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Getting From Scopes to Semiconductor Innovations

Once upon a time, in the 1970s, a leading electronics company that was not a semiconductor company spent a large amount of money to become the world leader in IC process capabilities.

This company developed its own internal semiconductor capabilities so that it could make ICs for its own competitive needs. The company was Tektronix, and the decision maker behind the venture was engineering vice president Bill Walker. The Tek “super high frequency” process produced BJTs with the highest fT anywhere on the planet.

Characteristic of Tek culture was the willingness to explore new frontiers, to take risks and seek new ideas. As a consequence, Tek ended up with the leading BJT process, and it was devoted to making (mostly) fast ICs for oscilloscope vertical amplifiers. Over time, however, the overhead of maintaining the leading processes only for the 'scope market could not be justified, and a joint venture with Maxim resulted. (Maxim is the sponsor of Integration Nation on Planet Analog.)

In reflecting upon this thread of history, there might be an answer to the question of where semiconductor companies can go from here. As it is, these companies function in a supporting role in the electronics industry, making parts that others use to make end products. As a consequence, their success depends on the success of those who can use their parts. Semiconductor companies therefore have an interest in how their parts are used, and to some extent encourage other companies in industries with technology that could most benefit from ICs to engage in the joint venture of ASICs.

Now consider a viewpoint on semiconductor companies, starting with something like the Tektronix scenario. Tek essentially started an internal IC company because it already was a company that could use the parts. Turning that around, what if semiconductor companies would create Tektronix-like companies by identifying how ICs might best be used where they currently are not?

In other words, having the IC capability, a semiconductor company is enabled to consider IC-oriented technology it could develop to give spin-off ventures the needed advantages to successfully address their own markets. The original semiconductor company becomes a hub around which various IC-depending ventures proceed. Instead of waiting for someone else to find IC applications, semiconductor companies take the initiative of applying IC technology where it has new advantages, through spin-off ventures.

Tek did something like this with their bistable storage CRT technology. These are CRTs that are able to retain an image of a trace by storing it on the phosphor screen. This was developed to give analog scopes some of the capability we expect from DSOs before there were viable DSOs. The technology was used in various Tek storage scopes. However, with the capability in-house, Tek creativity was applied in asking how else might this technology be used.

The answer was the computer terminal. Before semiconductor RAM became large and cheap, Tek terminals were connected to mainframes and minicomputers alike. It was a major success and the technology had no competition. If I were in marketing research in a semiconductor company, I would be asking to what new uses the in-house technology could be put, and then explore new product concepts based on answers. This is where the line is crossed from being a pure IC maker to being a creative applier of whatever capabilities exist within the company.

When Tek expanded from its core technology of oscilloscopes into the computer industry, some within Tek thought it was expanding too quickly and that this would weaken its core strengths. For semiconductor companies, the same challenge exists, of not spreading resources too thinly that IC capabilities are compromised. Yet without expansion into IC-applying technology and markets, the company can only grow like a pumpkin in a jug to the shape of an IC company, and be no more than that.

Being an IC company is enough of a challenge, but part of that challenge is what to do with the IC capability. I am suggesting that new ideas in answer to this dilemma exist in encouraging thinking about IC technology application within IC companies. One way of expanding and minimizing risk is to form alliances with selected companies already in the application areas of technology so that more than IC profits can be the resulting benefit.

For instance, I just ran a series of articles on one possibility, the integrated Z meter. To my knowledge, none presently exist, though there is nothing about Z-meter circuitry that prevents a more complete integration. This is only one instance, and I do not suppose that I am uniquely creative in proposing possibilities. Smart people at workbenches in IC companies probably already have ideas. Some of these will turn out to be technically impractical, or address too obscure of a market, or be so intricate that an IC company cannot venture into it. Yet there are multiple possibilities within these bounds. I have several ideas of this kind and others must too. They offer IC companies an opportunity to take the initiative to grow beyond a supporting role in fulfillment of other people's ideas.

Do you have suggestions regarding the markets that semiconductor companies could either move into or form joint ventures to take advantage of?

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119 comments on “Getting From Scopes to Semiconductor Innovations

  1. Scott Elder
    October 17, 2013

    Dennis – Apple Computer spends 2% of their sales on R&D.  The analog semiconductor companies that design the ICs for Apple products spend nearly 20% of their sales on R&D.  

    The analog semiconductor companies haven't substantially changed their business model in decades whereas companies like Apple and Microsoft now do everything from chip design to building “brick-and-mortar” stores in shopping malls.  Even Cisco (also chips to systems) is a household name, although they don't have store fronts–yet.

    Originally the analog IC companies wrote their own design tools, but now that task has moved over to Cadence, Synopsys, and Mentor Graphics to name just a few.  They also used to manufacture all the ICs they sold, whereas now more and more is manufactured by foundries like TSMC and GF.  And finally, the tool companies are slowly building circuit IP libraries and manufacturing relationships directly with the foundries.  Can you see where this is headed?

    You are advocating (with your Z-meter example) that analog semiconductor companies follow the lead of a Cisco, Apple, Microsoft, or Tektronix and become more vertically integrated.  I think you're right.  If they don't, they just might disappear with their technical staff moving to either tool companies or other vertically integrated companies that use tool company products to buy foundry-manufactured ICs.

    The analog companies need to get more return for their 20% R&D investment.  I don't see how that is going to happen unless they start selling higher level products closer to the end user (i.e. your test equipment example).  If they already have to design the chips, the boards, and write the software, why not go the next step and design the “skin” around those products also?

     

     

  2. Scott Elder
    October 17, 2013

    Analog semiconductor companies should move into portable medical products and take advantage of their expertise in low-noise, precision, power and high voltage analog.  For example portable imaging (ultrasound, digital xray) or monitoring (ekg, eeg, etcc.).  Focus on reducing the cost so that each middle class home could afford one of those products.

  3. eafpres
    October 17, 2013

    @Dennis-in this post I'll make a suggestion along the lines of your request.  My view is that considering the IoE essentially requires sensors on everything, the logical thing for IC companies is to forward integrate with sensor technologies and make complete sensor packages that are IoE ready–have all the I/O optimized for standard radio technologies which embed the IP protocols needed.  Where to draw the line is problematic.  Include power integration?  Energy harvesting?  Include the communication (radio, serial I/O, ethernet?)

