’ll be interesting to see how you simultaneously go after both of those demographics.

VB: Anything else on your mind?

McGregor: We have all kinds of stuff going on with this 4K transition. The TV space is going to change. Broadcom is basically powering all the set-top boxes and cable and all that technology to enable that. We’re pretty excited. The 4K stuff really does look good. The content will follow reasonably quickly. It’s not going to be the same issue with 3D TVs, where they were hard to install and people hated the glasses. This is just visibly better. Most high-end TVs are going to be 4K pretty quick here, once we get the content. That’s driving a wave of set-top box investment. For gamers it’s going to be visibly much better.

VB: Are you able to see any insight into the Consumer Electronics Show (CES) this year, this early?

McGregor: It’s going to be 4K everywhere, 4K content everywhere, and all kinds of different user interfaces for talking to your TV set and waving at your TV set.

VB: What do you think about the entrance from companies like Google or Amazon into the set-top space?

McGregor: It’s all good. There are going to be a lot of different ways to get content. There will be a huge range of over-the-top products to get standard free internet content. Content becomes king here. Who has content, how you get it, who has the rights to it, all that becomes really important.

The premium content is still going to come through protected license boxes, where the decryption technology is controlled. The Disneys and Major League Baseballs and NFLs of the world make a lot of money off that content. They don’t want it casually getting out into the free world. Premium and live content will traditionally go across high-quality digital rights management. The free internet stuff will go over all kinds of stuff. We do both.