The growing need for commercial off the shelf hardware as a means to reduce internal development cost and accelerate time to market is just one of the leading trends that we believe is causing many hardware manufacturers to reevaluate their current solution portfolios. During this QuickCast VDC's Chris Rommel discusses this, and several other trends we believe will shape the future of the Embedded Hardware & Systems market for 2012.
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More full turn-key systems and more outsourcing among embedded integrated computer systems manufacturers. Manufacturing the boards and sub-systems in-house no longer gives enough margin, as boards have become increasing commoditized. Full systems and solutions are where the viable margins exist now.A significant portion of communications respondents obtain most of their boards from third-party suppliersIn 2011, only 5% of communications equipment survey respondents indicated they build all boards using in-house resources and assets. Approximately 55% report they will obtain at least half of their embedded boards in 2011. By 2014, only 2% believe that they will manufacture their own embedded boards with in-house resources and assets, as the costs of building boards in-house are often too great for many companies, especially as inexpensive and reliable boards can be obtained from third-party sources. Approximately 98% of survey respondents believe some percentage of their boards will be obtained in 2014 using third-party board suppliers. The value proposition many board suppliers have developed and continue to offer include low power/ultra low power solutions, fanless designs, compact and low profile architectures, and extended temperature options with longer life cycles. Approximately 89% of communications survey respondents cite “Improved cost to develop/meeting cost reduction goals” as the primary reason for respondents’ organization obtaining embedded computer boards from third-party suppliers instead of building them in-house. Not surprisingly, approximately 56% of respondents cited “improved time-to-market/meeting time-to-market compression goals” as the second primary reason for using third-party embedded boards suppliers. VDC believes as communications companies focus on end-product design, features and functionality, more of these organizations will continue to seek outsourced components and boards that both lower overall costs as well as accelerate time-to-market. For example, Compal is a fast-growing original design manufacturer (ODM) based in Tawian with 40,000 employees across multiple worldwide locations. Compal manufactures diverse computing, networking and communications products, primarily for other firms (e.g., Juniper, NTT, HP, Dell, Motorola, etc.) Two of the most critical competitive advantages offered by firms such as Compal are (1) reducing operational lead times from weeks to days, and (2) lowering design and production costs because of the many economies of scale associated with the ODM business model.
Unit volumes will grow as FPGAs increasingly displace ASICs and other established technologies. With reduced non-recurring engineering (NRE) costs relative to ASICs, FPGAs will see increased volumes, especially as their overall prices come down.FPGA’s penetration into the DSP market space will continue to improve unit volumes too.A more recent development is the potential for penetration into the MCU space, now that low-end FPGAs are reaching reduced prices on the order of MCU prices. However, it is important to note that the price range between low-end FPGAs (typically $5-$15) and high-end FPGAs (can be over $10,000) is immense. So not all FPGA products are necessarily competitors in the MCU space.
If you have questions about this webcast, our research, or any other topics within the world of embedded software and tools technologies, please do not hesitate to contact us.Thank you for joining us today!