Archive for November, 2010
EMF has recently published a detailed analysis of the Mobile Device Industry focusing on best practices and ROI analysis. This paper is available for free download from our website.
Overview: It’s not easy being a mobile device manufacturer today
Profound economic conditions spawn profound opportunities and challenges. As in any economic contest, there will be winners, losers and those that can’t tell the difference. Market uncertainties challenge vendors and OEMs alike to find new niches, competitive advantages and markets that will remain stable while enjoying growth potential.
For example, the FCC has recently adopted a regulation that could dramatically improve our wireless devices. The rule offers a brand new and much-improved slice of the radio space for unlicensed use. The new frequencies are known as “white spaces” and result from making available to the public the frequency spectrum previously used by analog TV transmissions. This spectrum will enable greatly enhanced WiFi capabilities which will provide for mile-long connectivity as well as increased and more reliable data handling capabilities. One can imagine the many new and powerful apps that will emerge – most of which will require reusing developed code.
EMF believes that this will both increase opportunities as well as risk for mobile device manufacturers. EMF strongly believes that the issues we present in this report are essential to those manufacturers that will dominate this emerging market opportunity. Merely maintaining a growing position in the current expanding marketplace will not be competitively sufficient.
As processor costs continue their downward spiral, and as fickle consumers of mobile technologies are increasingly ready to move to more interesting and useful displays and functionalities, consumer-based markets are becoming characteristically disposable. New platforms appear nearly monthly – like quantum particles appearing and disappearing into the void of consumer insanity – characterized by more functional and entertaining GUIs that enable the technologically disadvantaged to easily link to social sites, read email, text and perform acts of information magic that would have made Merlin give up his wand.
Points of Pain: issues that mobile device manufacturers must consider to remain competitive
We all can agree that good market information is essential for a company’s growth, competitive and strategic planning and sales support.
But what is worse – bad information or no information whatsoever?
I recently read a story about an explorer looking for artifacts along the Amazon River when he happened upon some 50 or more tribesmen each carrying spears. Fearing for his life he cried out “Dear Lord I’m totally screwed”. A dark cloud appeared and a loud voice cried out, “you are NOT screwed – pick up the stone in front of you and kill the chief.” The man picked up and threw the stone hitting the chief in the head, killing him instantly.
The explorer looked up to see more than 50 tribesmen running at him aiming their spears at him. Looking up to the dark cloud, he heard the voice say “NOW you’re screwed!”
This is what Dolores and I ponder when we are publishing survey-based market intelligence and using it to address opportunities and threats that confront our subscribers. Giving advice is easy – giving “good” advice based on statistically accurate comprehensive surveys is essential.
We carefully track what we and what others publish and how close each of us comes to correctly forecasting the marketplace. As Dolores is relatively new to our industry, she is finding it hard to understand why market research groups that have been grossly wrong made much more money than we did. Dolores was beside herself asking what happened to those companies that got it wrong. The answer is nothing – newer companies bought their research and the analysts that were wrong found new lines of work. We, on the other hand, have been here for 15 years and plan to be here a lot longer.
Before we get to our forecasts, let me provide some background. Perhaps some of you can help me answer some of Dolores’ questions – questions that I wish I could answer. Times have changed since I was on your side of the industry.
A bit of background:
Dolores moved from education to the dreaded private sector when we became engaged some 5 years ago. Though having sufficient credits to complete a Ph.D. in performance analysis for validating student progress (skills that would bide her well at EMF), she was already at the highest pay level she could attain and she was more interested in seeing student improvement first hand, rather than theorizing about it and writing papers for her peers.
The professional environment in which she performed was union-based and raises were predicated on time on the job, degrees and post-graduate credits – actual performance was not a consideration and tenure was earned in as little as 3 years.
Her transition to our performance-based world was easy – she studied hard and attended many conferences and technical presentations over the years, yet her background in data analysis and performance outcomes supported her curiosity regarding how businesses grow or fail based on how they use available information for strategic planning, competitive analysis and sales support. Not only was she able to support my data-mining efforts with her experience, but she is able to ask embarrassing questions of me when she read (and schoolmarmed) my reports.
As embedded professionals, perhaps you can relate to the questions she has asked – and maybe provide us some feedback.
It usually begins with “I’m sure that this is a stupid question, but …” If I can’t explain it to her, then I probably didn’t think it through sufficiently.
Here are some of the many questions that she asks about companies in the embedded industry that I have a hard time answering:
1) Why do companies with very smart people spend hundreds of thousands of dollars on sales development and much less on marketing?
