Here Today, (Maybe) Gone Tomorrow

Since this is Microprocessor Report, I'll take the position that the microprocessor is the most important component of every system design. This implies that a system designer must perform extensive due diligence on a short list of processors. There are three fundamental questions every system designer should ask before making the ultimate decision. First, will the processor fulfill the needs of the application? Second, will the processor be available in the future? Third, will the processor vendor be around in the long-term, or even short-term, future to develop successors, ensuring the application's ability to evolve?

The answer to the first question is easy, because it represents a quantitative process that's performed using a thorough technical analysis, an evaluation of benchmark results, and a reading of user manuals. The other two questions pose more serious challenges for any system designer, because their answers could mean life or death for a product.

Will the processor and the processor vendor be around in the future? The importance of these questions has grown to enormous proportions during the past few years, owing to the volatile economy in the high-tech industry. Many large, stable processor vendors have struggled to maintain profits, while many smaller vendors have literally disintegrated. A good case in point is Lexra. A few months ago, we published an article on Lexra's new and interesting multithreaded processor technology. (See MPR 11/25/02-03, "Tying Up a MIPS32 Processor With Threads.") Lexra claimed customers were on the way, but in the next couple of months the company disintegrated so extensively that Lexra's Internet domain is now up for sale. That's bad news for any customers that may have locked the new Lexra processor into their designs.

BOPS has a similar fate to Lexra. Likewise, TriMedia recently expired, although that company had been flailing for several years. Fortunately, TriMedia's parent company, Philips Semiconductors, has taken the technology back in house, presumably to provide continued support to licensees such as National Semiconductor. Another example of a deceased company and technology is Chromatic, which had a decent architecture. Before it failed, Chromatic had approximately 250 people working on software support for two to three years.

Obviously, this is a short list of processor companies that have met their demise; it doesn't even include the vanished hordes of network processor companies. It's sad to watch these companies fail, especially for the hopeful employees that are thrown out of work. Their customers are often hurt, too. All the positive attributes of a processor are worthless when the vendor vanishes after its processor has been designed into the customer's product. There's not much one can demand from a bankrupt company.

Of course every company has its fluctuations. Even processor giants such as Intel, Motorola, and Texas Instruments (to name but three) sometimes have delivery problems or even decide to cancel a product. Large companies may also be plagued with inflexibility, making it more difficult to change directions on a product definition for the benefit of a single customer. On the other hand, most large and successful processor companies have spent enormous amounts of time and energy establishing and maintaining corporate-level relationships to help make customers feel cared for.

The small processor vendors that are smart and successful are those that recognize, appreciate, and cherish customer relationships. If their entire customer relationship were based solely on technological superiority, it is definitely more at risk than a relationship having the proper balance. True, some companies become successful purely on technology, but the ones that have survived over the years have also evolved into dedicated marketing machines. Long-term differentiation is based not on continued technology delivery alone but also derives from product branding, customer experience, and far-reaching distribution channels.

What can you do to minimize the risk to your company's future if you select a processor from a small vendor? First, let's establish the most probable reason for even considering a small vendor. Simply put, unique processor technology may allow the rewards to outweigh the risks: the unique technology may be the necessary ingredient to give your product the competitive advantage. In addition, small vendors can occasionally do things established companies cannot do; there's an advantage to not having an established infrastructure. Furthermore, if you're not a top-tier customer, the large processor vendor may be unable to provide the attention and hand-holding you need to bring your product to market.

Although we advise caution, we believe there will be small processor vendors that beat the odds; however, time is needed to tell the whole story. Improv Systems may be an example. The company recently closed another round of funding, obtaining enough cash to support itself for the next 18 months (perhaps enough time to outlast the recession). In general, any startup must publicly announce solid design wins to make it easier to prove their momentum and long-term viability. Although it may appear obvious, take advantage of leading-edge technology by exploring opportunities with small vendors, but watch your step.