Help, I’m shrinking . . .

Posted: 05.22.06

witchIf the markets we serve continue to consolidate I may have to go to work for a living—gack! What company would have me? I’m old, cranky, have an inflated opinion of my worth, and I’m hard to manage—hmmm, except for the old part, I guess I’m like most folks in SiVal.

In the last 12 months we’ve watched our four markets (PC, Handhelds, Workstations, CE) shrink in the number of suppliers.

In the PC graphics sector we’ve watched 3Dlabs shut down and the stragglers join Nvidia, and XGI be split up with parts of it going to ATI and SiS.

We saw the workstation and big-iron graphics space move E&S’s simulation group to Rockwell Collins, SGI file for bankruptcy, Sun stop shining, and IBM all but run out of the workstation space.

We went from eight or nine, depending on how you counted, CPU manufacturers to four (AMD, IBM, Intel, and VIA).

Handheld suppliers like Bitboys have been swallowed up by ATI, Alpha-Mosaic has been assimilated by Broadcom, Atsana got gobbled up by Mtekvision, and two others are in process that we can’t tell you about yet.

Are there any game companies left besides EA and UbiSoft? Yves Gullemot says he doesn’t think the consolidation is over yet.

And then you get the rumors. Sony is buying Nvidia, Nvidia is buying AMD, Intel is buying ATI, Toshiba is buying ARC, JPR is buying IDC, will it ever stop?

Market consolidation is natural; look at any other industry. It wasn’t too long ago that there were over 100 car manufacturers, and today there are fewer than 30 (depending on how you count).

We live and work in a relatively new industry. Our consolidations are just happening, and more are coming.

But, new companies always spring up. Cost of entry can be mitigated by producing a niche product, like an electric car, or a specialized processor. There isn’t any lack of imagination, and the consolidation actually exposes opportunities.

So consolidation may feel bad, and it certainly hurts some who are made redundant, while making others rich who get to sell their shares, but overall it’s good for the industry, at least an innovative industry like this one that has more imaginative engineer entrepreneurs per square hector than anyplace (although Taiwan would be a big challenger for the title).