  4. eafpres
    October 17, 2013

    @Dennis–now, let me take the other position in the debate.  Fundamentally, if IC companies vertically integrate this implies entering into the markets occupied by their potential customers.  The only way to avoid this is to find a so-called Blue Ocean.  In Blue Ocean Strategy, you create new markets, new paradigms.  In so doing you may destroy or render value-less existing markets, but you do not directly compete.  Unfortunately, the proponents of BOS aside, there is no recipe to find such Blue Oceans.  The favorite example until recently was Apple, first with the iPod, then the iPhone, then the iPad.  But their shine may be dulling, we shall see.  So it is a big challenge, and even in a Blue Ocean, your existing customers may think you are sailing right at them.

  5. Scott Elder
    October 17, 2013
  6. samicksha
    October 18, 2013

    This is good summary Scott, but if you just look at other side of coin, analog chips in information processing have been mostly replaced with digital chips. Analog chips are still required for wideband signals on account of sampling rate requirements, high power applications and at the transducer interfaces.

  7. Netcrawl
    October 18, 2013

    You' re right we're seeing some dramatic changes here, the world is going digital and we expect this to happen fast. Despite massive shift analog is here to stay, its showing some changes, as new design concept strategies and technologies are being revealed- its not dead, its just evolving into new area.

  8. jkvasan
    October 18, 2013

    @DF,

    When you make flour, why not the bread? Seems similar to what Samsung, Mitsubishi and NEC do. They use their own chips in their products. Their semiconductor products are not marketed extensively. Their goal seems to sell the end products and to be closer to customer.

    It makes sense.

  9. dates
    October 18, 2013

    Nah, I don't agree with this.

    End-equipment companies have a lot of knowledge about how to design, make, market and sell that equiipment. It's just naive to think that because a semiconductor company makes chips that go into those products, then they can make a success of becoming that end customer.

    Besides, if they enter an end-equipment market, they now become a competitor of those other companies in that market who they used to sell their chips to. I say “used” to sell their chips to, because that is the way it will turn out.

     

     

  10. Scott Elder
    October 18, 2013

    @dates – You wrote:

    “End-equipment companies have a lot of knowledge about how to design, make, market and sell that equiipment. It's just naive to think that because a semiconductor company makes chips that go into those products, then they can make a success of becoming that end customer.”

    Let me change a few nouns:

    “ANALOG SEMICONDUCTOR companies have a lot of knowledge about how to design, make, market and sell CHIPS. It's just naive to think that because a PRODUCT company makes SYSTEMS that USE CHIPS, then they can make a success of becoming that CHIP PROVIDER.”

    Well, many product companies are doing a fine job making complex chips today using the same tools, process technology, and design talent used by the IC companies.  The lines are blurring between who is actually doing the electronic R&D.  All it takes is the decision to invest the money and hire the right people.

    As far as becoming a competitor against your customers, isn't this what Microsoft has done by making computers that run Win8?  Isn't this what happened to the old data converter board companies like Analogic?

    Doug Grant wrote a great article about data converter history and Analogic:  http://www.planetanalog.com/author.asp?section_id=402&doc_id=560852&

    Analogic lost their data converter business because their suppliers (analog IC companies) got into the business and made better products.  Guess what Analogic does today?  They sell all types of medical imaging equipment–no doubt using ADI products!

    It is dangerous for a company to assume that another company can't pop up out of nowhere and steal their lunch based upon the assumption that they somehow have unobtainable market specific knowledge.

     

  11. eafpres
    October 18, 2013

    @JAYARAMAN KIRUTHI VASAN –” They use their own chips in their products. Their semiconductor products are not marketed extensively.”

    Recall when Apple used Motorola 68000 series CPU; at the time many thought it was far better than the Intel chips.  Eventually Apple designed their own chips.  My sense it is driven by (a) controlling costs, and (b) differentiation available by having everything you want in the chip vs. a general purpose chip.  Apple so far has not wanted to be in the semiconductor business, per-se.  I think the examples of backward vertical integration are more commonly successful than forward integration.

  12. goafrit2
    October 18, 2013

    >> Besides, if they enter an end-equipment market, they now become a competitor of those other companies in that market who they used to sell their chips to

    Making chips and building systems are different markets. You are correct there @dates. Besides being a competitor, Microsoft has shown that having Windows does not make you a good device maker with Surface. Not sure OEMS like TI can make airbags better than Bosch despite suppling the MEMS XL and gyros that power them.

  13. goafrit2
    October 18, 2013

    @Scott: Analog semiconductor companies should move into portable medical products and take advantage of their expertise in low-noise, precision, power and high voltage analog.  

    I do not think that extrapolation is that simple. That you make good ADCs may not qualify to have any expertise in making ECGs and EEGs which require a new set of expertise. Processing data within the domain of ADC design is different when you work with artefacts in biomedical measurements. Why it makes sense theoretically, practically, it is not that simple. You need to RE-TRAIN those ADC designers to start working with FDA!

  14. Scott Elder
    October 18, 2013

    @goafrit2 – I think you misunderstood.  You don't use the same designers.  You do what Apple, Cisco, Google, etc. do.  You go hire the people you don't have to fill in the blanks.  The point is not to retrain, but to grow the size of your business starting from your core strength.  Alternatively, you compete for a continually shrinking market for your products as more “Googles” hire away your talent and go around you.

  15. goafrit2
    October 18, 2013

    @Scott>> You do what Apple, Cisco, Google, etc. do.  You go hire the people you don't have to fill in the blanks.

    I have noted your points. Yet, it is not that easy to copy Google and Apple because they have free cash that they can support an unprofitable business just to play offence against a competitor. I am not sure Motorola (Google) will be profitable this decade but Google may not care provided Microsoft or Apple will not own the patents. With stock up there in high heavens > $1000, their business model is a lot unique. Compared to our commoditized industry where getting a margin of 11% is bravado, investing that horizontally could be challenging since you just expose your assets to more competitors. It is not that others will welcome you without fighting. 

    Also, is there any true comparative advantage a firm that makes ADCs and wants to go into medical device can have over medical device makers? ADC is a commodity business and that knowledge does not offer any special advantage.

