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Power Play: Li-Ion Polymer batteries hold promis but face cost, marketing challenges

While the latest wireless handsets feature such technological advancements as wireless Internet access, short message service and ever-decreasing size, the power sources needed to supply those functions have been left out of the limelight. Battery manufacturers are quick to point out that without the advancements they have made in battery technologies, the advanced features of the handsets would be of little use to consumers.

The latest advancement in the rechargeable battery market is the Lithium Ion Polymer battery. This technology includes a liquid ion electrochemistry in a matrix of conductive polymers, eliminating free electrolytes within the cell and allowing battery manufacturers to place the batteries in a foil wrapper similar to a bag of chips. This allows a lighter battery and a battery that can conform to an infinite number of shapes.

“When we show off the Li-Ion Polymer batteries at trade shows, people are always amazed at how much lighter their phones are with the Li-Ion Polymer battery,” said Julius Cirin, vice president of corporate marketing at Ultralife Batteries Inc. “It is almost like they are completely different phones.”

Li-Ion Polymer batteries also do not form a “memory” if they are not fully discharged before being recharged. This “memory” effect is triggered when a battery still has a charge and is plugged into a charger unit. If done repeatedly, the battery forgets its total charge potential and delivers only a portion of its energy capabilities.

With all the advantages of Li-Ion Polymer batteries, manufacturers admit the main barrier to its implementation is the high cost associated with its development. Cirin noted that the cost of the battery limits its use to high-end phones or as a premium after-market item for customers looking to upgrade an older battery.

Lev Dawson, chairman and chief executive officer of Li-Ion battery manufacturer and licenser Valence Technology Inc., pinned the price differences between Li-Ion Polymer and other battery technologies to production capabilities.

“Production capacity is the main problem at this time for widespread implementation of Li-Ion Polymer batteries, not price,” Dawson said. “As soon as the production capacity catches up with demand, there will be no price difference and no reason not to use Li-Ion Polymer batteries in handsets.”

Dawson also pointed out that handset manufacturers could also save money with Li-Ion Polymer batteries if they integrated the battery directly into the handset instead of as a clip-on after thought. With Li-Ion Polymer’s predicted life span of more than 1,000 charge-re-charge cycles, the batteries could out live the typical 2 year life span of most digital wireless phones.

“Manufacturers could see as much as a 40 percent savings in the costs of batteries if they integrate them into handsets,” Dawson explained. “I think it will become an absolute necessity in the near future. If they have good reliability, which Li-Ion Polymer does, they can get away with it.”

With Li-Ion Polymer receiving most of the limelight in rechargeable batteries recently, its greatest challenge will be in overtaking standard Li-Ion batteries, which offer competitive run times to Li-Ion Polymer, do not form “memories,” offer lighter weight compared with cheaper batteries, have a low self-discharge rate and offer relatively long cycle lives. These advantages have made Li-Ion the preferred choice for most mid- to high-end cell phones, laptop computers and other mobile communications devices today.

“For mobile IT applications and merging voice and data communications, the Li-Ion chemistry is currently the preferred choice in satisfying these specific features,” said Dora Fong, battery analyst at Frost & Sullivan, in a recent report. “While newer chemistries such as Li-Ion Polymer enter the commercial market throughout the next few years, the reliability of Li-Ion’s performance capabilities and expectations will ensure its market share.”

Atakan Ozbek, senior battery analyst at Allied Business Intelligence Inc., explained that Li-Ion Polymer battery technology is really good, but does not offer enough of an advantage over typical Li-Ion batteries to justify their added expense. Its ability to be formed to a variety of shapes is attractive, but its power potential is still limited due to its chemistry.

“The battery industry is a static industry,” Ozbek said. “It’s hard to play with battery chemistry, and they are limited by that chemistry.”

Ozbek also noted that for Li-Ion Polymer manufacturers to take a bite out of the Li-Ion battery’s share of the marketplace, they would need to ramp up production quickly to lower costs and provide enough capacity to meet the ever growing demand. In a recent report, Ozbek predicted that if manufacturers can meet the demand, Li-Ion Polymer battery sales could reach almost 900 million by 2007, up from 80 million sold in 1999.

Li-Ion’s prominence has come at the expense of a slightly cheaper battery technology, Nickel Metal Hydride. Even though NiMH batteries offer less power density when compared with Li-Ion technologies, its cheaper price has allowed it to remain a large player in the mobile communications market. According to Frost and Sullivan, 38 percent of all cellular phones and 14 percent of personal digital assistants relied on NiMH batteries last year.

“Even with Li-Ion batteries coming down in price, Nickel Metal Hydride batteries are still cheaper for users,” said Keith Nowak, media relations manager for Nokia Corp., which uses both Li-Ion and NiMH batteries in most of its wireless phones

Nowak noted that Nokia offers replacement batteries for its 5100 series phones using NiMH, Li-Ion and Li-Ion Polymer technologies. Those batteries range in price from $39 for a NiMH model, $59 for a Li-Ion model, and $70 for a Li-Ion Polymer battery.

But even with the rapid improvements provided by battery manufacturers in pushing battery technology, it still lags far behind the improvements in processing power made by chip manufacturers.

Ozbek noted that over the past decade battery performance has improved close to 100 percent, compared with chip performance improvements of more than 3000 percent.

“The battery industry has not been very successful in keeping up with the chip makers in relation to power,” Ozbek said. “They have to increase power levels by several fold. If they can’t meet that challenge, someone else will come in and take their market share.”

Ozbek noted that one potential threat to that market share could be rechargeable portable fuel cell batteries. Designed to run on either methanol, zinc or aluminum, fuel cells can provide up to 10 times the energy density of Li-Ion Polymer batteries.

But, even with advancements being made by some of the larger companies in the industry, including Motorola Inc., Samsung Electronics Co. Ltd. and Toshiba Corp., Ozbek said he did not expect fuel cells to reach the market for a few years.

Once fuel cells hit the market, expected during 2002, Allied predicts that global shipments will quickly climb to 200 million units by 2007.

“Portable fuel cells could be the answer to the radical power needs of the wireless industry, which includes not only wireless handset manufacturers, but also [personal digital assistants] and laptops,” said Ozbek. “If battery manufacturers are relying on current battery chemistry’s in hopes of competing with fuel cells, they need to quickly ramp up production levels to maintain their market share.”

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