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Harald Bluetooth Gormson, a 10th century Danish king, was killed in a rebellion led by his son. One thousand years later, a wireless communication technology named after him is frequently tipped to suffer the same fate, killed off by a younger upstart.

Such fears helped wipe a quarter – or more than £350m – off the market value of CSR on Monday. But the Cambridge-based Bluetooth chipmaker is confident that the reported demise of the technology, which allows different devices to communicate without wires, has been exaggerated.

“It is not Armageddon; it is a slightly reduced outlook,” says John Scarisbrick, the chief executive.

For the sake of CSR, which has become a rare British technology leader, he had better be right. The company’s fortunes are tied to the success of the technology and hiccups hit hard.

The most visible manifestation of Bluetooth is the space-age headsets that allow owners to walk about apparently talking to themselves while they are actually making a phone call with the headset wirelessly linked to the mobile handset in their pocket.

It was a late change in orders from a headset manufacturer that caused CSR’s pain on Monday. In an industry with tight confidentiality agreements, analysts were left to guess the potential culprit and came up with different names.

There was broad agreement, though, that the shares were oversold on Monday. Volatility is a feature of CSR’s share price performance. Since it was spun out of Cambridge Consultants in 1999 and floated at 200p, CSR reached a peak of £15.12 in June this year before Monday’s drop to 856p.

But rather than indicating a low-quality company, peaks and troughs are endemic to the chip sector and a feature of Bluetooth. “I think we learn to live with the dynamics of the marketplace we are in, because frankly there are few more attractive electronic markets,” says Mr Scarisbrick.

A trio of British companies have specialist leadership positions in the industry. Along with CSR’s Bluetooth skills there is ARM Holdings, also based in Cambridge, which designs chips and licenses the intellectual property. In Edinburgh, Wolfson Microelectronics makes chips that convert electronic signals into sound and have found a prestigious home inside Apple’s iPod music player.

A similar deal with Apple could help CSR tackle its chronic volatility. It is dependent for about 60 per cent of its revenues on five big customers and most of its chips go in mobile phone handsets or headsets. The arrival of Bluetooth-equipped iPods would be the sort of contract to make CSR’s share price jump.

But will newer, more powerful communication technology wrest power from Bluetooth in the same way as its 10th century namesake? Wi-Fi has been slated as the Bluetooth killer but it saps precious battery life even if it offers faster communications.

Mr Scarisbrick notes that the company now boasts the lowest-power Wi-Fi chip, but insists “there’s still a long runway for Bluetooth. There’s no question, the end of wires is nigh.”

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