Summertime…And The Living (Isn’t) Easy

It’s a mad dash to create the right business model and products at the right time and price point.

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By Jack Browne
Normally summer is a time where most people slow down, relax, take vacations and the pace slows down accordingly with the seasonal ebb and flow of our industry. But not this summer.

Exhibit A, B, C, D and so on: This past month has demonstrated the profound element of change. Mostly in our wallets. The stock market volatility and global economic disruptions have echoed (and roared) around the world. We’ve seen the lowest 30-year mortgage rates, U.S. downgrades, company downsizing. Sure rollercoasters are often associated with summer, but not this kind. We are seeing rollercoasters of an entirely different persuasion altogether. In tech, Apple and Exxon Mobile have tag-teamed back and forth as the most valuable publically traded corporation. A lot of movement—nothing is still and quiet this summer. However, we all have been here before and are getting accustomed to the bumpy ride. And we know all too well to keep our chin up as bumpy rides and volatility breeds new opportunity!

So business goes on, IPOs are happening, new products are popping up left and right, and the cycle continues. There are still high expectations for strong technology companies to deliver and innovate, as more content is demanded (and shared) across connected communities worldwide. History has shown that the most successful companies thrive and innovate in a downturn…so we assume the position and carry on.

Look at one of the critical and most dominant market drivers today– the proliferation of video content. Consumers want video and they are choosing the solutions that are easiest to use with the richest variety of content. Nowhere is this more obvious than in Netflix’s recent business model change to separate its streaming offering from the snail-mail delivery of DVD content. The Netflix business model enables consumers to view content on a broad range of devices and form factors—and is banking on the fact that is what you want in 2011 and beyond. And we do.

All around us, digital video is migrating to tablets and smart phones, and the future digital TV/video consumption will shift from PCs to tablets. In fact, this week In-Stat said 65% of the U.S. population will own a smart phone and/or tablet by 2015. That amounts to more than 200 million people. This powerful statistic alone will dictate market activities and product priorities by almost all the semiconductor leaders—in every region.

Content is the basic driver for many system companies as they work to show alternatives to Apple’s strong ecosystem around a range of “iDevice” products that allow consumers “the content they want, when and where they want. ” With Apple’s rise in smart phones, its strong product offering has resulted in the company receiving 50% of the profits in the smartphone market and defining a new market (again) with tablets. That’s innovation my friends!

Earlier this year (Feb 2011), Cisco shared a comprehensive study on mobility and content and the effects on overall bandwidth consumption. For example, smart phones represent 13% of total global handsets in use today, but represent of 78% of traffic. And the tablets, a new category, are using five times the traffic of the average smart phone.

Consider that HP’s WebOS tablet didn’t show the volume traction to deliver significant results to HP, and HP quickly opted out and moved on to other strategies. Google’s acquisition of Motorola Mobility is seen to offer Google a war chest of patents while enabling Google’s Android vision to be accelerated with tighter control and earlier market entry of flagship devices. Apple, Intel and ARM are companies at the heart of others’ strategies in the quest to build compelling devices that win consumers and brand loyalty— while differentiating from their competitors.

So for the semiconductor architects, getting the right video performance and battery life is just as important as tuning for best processor performance. And today’s multicore devices are continuing to increase in complexity as more cores are used to explore different SoC results. Performance, battery life and cost efficiencies are the key attributes as SoC designers work to leverage similar IP cores and foundry nodes while differentiating products.

–Jack Browne is senior vice president of sales and marketing at Sonics.


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