  16. Scott Elder
    October 18, 2013

    @goafrit2

    < >

    If this is true, and you own ADI stock, I recommend you sell!  Because if what you wrote is true, then what advantage does an ADI have to sustain their $2.8B, 65% margin business?  What keeps someone from coming in and stealing the $2.8B??

  17. goafrit2
    October 18, 2013

    >> If this is true, and you own ADI stock, I recommend you sell!

    Laughts. Of course $2.8B is not that big a business for a 50 year old pioneer when a young college dropout flipped Facebook for $115B after 7 years. That ADI is still at 2.8B for more than a decade shows the firm is not growing, just managing its fences and borders. Look at the valuation. Sure, a great innovator but it does not do what others cannot do. How do you know?

    When 2.8B gives you $14B valuation, it means your muliples are low. Twitter hardly makes money and in 10B valuation. Instagram was sold at $1B when it has no bank account.

    But move to semiconductors, you see so much effort but less wealth cretion because there is no truly defined differentiator. They have the worst ROCE, ROI and poorest ability to put assets to work. 

    Meanwhile, I love ADI – they have the best datasheet in the industry. Great company but extremely conservative in strategy which has impacted its growth. 

  18. samicksha
    October 19, 2013

    I agree you Jaya, infact Apple's A7 chip again made by Samsung, camera by Sony and non-descript 'M7′ chip by NXP.

  19. D Feucht
    October 19, 2013

    @Scott- Medical instrumentation is an excellent choice. I consulted for some medical instrument companies in the early '90s in Irvine, CA, a hotbed of medical instrument activity. Instrument cost is driven by the nature of the American health industry, which has become a disaster because of insurance and pharmaceutical companies, lawyers (litigation) and government. (I'll refrain from developing a full rant about that here!) As a consequence, medical instruments are not designed with low cost in mind. I agree, that this provides a real opportunity to design low-cost instruments for the developing markets which are in the developing world – and they are substantial.

    As an example, an eye cataract surgical instrument (a phacomachine) can cost tens of thousands of US$ but with cost-conscious design could still be reliable (most ophthalmologists have two at hand while doing eye surgery) and sell for not much more than what a good oscilloscope sells for: a few thousand dollars.

    The same applies to ultrasonic imaging. I have on the shelf a working prototype of the front-end of an ophthalmic ultrasonic imager (from an dissolved entrepreneurial project of the early '90s) that would have an estimated parts cost today of less than $100 (not including the probe). It produces a 20 MHz, 8 bit digitized output stream with scan formatting signals, though nowadays, a higher-bit ADC would be used at a lower price than the old NSC ADC that was used.

  20. D Feucht
    October 19, 2013

    In comparing Facebook or Google to ADI (or TI or LTC or Maxim, etc.), it would appear that these Internet-oriented start-ups are more successful at business than the semiconductor companies, but this might be an illusion. Why?

    First, what is their product? It is a form of communication among people. Yet the technology needed to implement a Facebook is hardly beyond the capabilities of many other software-oriented companies. What they have of value is their large installed base of users, which affords an audience for advertizers. They met an unmet want (or need) in the marketplace. However, for their stock value to be based solely on their present user-base seems fragile to me.

    Second, the overall financial and economic system in the overdeveloped world is in a state of meltdown and the usual equilibrium assumptions about markets do not apply. At the bottom of this is the fiat nature of currency other than commodity money such as gold or silver or even (processed) silicon. In an economic collapse of giant proportions (which the important social trends portend), a silicon chip might be elevated far above an Internet user-base in market value. Things are not what they seem since that days when Nixon renegged on the Bretton-Woods agreement. But that is well beyond electronics. And so is my point: that to understand the dynamics of the social order in some depth is important in assessing what to do in the microcosm of it that is the electronics business.

  21. Netcrawl
    October 20, 2013

    @goafrit2, and there's another-a majority of semiconductor vendors do not own or operate their own chip manufacturing hubs, the sophisticated and capital-intensive stages of packaging chip, most of this is outsourced to other companies based on Asian countries like India or China.

  22. Netcrawl
    October 20, 2013

    @goafrit2 Microsoft is a software and “pure” platform company and not a hardware company, the reason why it failed in tablet, it missed the market turns and lack some of the most important factors in mobile space – lack of clear marketing startegy, innovation, apps and hardware skills.

     

  23. Netcrawl
    October 20, 2013

    Both companies have a huge warchest- billion of dollars enough to make some series of highly targeted acquisitions, the huge pile of cash provide some plenty of room to innovate. Apple's strength in hardware provide the company a relatively safe source of revenue and great flexibility.

    @goafrits the huge pile  of cash provide these two companies with great financial security, enable them to sustain massive losses and terrible market beating. Take a look at Google, the company is losing huge amount of money in Motorola, but with Google's massive warchest I think everything is just fine they can able to sustain everything.

  24. Netcrawl
    October 20, 2013

    I agree with you @Feucht medical instruments are not designed with low cost in mind, the companies are losing battle inthe global playing field, its a global war. And developing countries are making a huge win here, why? because they good in low cost production with great quality, and most of today's companies are moving to developing countries to take advantage of the growing market opportunities and low cost production facilities. Its not a technological battle, the american could easily win that, its the economic side that beat us, the price of the stuff, how we produce it and sell. 

  25. Netcrawl
    October 20, 2013

    @samicksha you're right about that, Apple has some deal with Samsung, Samung built the Apple's A7 chips, not just chips most of iPhone parts are made in China or simply built by chinese companies. They're partners in one particular area- A7 chips and enemy in another area of the business-smartphone and tablets, we got term for this one, the tech world call it  “frenemies”.

  26. Netcrawl
    October 20, 2013

    Semiconductor companies contrinue to see unprecedented performance and integration sophistication, there will be continued demand and this will lead for much more advanced technology and innovation. I could see some big things in the next couple of years, perhaps some great market opportunity for ADI.

     

  27. Netcrawl
    October 20, 2013

    I think company user behavior has changed dramatically in the past few years, with the consolidation of buyers and pervasive shift from one particular area to another area, I think it's no longer important for someone to focus soley in one particular area of the market. Its a different world now, where many remain vulnearble to unforseen market innovations, a massive force that could shake anyone in the market. The reality is there's a great need for continual technology development and its mandatory! they need it to survive and thrive. Everyone need to be alert for innovation, innovation is occuring elsewhere in the industry, and innovation could be a big disruption or simply a killer. 

