The Future of the Embedded Hardware & Systems Market


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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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  • VDC Research Group (VDC) provides exceptionally detailed direct-contact primary market research and consulting services to many of the world's largest technology suppliers, innovative start-ups and leading investors.
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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!
  • The Future of the Embedded Hardware & Systems Market

    1. 1. Embedded Hardware & Systems Practice Christopher Rommel – Vice President QuickCast The Future of the Embedded HardwareDecember 2011 & Systems Market © 2012 VDC Research QuickCast Embedded Hardware &
    2. 2. Recording Available A full audio recording is available for download at: © 2012 VDC Research QuickCast Embedded Hardware &
    3. 3. About Us Market Intelligence for Technology Vendors & Investors  Direct-Contact Primary Market Research  Deeply Segmented Data  Expert Insights  Validated Results Custom Consulting Services for Your Most Critical Business Decisions  Research-Based Consulting  Transparent Tools & Methodology o Highly Customized Survey Guides & Output Templates o Sophisticated Market Estimate & Forecast Models o Detailed, Flexible Stakeholder Maps & Profiles o Industry Development Scenarios o Market Opportunity Fit Screening, Rating & Ranking © 2012 VDC Research QuickCast Embedded Hardware &
    4. 4. Our Core Coverage Areas AutoID & Transaction Automation Embedded Hardware & Systems Mobile & Wireless Industrial Automation & Control Embedded Software & Tools Emerging Technologies © 2012 VDC Research QuickCast Embedded Hardware &
    5. 5. Ways to Work With UsOur syndicated research is the basis for the many ways VDC can help you grow your business. We offer a wide variety of services designed to meetspecific tactical and strategic decision support needs. All of our services are built on a foundation of highly skilled professionals applying robustmethodologies to VDC’s large and continuously refreshed datasets. © 2012 VDC Research QuickCast Embedded Hardware & Systems
    6. 6. Today’s Speaker Chris Rommel Vice President, Embedded Software & Hardware Chris is responsible for syndicated research and consulting engagements focused on embedded software, hardware, and development solutions. He has worked with wide variety of clients supporting a range of projects including competitive analyses, strategic marketing initiative support, ecosystem development strategies, and vertical market opportunity assessments. Chris’s prior research also includes studies on multicore components and tools, operating systems, software development tools, and software/system lifecycle management tools, among others. Chris holds a B.A. in Business Economics and a B.A. in Public and Private Sector Organization from Brown University.For complimentary insights and marketing data: © 2012 VDC Research QuickCast Embedded Hardware & Systems
    7. 7. Outsourcing & Fab Houses Drive More Interest in Full System Solutions Primary Reasons for Obtaining Embedded Computer Boards  More organizations from Third-Party Suppliers (% of Communications respondents identifying) seeking outsourced components and boards to lower overall 89% costs and accelerateImproved cost to develop / meeting cost reduction goals time-to-market 56% Improved time to market/ meeting time to market  We expect more board compression goals 40% suppliers to look to Change in strategy / developing the platforms no extend bundled longer a differentiator 36% service and software Specific customer request or requirement offerings in order 35% to maintain value Reorganization / staff reduction proposition 21% Other competitive pressures 3% None of the above / dont know 0% 20% 40% 60% 80% 100% © 2012 VDC Research QuickCast Embedded Hardware & Systems
    8. 8. Product / Service Elements of Cloud DeploymentsEmbedded cloud market footprint is much broader than SEN … offering many avenues for growthWhich of the Following Product / Service Elements What are your main reasons for selecting software Were Included in Your Cloud Deployment? bundled on a local host platform – the SEN? (% of IT end user respondents identifying) (% of IT end-user respondents identifying) Don’t Know 33% 8% Application requires local SEN redundant/backup points of control 14% Saas 29% 34% Customer requirement 28% Application requires a local host Turnkey point of control 21% Cloud 15% Company policy requirement 14% Software Regulatory requirement & Service Bundles 13% 29% Dont knowSaaS = Software only 0% 10% 20% 30% 40%Software & Services Bundles = Software & IT Management Services onlySEN = Software & Local Hardware Platform onlyTurnkey Cloud = Software, Hardware & IT Management Services © 2012 VDC Research QuickCast Embedded Hardware & Systems
    9. 9. Programmable Logic Becomes Competitive in MCU-class Devices Total Market, FPGAs in Embedded Applications, 2009-2014 (Millions of Units)  FPGAs are increasingly displacing ASICs and 45 other established technologies 40  Some low-end FPGAs 35 are now reaching reduced prices on the 30 order of MCU prices 25 20 15 10 5 0 2009 2010 2011 2012 2013 20142009-2014 CAGR: 17% © 2012 VDC Research QuickCast Embedded Hardware & Systems
    10. 10. ARM Expands Beyond Deeply Embedded Systems ARM was once relegated to deeply embedded markets More board and systems vendors are being driven to evaluate new architectures that offer greater power efficiency The adoption of ARM can have significant impact on other the components selected for the target systems © 2012 VDC Research QuickCast Embedded Hardware & Systems
    11. 11. 2012 Research ProgramsEmbedded Hardware & Systems Market Intelligence Service FastForward: Insights for Leaders Embedded COTS Systems o Volume 1: Generating Revenue from Embedded o Volume 1: North America Cloud Enablement Services o Volume 2: European Union o Volume 2: CleanTech: The Next Big Opportunity in Embedded? o Emerging Technologies & Critical Trends o Volume 3: TBA o Volume 1: Embedded Systems Integration Services o Volume 4: TBA o Volume 2: Migrating to the Embedded Cloud Embedded Processing Technologies o Volume 1: Microcontroller Units (MCUs) o Volume 2: DSPs, GPUs & Media Processors o Volume 3: Mobile Processing Platforms & SoCs o Volume 4: PLDs & FPGAs o Volume 5: Aggregate © 2012 VDC Research QuickCast Embedded Hardware & Systems
    12. 12. Thank You for Attending this VDC QuickCast.For more information please contact: Christopher Rommel – Vice President | 508.653.9000 x123 Bob Perugini – Account Director | 508.653.9000 x143For complimentary insights and marketing data: © 2012 VDC Research QuickCast Embedded Hardware & Systems