The semiconductor industry is ever changing and is not for the faint hearted. If we holistically look at the changing market dynamics, there are three emerging realities that operate in today’s semiconductor industry.
Firstly, there is a higher demand on power consumption by mobile devices. Today’s hand-held smartphones are magnitudes higher in computing power than high end minicomputers from just two decades ago. Higher performance in a pocket sized form factor places huge demands on efficient power management in chips powering today’s smart phones.
Second, the role of semiconductor firms and OEMs has expanded beyond just providing microprocessors. Clients today want OEMs to manufacture fully featured devices with accompanying software that can be white labeled.
Lastly, the demand for fully featured white labeled mobile devices puts pressure on semiconductor firms to have a deep understanding of several geographical markets and their own unique consumer nuances and insights to enable them to manufacture products that will generate significant consumer traction.
These market demands are causing five key market trends to emerge:-
1. Commoditization: Innovation in the entire mobile ecosystem is essential to avoid commoditization of mobile devices. Standalone devices are themselves “dumb”, but a full ecosystem of content, apps and interoperability is the game changer.
2. Tablets: Apple created a new market for tablets with the iPad. Samsung followed soon after. Tablet sales will soon exceed PC sales. A coherent tablet strategy is essential to succeed for any semiconductor company.
3. Four Screens: Content and apps are not consumed on a single screen any more. More often than not, the experience continues from PC to smart phone to TV to automobiles and even wearable devices. The trend is clearly out there and semiconductor companies must essentially decide on their device and application strategy in the context of four screens to succeed.
4. Enterprise Mobility: Mobility is not just limited to the consumer space any more. More and more business applications are embracing the reality of ever connected and powerful mobile devices in the hands of their employees and customers. Consequently, IT budgets across most large companies are shifting from being hardware focused to being centered on solutions to leverage this key trend.
5. Application Development: Mobile platforms are fiercely competing with each other, and most trends indicate that even after consolidation, there will be 2-3 key platforms that will co-exist in the end. There is a significant push from platform owners to have a large app ecosystem to make the platform attractive; from application developers’ side too, there is a clear need to develop apps to serve every large mobile platform.
The winner, in the end, will be the one who clearly understands the market dynamics in this industry, and is able to move fast by partnering with an entity who shares the same level of understanding of the market and emerging consumer and business trends.
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