Audience today announced that it appears "unlikely" Apple will use the company's earSmart noise suppression technology in the upcoming iPhone 5. Audience's technology was reported to a key innovation providing support for Siri on the iPhone 4S, and Apple was reported back in February to have licensed Audience's next-generation technology for future products. But with today's announcement, it appears that Apple has elected not to take advantage of the technology.
Audience sells processors and licenses its processor IP to Apple Inc. and certain of its subsidiaries (collectively, OEM) for inclusion in the OEM's mobile phones pursuant to a Master Development and Supply Agreement (MDSA). Pursuant to a statement of work under the MDSA, amended in March 2012, Audience developed and licensed a new generation of processor IP for use in the OEM's devices. However, the OEM is not obligated to use Audience's processor IP.
Audience now believes that it is unlikely that the OEM will enable Audience's processor IP in its next generation mobile phone. Audience is not aware of any intended changes by this OEM to its use of Audience's processors or processor IP in prior generations of the OEM's mobile phones.
Apple's decision not to use Audience's new IP in the iPhone 5 will impact Audience's financial picture beginning one quarter after the introduction of the iPhone 5, as Audience receives licensing royalties from Apple one quarter after the device's are sold to end users.
Peter Santos, president and chief executive officer, commented, "While we are disappointed by this development, we are confident in the diversification of our business and see sustainable growth in 2012 and beyond. As such we are raising guidance for the third quarter of 2012. Looking ahead, we believe our expansion into adjacent markets such as Smart TVs, automotive, and notebooks, will continue to bring growth in 2013 and beyond."
Audience delivered a standalone voice processing chip for the iPhone 4, but the company's technology was reportedly incorporated directly into the A5 chip used to power the iPhone 4S. The improved Audience technology integrated into the A5 was said to be much better at suppressing background noise, thus allowing Siri to more easily pick out the user's voice.
It is unclear what voice processing technology Apple will be using in the iPhone 5, but it seems that the company has found a better or more cost-effective solution than that offered by Audience.
Update: Audience's stock is down over 40% in after-hours trading following the announcement.
Top Rated Comments
It's more front page material than "Tim Cook and Jony Ive Top Vanity Fair's 'The New Establishment' List" and the Laurene Powell Jobs stories.
Ugh, with a pun that bad can you blame Apple? :D
Apple have never been ones to check items off a spec sheet. Sometimes technologies that have not yet fully-ripened or if the usage demand is not there, they may not make the cut. It has nothing to do with being "up to date."
Wireless charging is not as compelling a feature as you may think. The Palm Pre had it - no one cared.
NFC, maybe.
If Apple included a built-in comb on the next iPhone, would that make all Android devices "out of date?" ;)
It's pretty darn rare for an Apple partner to speak publicly about an unannounced product, even to say their stuff won't be used.
"Apple bought rights to the company, secured it's IP, then decided against using it in their mobile device line, thereby screwing said company. Due to Apple's 'arrangements', said company may not use this IP in other mobile devices, but may venture into other device markets. Company's stock dove after announcement."
Good job Apple. Buy out tech, keep it, don't use it, sink it. Rinse. Repeat.