Vol 15, Issue 44

October 29, 2001

Forecasts

By Max Baron

Many experts look upon the recent tragic events as more reasons to push improved-revenue forecasts further into the future. Their pessimistic starting point uses data that shows reduced sales and expectations for corporate and consumer products that are either already out on the shelf or in process of being developed and delivered to market. There seems to be an unstated premise that we should evaluate the future of the electronics business by predicting when "things are going to return to normal" and when life will continue as it did before.

But will life as we used to know it really reboot and return to its previous status? What will the industry do in the meantime? Should the industry, as some pundits suggest, try to survive by holding on to its key employees, spending as little as possible and hibernating until the warm sun of spring comes out?

I don't think so. I think the successful CEOs will look at the short-term scenario and its probable effect on the future. They will respond to the immediate need to help our country—a need that may turn into an opportunity to create new business directions or retarget products that, before September 11, 2001, were considered dormant.

A few examples may be in order. Security has become the "product of the hour," creating interest in biometrics, surveillance, smart cards, DNA identifiers, and many other devices that can help decrease potential threats to human life. Previously, security products were aimed at preventing theft of money, goods, and ideas—an important market but, volumewise, unimpressive. Recent events, however, have promoted this type of product to the importance level of health services and beyond. Security products need to run their application programs on desktops and other types of computing systems. Transceivers, digital video, audio, and still-imaging hardware are used in many of these applications. Servers are required to maintain authorization databases and to store accumulated status history.

Recent reductions in travel have reawakened interest in video conferencing and group collaboration over the Internet. Communications hardware and software—distance learning, audio-video streaming, shared whiteboard technologies, and others—that were left dormant for quite a while may now come into their own. The importance of quality-of-service (QoS) and virtual private networks (VPN) will escalate, as QoS and VPN provide quality and confidentiality of communication over the Internet. The distance-collaboration group of products requires desktop computers, servers, whiteboard digitizers, Internet connectivity hardware, video cameras, and real-time streaming services; use of these products will increase the need for more bandwidth in corporate networks.

The scare of dangerous envelopes in the mail will encourage increased use of email and facsimile, enlarging storage requirements at the office and creating penetration of more homes than before. Sales of computing platforms, inexpensive email terminals, printers, fax machines, and Internet connectivity may increase.

The sudden rise of companies in videoconferencing, DNA recognition, and security has occurred because people needed and purchased existing equipment quickly. The need will not soon disappear. New devices with more sophisticated specifications, and others with lower prices, will be welcome, as long as they are delivered in a timely fashion.

We must underscore the important difference between peacetime markets and the type of market we are seeing now. Until a few months ago, product introduction, customer acceptance, and volume sales followed a slow pattern. Many OEM designers budgeted for about 10–15 months of development and debug. The follow-on steps of productization, advertising, fabrication, and sales may have brought the total time from design start to solid revenue to about three years.

Recent events have changed the scenario: a sudden market has been created by new circumstances rather than by the introduction of new toys. People have new problems and require immediate solutions; they will respond quickly to their introduction. OEMs must now react in months instead of years. New products must be designed and tested quickly, a requirement that favors use of general-purpose and DSP computing platforms, FPGAs, and appropriate ASSPs. Existing products—such as desktops, servers, and cameras—must be retargeted into quick solutions to new problems. Microprocessors, DSPs, microcontrollers, FPGAs, and other complex semiconductor devices will be needed.

The new business scenario has not replaced the old one but superimposes on it a component the industry can and should act upon. There is a need for quick-turnaround solutions that solve and anticipate problems, that may even sacrifice low price for rapid time to market. And instead of complaining, some companies may want to leave the hibernation mode and investigate the current landscape.