The incumbents

Posted: 02.18.14

I want all of mine and some of yours.

When markets have slow to negative growth, the only way a company can grow in them is to take market share from the other players. Consider the contests that are at work:

• ARM is by far the leading RISC processor designer serving the mobile and TV markets as the incumbent leader.

• Imagination technologies is the leading GPU IP provider serving the mobile and TV markets as the incumbent leader.

• ARM was to take Imagination’s GPU business away with their IP GPU core.

• Imagination wants to take away ARM’s processor business with their MIPS RISC processor. 

• Intel is by far the leading x86 processor manufacturer serving the PC and server markets as the incumbent leader. Somebody’s gonna get hurt cause things don’t stay the same.

• AMD wants to take away Intel’s x86 processor and server market position.

• Intel wants to take ARM’s processor business away with their micro x86 mobile Atom processor.

• ARM wants to take away Intel’s server market position with its 64-bit RISC processor.

• Qualcomm is by far the leading SOC processor manufacturer serving the mobile and TV markets as the incumbent leader.

• Apple is by far the most valuable brand in the mobile space.

• Qualcomm wants to take away Apple’s leadership position and empower all of Apple’s competitors.

• Nvidia is by far the leading PC GPU supplier and GPU compute provider.

• AMD wants to take away Nvidia’s PC GPU market position.

• Intel wants to take away Nvidia’s GPU compute market position.

• Nvidia is by far the most valuable GPU brand in the industry.

• Qualcomm was to take away Nvidia’s GPU status and block them from gaining any traction in the mobile market.

All the above companies with the exception of Apple have discovered the automobile market and want to take away Freescale and Fujitsu’s market position.

How can these sharks survive with all these sharks swimming around them?

Intel has to play their fab trump card and do to Qualcomm  and Samsung what it did to IBM, Oracle, and AMD, and deliver superior processors.. But  SoCs,  are different than high-margin server chip, and so even if Intel can build a better SoC, it has to make a profit while doing it, which isn’t all that easy in the SoC biz..Meanwhile Qualcomm has to look back at not just Intel, but MediaTek as well. This year, MediaTek plans to hire about 150 engineers, business development and marketing staff in the United States, adding to a 300-strong U.S. workforce, and plant them  in San Diego – guess what labor pool they hope to draw from. 

While that’s going on rumors continue to circulate about Google’s semiconductor interests, and then there’s Microsoft which is already building Xbox360 SoC.

It’s those damn numbers

When an industry starts selling over a billion units a year, everybody wants to get in on the action; especially when those billions of units cannibalize one’s base market. 

All these companies want to boost their share price, the execs and a few employees are compensated  with shares and so naturally they want to price to go up so they can buy Teslas and Ferraris. Also, if a company ever needs cash (to buy another company) they want their share price to be as high as possible. Share price is set by the Wall Street sharpshooters with their smart trading algorithms running at lightning speed on super computers and based on the forecasted growth the company. So no grow, no share price rise, no bonus, and no cheap acquisition deals.

And how do you grow faster in a market that is approaching GNP growth levels? You either steal the competition’s customers, or you acquire the competition.  You know what a blivet is right? 10-pounds of stuff in a 5-pound bag. Well an anti-blivet is getting 10 pounds of stuff out of a 5-pound bag.  Both cases are impossible, and so if you can’t get 10 customers out of 5 customer bag, then you take someone else’s customers.

Or….. you invent a totally new market, like smartwatches, or AR glasses, or …..

Just be careful when you go swimming in new waters, there are sharks everywhere.