Norwegian chip manufacturer Chipcon last month announced it would buy Figure 8 Wireless in a deal that combines leading hardware and software vendors implementing the ZigBee wireless LAN standard that was ratified in December. Terms of the deal were not disclosed.

Operating in the unlicensed 2.4 GHz band, ZigBee — a combination of the HomeRF Lite and 802.15.4 specifications — provides bursty data communications while using little power, according to Figure 8 Wireless CEO Joe Markee. The first generation of ZigBee chips are expected to cost $4, but the industry is hopeful that mass production eventually will drive the price point down to $2, he said.

“When you want the lowest-cost, lowest-power two-way communications, ZigBee is your best choice,” Markee said.

Markee said the merger will create a “real powerhouse” in the ZigBee space, as Chipcon is one of the top hardware vendors. Meanwhile, Figure 8 is the only software vendor for commercially available ZigBee products, said John Morris, Figure 8's vice president of marketing.

“If they're shipping, they're shipping with the Figure 8 stack,” Morris said.

Markee said the Figure 8 software would continue to be available for other chip vendors to use “for the foreseeable future.” But the merger of Chipcon and Figure 8 will create an opportunity for the merged company to develop a one-stop solution in an integrated product instead of forcing OEMs such as Siemens and Honeywell to put the pieces together, said Harbor Research President Glen Allmendinger.

But Precursor wireless strategist Rudy Baca said he questions how much traction ZigBee products will gain while competing with wireless technologies such as Bluetooth, radio frequency identification and especially ultrawideband.

“Everything ZigBee can do can be done better by other technologies,” Baca said. “The most compelling feature is [ZigBee] can use less power, but it doesn't use as little as ultrawideband.”

Allmendinger acknowledged the overlap but noted that Zigbee is much more mature than ultrawideband, giving it an important edge.

“All this stuff is heading to a buck retail within five years,” Allmendinger said. “The scale of adoption and speed of adoption drives the economics.”