     

  28. Davidled
    October 20, 2013

    I remembered that a lot of start-up company related website dot.com collapsed in the Silicon Valley in late of 1990s. Their product is a virtual stuff closely interacted with customer in the website. All stock value was radically down from top. All risk finance impacted the global economics and other sector. It reminded me that manufacture such as semiconductor or any plant is the backbone of economy in the country.

  29. samicksha
    October 21, 2013

    @netcrawl: that is what my concern here, Samsung and Apple are competitors but still they are into strong internal business relationship, relying samsung for their hardware assembelies.

  30. fasmicro
    October 22, 2013

    >> Microsoft is a software and “pure” platform company and not a hardware company, the reason why it failed in tablet, 

    I think every business goes through correction. Microsoft had its turn. But I am sure they will be a player in coming years with the assets from Nokia in the mobile space. Do not count them out yet.

  31. fasmicro
    October 22, 2013

    >> In comparing Facebook or Google to ADI (or TI or LTC or Maxim, etc.), it would appear that these Internet-oriented start-ups are more successful at business than the semiconductor companies, but this might be an illusion

    If business is creating value for the owners, I will prefer to be owner of Facebook or Google. I have no basis for your analogy. Simple, Facebook and Google are more successful because they have generated more wealth than all the semiconductor companies combined.

  32. fasmicro
    October 22, 2013

    >> First, what is their product? It is a form of communication among people

    The most important thing in business is not to focus on your product but the value you are creating. I will still prefer to make candies and build a $100B business than create supercomputers that I can hadly generate a value of $10m. See it from the lens of value creation and not the quality of the products within your experiment. As a hi-tech guy, you have the bias over electronics and that means you may think ADI is providing better value to the world than Facebook despite ADI having a market value of $14B which is change in Facebook valuation. What they do is not the problem, what matters is the value they create.

  33. fasmicro
    October 22, 2013

    >>  silicon chip might be elevated far above an Internet user-base in market value.

    Unfortunately, that is yet to come. The problem with that is that web companies have continued to grow than our industry. And may continue in the next future. I do not see the constructs how that will change in the near future. 

  34. D Feucht
    October 23, 2013

    “The most important thing in business is not to focus on your product but the value you are creating.”

    Value can be elusive and also illusory. The various market manias in the past have demonstrated this, such as the recent dot.com mania of a decade ago. When those dot.coms were highly “valued”, on what was their value based? It is a question of what humans beings need and want. The market can be fickle in its valuation.

    It is obvious, is it not, that without semiconductors there can be no Facebook, regardless the “valuation” of its stock in equally ephemeral dollars. Food is even more valuable than semiconductors and what depends on semiconductors cannot make them of lesser value.

    The dollar value of ADI stock might be a fraction of that of Facebook, but that is only because ADI has been successful in offering the value of its products at a lesser price. If the semiconductor companies were to close their plants for a while, their value would increase immensely while Facebook would decrease due to the inability to provide services because of a lack of semiconductors. Market demand drives much of this “valuation” and it is not a fundamental property of the universe.

  35. Netcrawl
    October 23, 2013

    @fasmicro Microsoft has just missed the market turn, they have no idea what's coming next, they ignored the threat, they think they  still in control.

    But with Nokia things has just get better for Microsoft, Its a synergies! they're now well-positioned to challenge both Apple and Google, they got strengths-hardware and software and massive reach. 

  36. Netcrawl
    October 23, 2013

    Comparing Google to ADI? I think you can't the two has different business model and culture, in term of market value Google is far more larger than ADI and far more profitable, and far more powerful. Google is extremely powerful and well-positioned to organically enter new markets through its stronghold in some in industries such as online search business and mobile technology, strong market position also provide some great flexibility and safe source of revenue for Google.

    In term of wealth geration ADI simply can't match Google, semiconductors always beat in this kind of game, internet-based company like Google will always win, they're far more superior in terms of profits and market value. 

  37. samicksha
    October 23, 2013

    MS is itself a another world they have number of things running, this is one of the major issue why they got confused and did not responded to new trend and more over BYOD was one to change the entire game it came like cyclone and left only few survirors…

  38. jkvasan
    October 23, 2013

    eafpres,

    I would like to add 'customisation' as another reason. When there are specific needs, it would come handy if the product making company can also make its own customized chips to suit its special requirements.

  39. jkvasan
    October 23, 2013

    @Samicksha,

    Another company was NEC which made its own chips for its products, if I am right. NEC is merged with Renesas. 

    Sharp also has semiconductor plants and make several components. I do not know if they use their chips in Sharp consumer equipment.

  40. etnapowers
    October 23, 2013

    @Netcrawl: I don't think that Microsoft and Nokia will be an hard competitor for Samsung and Apple, I agree on the synergie might work but not to compete with giants like  Samsung and Apple.

  41. samicksha
    October 23, 2013

    @etnapowers: I guess they dont even want to be competitors, Nokia recently released its tablet which seems impressive progress in way their survival….

  42. etnapowers
    October 23, 2013

    @samicksha: They cannot be competitors now because of different volumes of business but it was different not many years ago when Nokia was the leader in the cellphones market.

  43. Netcrawl
    October 24, 2013

    NEC lost the chip war, try to escape by merging with Reneses. Sharp has a very hard times, it lost the consumer market space, getting kileed fast in the market but get some relief when chip giant Qualcomm announced plan to invest a huge amount of money on one of Sharp's division.

    Sharp has a terrible market track, competition is not good fo rthe company, its getting crushed and squezzed by two forces Samsung and LG.

  44. Netcrawl
    October 24, 2013

    @samicksha Its not survival I think its pure business they're going after the competitors. trying their luck to steal some market share,its payback time.

    The timing is great because Microsoft is also readying some big assault- entering a tablet space. I think the two makes a good competitors, two is better than one, and they're well-positioned to take on rivals.

