Summary
Home security - a burgeoning market segment due to the ubiquity of home wireless networks.
OVTI was first into this sector last year due to the fact that they have SOC capability with NTSC/PAL and are being forced out of the mobile handset sector. Only Micron and Pixim have SOC with NTSC/PAL for closed cicuit systems.
Analysis
Since Q-2 of calendar year 2005 OVTI has been displaced from the mid and high end of mass market opportunities such as mobil phone primarily due to their inability to keep pace in CMOS image sensor process technology.
While Micron is at 1.7 pixel pitch, OVTI is only at 2.5 micron, allowing Micron's (the manufacturer) sensors to penetrate into the new breed of slim design phones. OVTI and all others except Sony and Samsung are religated to "fat" phone designs in laggard geos such as China.
Being fabless, OVTI had to find another market to exploit and be the first into that market before ASP errosion.
Since 2001, OVTI has always shown a propensity to be first in-market. That has always been their model for higher margins, until others can penetrate and ASP's become eroded.
Home wireless networks are fueling this new sector of CMOS sensor adoption and by 2007, we will see home networked security systems below $149 at major retailers.
OVTI is right in their 2005 assumptions, there were 18M total units shipped into the security segment. By 2006, this segment will grow to 22M.