2) Why to companies that understand the value of marketing for sales and competitive positioning – and spend in some cases millions of dollars in their marketing efforts – spend very little on detailed, relevant and comprehensive market intelligence information?
3) Why do these very smart people choose to ignore clear market signs (even when made aware of them) that can significantly impact current markets, future revenue streams and company survival?
4) Why do so many European-based company CEOs micromanage their executives instead of hiring the best and freeing them up to success? Is this a better approach to corporate controls?
Forgive what might be construed as a commercial – what really drives her buggy is that she asks me (and not infrequently potential subscribers) “Tell me what I’m missing here; Companies can have access to detailed data that they can use for sales promotion, strategic planning, and competitive analysis for less than one-fourth what they pay for an administrative assistant. Moreover, they can have access to the information that the US military and many prime contractors have about them in order to better respond. Why isn’t someone fired?”
What’s on the Embedded Horizon? EMF’s look at markets that are in transition – creating opportunities as well as threats
Looking at Mobile Devices and Consumer Electronics
If you are in – or looking to get into – this market segment you will find plentiful opportunities and incredible challenges. New processors and new platforms are appearing regularly and the fickle user base will drop you without hesitation. Now that analog TV signals have gone the way of the Platypus, the FCC is assigning these “white channels” for public use. Herein we will see long range WiFi, and enhanced data handling capabilities that will provide new and dazzling apps that will drive newer markets. Time-to-market will be a crucial consideration, so the ability to reuse code and to apply such code to new interfaces and hardware will determine who will win and who will lose.
Do you provide mobile or consumer electronic products or applications? Do you know what processors, OSes and platforms provide better and timelier design outcomes? Does it matter to you? Is your resume up to date?
Looking at Medical Devices
If we separate medical devices into two cadres; one that supports devices that are attended to by medical staff (ultrasound, CAT scans, renal dialysis, etc.), the other that needs to operate independently of medical support staff (patient monitoring) we see that the same technology that keep military and commercial aircraft operating under secure and mission critical conditions is overkill for medical applications.
Did you know?
- The medical device marketplace has been growing at a double digit rate – and new considerations should enhance opportunities for embedded vendors in 2011 – IF they take the time to correctly understand the selling points
- Considerable attention has been given to the medical marketplace by vendors seeking a safe haven from the expected decline in mil/aero. EMF believes that many such vendors don’t understand the market segment, how to sell to it, or what the users need and will purchase
- It would be funny if it wasn’t sad that certain leading RTOS vendors are pushing their certified high power, mission critical OSes towards an industry that develops products whose defining frequency requirements are less than 100 Hz
- New CDRH/FDA initiatives are acting to create opportunities and threats.
Having brought many products through the 510k process and to market, and understanding the purchasing value system within the medical device marketplace, I am amused at the hundreds of thousands of dollars that vendors throw away on pursuing meaningless approaches to this marketplace. Dolores gets the “everything looks like a nail theory” and it was hard for her to keep a straight face when one colleague who is a vendor’s VP told us that it took them a year (and mucho dinero) to discover that what we gave them for free was correct.
The Coming Tsunami
The Aerospace and Defense Industries of the United States are poised to undergo one of the most significant changes since the end of the Cold War; perhaps the most significant since World War II. We believe that observers (embedded vendors included) who expect small changes are mistaken, thereby fostering a false and dangerous sense of security across much of the industry and government.
The impact to our economy goes far beyond our current financial problems and involves fundamental structural changes taking place in the industry and in the market. As in prior shifts of this nature, there will be winners and losers – however these shifts may be profound, creating more dramatic winners and losers than in the last cycle.
The impact of major primes shifting financial challenges to their vendors (and by association to embedded sub-vendors) will reach down into the value chain, in some cases devastating naïve second and third tier vendors.
To make matters more challenging for industry, as spending draws down, the effect on industry will be dramatic beyond the proportions of top line reductions. This will be caused by a squeeze on the so called “Investment Accounts.” These Investment Accounts are the funds used for product development and buying equipment.
Embedded vendors that offer “high end” OSes and tools will be hardest hit as reductions in DoD discretionary funding and the actions of prime contractors to absorb overhead within the limits of their financial structure.
We expect to see reductions in outsourcing to and purchasing from embedded markets defined as “mission critical” and that involve MILS security, DO-178B, and virtualization technologies as these anticipated contractions take place over the ensuing 2-3 year period. Many high-end vendors are already looking to alternative markets to shore up expected reductions – but most lack the data to determine which markets they can competitively serve.