  45. Netcrawl
    October 24, 2013

    I guess these companies has just missed the big picture,and misread where the market really heading. In Microsoft's case its a big combination of lack of innovation and poor execution, they're not “in the game”. Its a jungle out there you never know who's going to down and who's not, survivcal is the name of the game, you want to stay in the game then you need to disrupt the entire market and make some noise.

  46. fasmicro
    October 24, 2013

    >> The dollar value of ADI stock might be a fraction of that of Facebook, but that is only because ADI has been successful in offering the value of its products at a lesser price.

    I think within the constructs of fudiciary responsibility to investors, your argument may not matter that much unless we are talking of non-profits here. I will hope I own the stocks of companies that are growing their values irrespective of the kind of legal products they create. The corollary to your point is also true >because ADI has been successful in offering the value of its products at a lesser price>>

    It is possible Facebook has grown its value because it was able to offer a compelling product that it can attract greater price. The race to the lesser price is not an indicator of leadership; it means you have no command of the territory.

  47. fasmicro
    October 24, 2013

    >> But with Nokia things has just get better for Microsoft, Its a synergies! 

    Time will tell if the Microsoft Nokia marriage or M&A will challenge the dominance of Goggle, Samsung and Apple. That Nokia staff were Microsoft badge does not mean they have changed. We will know in few quarters. Siemens, Sony, Alcatel, Lucent etc have all done those. They rarely work.

  48. fasmicro
    October 24, 2013

    >> it would come handy if the product making company can also make its own customized chips to suit its special requirements.

    Apple seems to be the only company that has done that with success. It makes the chip that powers its gadgets and in the process get the best in power, size and overall performance. Even the big HP, Dell, and others depended on Intel to give them the brains to their products. I am not sure that is a great business model – to make your chip but Apple is showing that it can work.

  49. goafrit2
    October 24, 2013

    ??I don't think that Microsoft and Nokia will be an hard competitor for Samsung and Apple

    That is the overriding conclusion but no one can count of Microsoft in a hurry. Blackberry app was downloaded more than 10 million times within 24 hours when they released on Android. With a rapidly changing taste from customers, this game has not been won. Anything is possible because someone can self-inflict its own wounds.

  50. etnapowers
    October 25, 2013

    @goatfrit2, You're right, but I think that the Microsoft company has learned the lesson and it could recover but not today, Samsung and Apple are too strong competitors for the alliance Microsoft+Nokia.

  51. jkvasan
    October 25, 2013

    fasmicro,

    I may have to differ from your view point.

    ASICs can be made by the product manufacturer to safeguard the IP. Another useful feature would be third party players may not eat your service revenue. Fakes can be easily identified.

  52. yalanand
    October 27, 2013

    While reduction of feature sizes and growing wafer spans have provided the major share of that growth, and would continue to be important contributors throughout the next forty years, there are many other methods to continue to decrease the cost per transistor.

  53. fasmicro
    October 27, 2013

    >>   but not today, Samsung and Apple are too strong competitors for the alliance Microsoft+Nokia.

    Absolutely, that is the state today. But time will tell if this status will change in coming years. I know Samsung is secured, I am not sure Apple's two-product strategy will survive the onslaught that is coming from all angles. Yes, my take does not matter as the pros are far better than me.

  54. fasmicro
    October 27, 2013

    >> ASICs can be made by the product manufacturer to safeguard the IP. Another useful feature would be third party players may not eat your service revenue. 

    Business is core competence. Anyone can do anything. Ford can make tires. Toyota can make rugs and anything but that does not mean it is the best for them. Citi bank can start making ATM machines if they like. I do not think it makes sense for OEM to be product companies. The business is different.

  55. jkvasan
    October 28, 2013

    fasmicro,

    It all depends on how well the product has merged with the companies processes. Citibank may be interested to make ATMs if all of their customers only use ATMs, and close many of their branches.

    As today's trend is out-sourcing it may not be sensible to do everything on one's own. As you rightly said, business is all about core competency.

  56. etnapowers
    October 28, 2013

    @fasmicro: I fully agree with you about Samsung.

    Talking about Apple I think that, if this company will add many free apps and it will add features to make its system a little bit more “open” and maintain the material quality and software computational effectiveness and speed, Apple will survive to this high competitive market remaining a global leader in the next years. Do you agree? 

     

  57. SunitaT
    October 31, 2013

    Time will tell if the Microsoft Nokia marriage or M&A will challenge the dominance of Goggle, Samsung and Apple. 

    @fasmicro, I totally agree with you. But lets not forget that quality of the hardware that nokia provides is far better than the quality of other mobiles. I recently read a news which said  Lumia 800 worked even after it was underwater for almost four months before being brought back to life.

  58. SunitaT
    October 31, 2013

     Apple will survive to this high competitive market remaining a global leader in the next years. 


    @etnapowers, I think lot will depend on what new innovative features Apple will add to its handsets. I think Samsung is already planning for flexible display screen and I am not sure Apple is also planning to develop flexible display screen.

  59. SunitaT
    October 31, 2013

    Blackberry app was downloaded more than 10 million times within 24 hours when they released on Android.

    @goafrit2, true Blackberry app got tremendous response but when I read the reviews many people still feel that Whatsapp is better chat software compared to this app.

  60. SunitaT
    October 31, 2013

    I am not sure that is a great business model – to make your chip but Apple is showing that it can work.

    @fasmicro, but in the beginning Apple was dependent on Samsung to build its processors. Not many companies can afford to build its own customized chips hence they dont have a choice but to rely on other companies.

  61. SunitaT
    October 31, 2013

    Samsung and Apple are too strong competitors for the alliance Microsoft+Nokia.

    @ethnapowers, true but lets not forget that Lumia smartphones are getting very good response from the end users. Infact sales of Lumia smartphones rose 19 percent quarter-on-quarter to 8.8 million units.

  62. SunitaT
    October 31, 2013

    Samsung and Apple are competitors but still they are into strong internal business relationship, relying samsung for their hardware assembelies.


    @samicksha, but I think lot has changed after Apple accused Samsung of copying. I am sure Apple will hesitate to share new designs and concepts with Samsung.

  63. SunitaT
    October 31, 2013

    Take a look at Google, the company is losing huge amount of money in Motorola, but with Google's massive warchest I think everything is just fine they can able to sustain everything. 

     @Netcrawl, Agree with you that Google is profitable overall, and its cash on hand has grown steadily. But if this trend of Motorola continues to slide, Google may eventually be forced to write down the cost of the $12.5 billion acquisition.

  64. SunitaT
    October 31, 2013

    When you make flour, why not the bread? Seems similar to what Samsung, Mitsubishi and NEC do. They use their own chips in their products.

    @Jayaraman, true many companies have the capability to develop their own product. But to build good product companies should also conentrate on software part.

  65. goafrit2
    November 1, 2013

    >> infact Apple's A7 chip again made by Samsung, 

    Samsung did not make A7, they only produced it (i.e. manufactured it in the foundry). They did not design it.

  66. goafrit2
    November 1, 2013

    >> I agree, that this provides a real opportunity to design low-cost instruments for the developing markets which are in the developing world – and they are substantial.

    The number driver in medical equipment business is insurance. The problem is that doctors buy insurance for their practice as people can sue them. Clinics insure themselves also. Imagine if HP has to take insurance for making a mistake in installing a server for say US Army. The total chaos in US healthcare industry is legal, never a technical one. Why the developing world seems to be better is simply the absense of trial lawyers. That may not be optimal as there are abuses there. Most times, it is tough to choose a world to live because none is perfect.

  67. goafrit2
    November 1, 2013

    >> there are many other methods to continue to decrease the cost per transistor.

    Any suggestion – this can win you a big award in Intel. This is the business when you have to pack millions inside a chip. Generally, technically, increasing the size of wafer is not a good way of reducing cost – you only get marginal cost reduction which may not offset the extra expenses in rebuilding the photolithographic equipment to support that increase.

  68. goafrit2
    November 1, 2013

    >> Apple will survive to this high competitive market remaining a global leader in the next years. Do you agree? 

    The competition Apple faces will not come from Google, Samsung, etc. They already know those companies. The main competitor is one it does not see right now. It is like what happened to Facebook last week – teens are not using the servce as they used to. Why? SnapChat and other lesser known services are taking their time why Wall Street was thinking that Google Plus was Facebook problem.

  69. goafrit2
    November 1, 2013

    >> . I recently read a news which said  Lumia 800 worked even after it was underwater for almost four months before being brought back to life.

    Yes, Nokia makes great product. Sony makes great laptops in Viao. The problem is how many people can afford them. Until you have that optimality between price and quality, any business will struggle. The exciting thing about Chinese firms is that they are improving on quality why keeping price low. That is where Lumia is having problem.

  70. fasmicro
    November 1, 2013

    @Sunita >> I think Samsung is already planning for flexible display screen and I am not sure Apple is also planning to develop flexible display screen.

    This is not entirely a business of the best technology wins. It is the best service. As someone had noted in this thread, Nokia has a great technology. But go to their site, you will know they have not evolved. It is possible one can have good technology like Blackberry(most secured) and yet cannot compete.

  71. fasmicro
    November 1, 2013

    >> Not many companies can afford to build its own customized chips hence they dont have a choice but to rely on other companies.

    Flextronics and a bunch of few other three firms make the chipsets that power most of the handsets especially the ones in China. That will get you far enough as it has become increasingly clear that any savings in power or weight as Apple does could add innovation in the product

  72. fasmicro
    November 1, 2013

    >> Infact sales of Lumia smartphones rose 19 percent quarter-on-quarter to 8.8 million units.

    Becuase they discounted the price to clear inventory. That is not necessary a good indicator. HP wrote down ElitePad by nearly a billion dollars and exited the business. They might have sold it for half he price and grow volume. In this business, profit matters because you are making physical things – Apple and Samsung hold the ace there.

  73. fasmicro
    November 1, 2013

    >>  Google may eventually be forced to write down the cost of the $12.5 billion acquisition.

    I am not sure Google bought MOT for anything monetary. I think they reacted badly to the wave of patent lawsuits and decided to play offense by acquiring the company. As of today, Asus is making Nexus phones for Google when they have MOT which does not make sense to me.

  74. Davidled
    November 2, 2013

    If I remembered correctly, most smartphone OEM uses ARM chips made by British IT company. I think that without ARM chip, Smartphone would not be working properly. They designed the necessary component and supported any interface Smarphone requires.

  75. jkvasan
    November 4, 2013

    Sunita,

    ASIC manufacturing is common in Textile industries. The company making end products would get chips done to their specifications and implement in their products. This helps them protect their service revenue and also the quality of the overall system.

  76. etnapowers
    November 4, 2013

    @SunitaT: I'm not so sure that flexible display screen are the only key for surviving in the smartphone market, this feature is being discussing for a while in electronics in general but I don't think it's the only way to ensure the survival for Apple or Samsung.

  77. fasmicro
    November 4, 2013

    >>Both companies have a huge warchest- billion of dollars enough to make some series of highly targeted acquisitions

    I am yet to see any big tech company that was redeemed through acquisition. For acquisition to make sense, you the acquiring company must be solid. In the land of tech, you cannot buy yourself out.

  78. fasmicro
    November 4, 2013

    >> the reason why it failed in tablet, it missed the market turns and lack some of the most important factors in mobile space 

    Microsoft failed in tablet not because it could not necessaily compete but baecause it thought its partners like Dell, HP etc could. That was the major problem – it overlooked the need to get involved when Apple and BBR were eating the piles.

  79. fasmicro
    November 4, 2013

    >>Talking about Apple I think that, if this company will add many free apps and it will add features to make its system a little bit more “open” and maintain the material quality 

    Apple is the only tech company that has refused to be “open” in the consumer market. But yet, they are doing great. That shows the power of brand. You can do anything you want, against the way many see it, if you are a leader in innovation. Imagine if Facebook begins to charge fees for premium membership? Makes sense or not. If it remains dominant in the next 10 years, it may as it will be a favor for FB to accept you since without there is not life. They can ask people to pay.

  80. goafrit2
    November 4, 2013

    No one has indeed failed. The market of app is still growing and evolving. When people said Facebook has locked up he social media, they did not see SnapChat. Now, that app is taking away teens from Facebook and Facebook is working hard to “fight”. Any tech firm is a click away from obsolence. No one believed we could abandon our email accounts in AOL to move to Yahoo and then Gmail.

  81. goafrit2
    November 6, 2013

    >> If I remembered correctly, most smartphone OEM uses ARM chips made by British IT company

    You are correct. Companies like Flextronics port those ARM chips into chipsets which they sell to many companies which them repackage them as tabs or phones. In other words, if you open the core technology, most phones are the same, the difference is the packaging.

  82. goafrit2
    November 6, 2013

    @Jay >> ASIC manufacturing is common in Textile industries.

    I do not understand this comment. Are you saying Textile firms can also do ASIC? ASIC here Application Specific Integrated Ciruits – what is the relationship to textile?

  83. goafrit2
    November 6, 2013

    >> : I'm not so sure that flexible display screen are the only key for surviving in the smartphone market, this feature

    In most surveys, people rank ease of use. The fact is this Apple and Samsung products despite their nice resolutions are easy to use. That is more important to any technology. Technology is vital but people get to have the ability to use the device first.

  84. etnapowers
    November 7, 2013

    @SunitaT: Nokia Lumia is a good smartphone , it will guarantee the survival of Nokia+Windows in the short term , I'm not sure that this device will be a contender of the top level smartphones from Apple or Samsung.

  85. etnapowers
    November 7, 2013

    @goatfrit2: Yes you're correct, the best challengers are the rising ones and this is true for each company, but I think that the competitors you mentioned are small companies that can attack only a small portion of the market so this factor is important but it is not the only one to be considered.

  86. etnapowers
    November 7, 2013

    fasmicro: That's exactly what I intend, the Apple's brand can be imitated but not replicated because Apple introduced some quality materials and ideas that no other company introduced before, it's a leader at this moment. I had the chance to use the new Apple tablet and the quality of the materials and of the video graphics is really outstanding to me!

  87. fasmicro
    November 9, 2013

    >>  but I think that the competitors you mentioned are small companies that can attack only a small portion of the market 

    It is a sign of trouble when you think a competitor is so small to matter. The best deal is warfare is to close your flants. In business, the best strategy is to nib the competitor before they have the space to grow. Never think any competitor can be ignored in our industry. One press release, your product can be obsolete

  88. jkvasan
    November 9, 2013

    goafrit,

    May be my comment is misleading. I meant that Textile Equipment manufacturers normally use ASICs tailor-made for their products. They get these components outsourced. They do this mainly to discourage third party service providers.

  89. fasmicro
    November 27, 2013

    >> No one believed we could abandon our email accounts in AOL to move to Yahoo and then Gmail.

    Your point is the very reason why some investors or funds do not bother putting money in tech. They consider it very risky because a really good idea can be old by one press release. Yet, if you understand the business- they invest in people and not just the idea. Ideas evolve and they adapt and that is why the management team is vital to success.

  90. fasmicro
    November 27, 2013

    >> , I'm not sure that this device will be a contender of the top level smartphones from Apple or Samsung

    Your assumption is that Apple and Samsung are sure to survive. Do not bank on that. If the sub-$70 tablets and phones continue to improve, it will be waste to ever visit the Apple store.

  91. fasmicro
    November 27, 2013

    >> but I think that the competitors you mentioned are small companies that can attack only a small portion

    Accoriding to HBS Clay Christensen (s.p), the best competitors attack from the flanks. It is the same as the Tsa's Acts of War. It is not usually announced that you hit the company right on its core business. Carebuilder, Monster etc did not see LinkedIn as a competitor. But now, that is history. 

  92. fasmicro
    November 27, 2013

    >> I had the chance to use the new Apple tablet and the quality of the materials and of the video graphics is really outstanding to me!

    According to J.D, Power, Apple came 2nd behind Samsung when cost and quality are all considerred. There is not special genius to make a really expensive Bentley and then you take it for comparison with Toyota. Apple phones are expensive. When cost to benefit analyses are taken into considerations, J.D Power said buy Samsung because their products make more economic sense. The problem is that people do not understand that quality is an illusion. You can have the best anything on eath, but that depends if you can sustain it. Apple is good, but in years, the cheaper phones will get better. The party may crash then.

  93. etnapowers
    November 27, 2013

    @fasmicro: I think that the sub-70$ tablet do not have the chance to compete with Apple tablet, the difference is the quality of the materials, the graphic, the core , it's so a big difference that I suppose that Apple and Samsung not only will survive but will be the leaders in this market for many years from now.

  94. etnapowers
    November 27, 2013

    That's correct but the competitors will have to offer a better product or a better service to overcome big companies like Apple and Samsung,I think that it won't be easy.

  95. SunitaT
    November 30, 2013

    I think that the sub-70$ tablet do not have the chance to compete with Apple tablet, the difference is the quality of the materials, 

    @etnapowers, I am not sure if price makes the difference. For example although BOM of apple devices is low but still Apple prices its products very high. I think its all about brand perception.

  96. SunitaT
    November 30, 2013

    Apple is good, but in years, the cheaper phones will get better.

    @fasmicro, I totally agree with you. I think cheaper phones doesnt necessarily mean low-quality. In india we have new start-up companies who are building very high quality smartphones and tablets and such products are priced very low.

  97. SunitaT
    November 30, 2013

    Apple introduced some quality materials and ideas that no other company introduced before

    @etnapowers, agreed. Apple was the one which first introduced iPad, iPod's etc but offlate we don't see Apple releasing innovative products. Infact other companies like Samsung are already working on flexible display screen. Samsung Galaxy S5 rumoured to come with 5-inch flexible display.

  98. fasmicro
    December 3, 2013

    >> @fasmicro: I think that the sub-70$ tablet do not have the chance to compete with Apple tablet, the difference is the quality of the materials, the graphic, the core

    Wait for three years when today's supercomputers become laptops. There is a dimishing returns as these processors improve and costs go down. All of us do not drive Mercedes though we know it could be better than Kia. That will happen in mobile business.

  99. fasmicro
    December 3, 2013

    >> That's correct but the competitors will have to offer a better product or a better service to overcome big companies like Apple and Samsung,I think that it won't be easy.

    There is what they call cost-to-benefit analysis. You do not need to be better than them. You need to offer a compelling alternative based on cost and quality. Like we buy Kia despite the presence of Bentley, we can buy sub-$100 tabs in the world of iPad because it offers enough value than wasting extra %400 may not make up for the difference

  100. fasmicro
    December 3, 2013

    >> etnapowers, I am not sure if price makes the difference. For example although BOM of apple devices is low but still Apple prices its products very high. I think its all about brand perception.

    Good point – it is not really that Apple uses a lot of extremely expensive materials. What works for them is brand and that is what they sell. With good competitors, you can chip that away at reasonable cost.

  101. fasmicro
    December 3, 2013

    >> In india we have new start-up companies who are building very high quality smartphones and tablets and such products are priced very low.

    That is true – some, if you put the Samsung logo, people may not even know the difference. It is like the beer industry in Africa. One brand Star was popular. So fraudsters started buying the “other brands” and putting them in Star bottles. People were drinking thinking it was Star. They never knew. These things are imaginations and totally not hard science – branding is the magic of Apple and Samsung besides the products.

  102. fasmicro
    December 3, 2013

    >> Samsung Galaxy S5 rumoured to come with 5-inch flexible display.

    I am waiting for that myself. It will be really good to see that product launched by Samsung. It will be truly significant in every way.

  103. Victor Lorenzo
    December 4, 2013

    @fasmicro: “Wait for three years when today's supercomputers become laptops.

    Indeed! I have a borrowed BeagleBone Black laying on my desk at home that exhibits more than ten times the processing power of that what I used for designing SCHs/PCBs and doing simulatons back in early 90's.

  104. Victor Lorenzo
    December 4, 2013

    @SunitaT: “Samsung are already working on flexible display screen

    Sony has also shown some results on that: http://www.youtube.com/watch?v=9OvTLg4i2_U

  105. etnapowers
    December 5, 2013

    @SunitaT: yes the flexible display could be a good feature , provided that the company will guarantee an effective driving of the display, because many issues may arise in this type of application. S5 smartphone is rumoured to have integrated sensors for safety applications. It could be an high runner product of the market.

  106. etnapowers
    December 5, 2013

    @fasmicro: I agree with you on cost-to-benefit analysis , I add that the price policy of big companies has to be regulated, in order to keep the gap between costs and benefits under a specified value to avoid the risk to be attacked by low cost competitors.

  107. etnapowers
    December 5, 2013

    @fasmicro: I'm waiting for S5 as well as you. Galaxy S5 promises to have many features that other smarphones don't have. It will be very interesting to see the differences between this model and the previous model of the galaxy series. For example I don't see a big differences between S4 and S3 models. I hope S5 will surprise me.

  108. etnapowers
    December 5, 2013

    @fasmicro: BOM of Apple devices is low but the perceived quality of the materials constituting the devices is really high, the assembly engineers made a really good job at Apple.

  109. fasmicro
    December 9, 2013

    >> Indeed! I have a borrowed BeagleBone Black 

    Check out the processors they use to mine Bitcoins and you will be surprised on the type of computational power we have today. They could be portable, but they have more “torque” and horsepower than the mainframes of '90s

  110. goafrit2
    December 9, 2013

    S5 smartphone is rumoured to have integrated sensors for safety applications. 

    Any idea what these safety sensors are supposed to do? Medical in my smartphone? That seems scary I must point.

  111. goafrit2
    December 9, 2013

    >>  I add that the price policy of big companies has to be regulated, in order to keep the gap between costs and benefits under

    Unless you are an utility, I do not think government needs to regulate pricing. Regulating pricing distorts market equilibrium and causes many problems. What government needs to do is to have a platform for healthy competition.

  112. goafrit2
    December 9, 2013

    It will be very interesting to see the differences between this model and the previous model of the galaxy series. For example I don't see a big differences between S4 and S3 models. I hope S5 will surprise me.

    I do not think we need to see a lot of difference in these products when you consider that most are coming out within a window of 18 months. Instead of technical differentiation, the key factor to look for is cost. Can they deliver the next one at 50% of the cost of the previous one? It is only in phones do not see the Moore's law working.

  113. etnapowers
    December 10, 2013

    @goatfrit2: The rumours are about sensors utilized to reveal the presence of dangerous substances, I don't know about the presence of medical applications.

  114. Victor Lorenzo
    December 10, 2013

    I can't recall the source now, but several ongoing projects I've read of (and talked with other collegues) are centered on developing a set of biomedical sensors with wireless communications capabilities for sensing body temperature, heart&breath rates, epylepsia attack preludes, intraocular pressure, CO2 concentration, and several other constants and parameters. Some captures are 'simply' for data-logging but a number of projects are focused on real-time patient monitoring, so the system can automatically fire alarms to remote health care, family members or even to the patient's mobile phone to instruct him/her of taking some mitigating actions.

  115. goafrit2
    December 12, 2013

    >> are centered on developing a set of biomedical sensors with wireless communications capabilities for sensing body temperature, heart&breath rates, epylepsia attack preludes, i

    There are many projects in that space across the globe. There is absolutely activity there from Silicon Valley to Boston. The real challenge is the quality of the measurements of these systems owing to varying natures of the human systems.

  116. fasmicro
    December 12, 2013

    >> The rumours are about sensors utilized to reveal the presence of dangerous substances, I don't know about the presence of medical applications.

    There are many ideas floating in the medical industry. These applications can go. I just read one by a billionaire that wants to put all medical dataset of all 7.2 billion people on earth. Those sets will be updated as people visit hospitals and get treated. Possibly with that, lessons can be learned on what works best.

  117. fasmicro
    December 12, 2013

    >> the assembly engineers made a really good job at Apple.

    They eat the pride as Apple does not pay that well, unfortunately. Yet, Apple in your resume can land you a big gig somewhere after few years there. It is a hugely innovative firm that is destined to dominate the tech space for a long time with their infinite resources.

  118. etnapowers
    December 13, 2013

    Yes, there is much interest on putting medical applications inside smartphones and tablets,the main goal is  to have a remote access to the medical data. I think this interest will grow in the near future.

  119. fasmicro
    December 16, 2013

    Yet, as people begin to turn smartphones into medical devices, there is that risk that many people will be harmed without standard. It is very difficult to work on meedical systems as not all humans are the same. I feel bad when I go to Google Play and see hundreds of EEG monutors that practical deceive people are their health conditions. We need tougher oversignt in the new sector.

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