A View from the Height


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Throughout the pages of this magazine our editors bring you the latest technology and products to help make your embedded computer decisions easier and more effective. We provide the technological details, product features and benefits and applicability to specialized requirements to help you evaluate where you’re going. And, over the past year or so, we’ve seen dramatic changes driven by fundamental developments in the technology, shifts in the requirements of the marketplace and new and exciting trade-offs in power, size and performance.

In this small corner of the book, I try and provide some of the backdrop and rationale of what makes the rest of the business work. For one view we look from the 10,000-foot level and examine the changes in the application areas. Certainly the economy, political environment and sociological events bring new dimensions to our industry. We try and identify burgeoning opportunities in everything from food safety and health care to advanced productivity tools in industrial control and automation.

For example, last issue we discussed some technology ramifications of the Stimulus Bill recently passed by Congress. In health care,  funds (more than $19 billion) for health-information technology, essentially E-records, are likely to be a boon to a variety of embedded computer makers.

Following that rabbit down the hole a bit, it seems that at least some of that largesse will find its way into the hands of big companies such as General Electric, IBM and even Intel. However, several smaller players are now gearing up as they see multiple opportunities for data acquisition, management, portable/mobile devices and bedside/office monitoring and storage equipment. And, we can expect much of this equipment to carry relatively high ASPs as it will likely have to have the blessing of the FDA.

There’s a lot to be done. According to a survey by the recently named Coordinator for Health Information Technology—a new position from the Obama administration—only 1.5% of hospitals have adopted what the survey defines as a comprehensive hospital-wide system. But even more significantly, only 9% of U.S. hospitals have electronic health records at all. Cost was the most commonly mentioned barrier to the adoption of such systems, opening the door for the economic stimulus package money.

Basic Technology Developments

Still at the 10,000-foot level, we look at basic technology developments such as semiconductor process developments, advances in packaging, and materials that impact new products at the most fundamental levels. While we don’t tunnel down into the basic physics of these advances, we look at how some sea changes will affect applications areas. For example, Intel’s latest 32nm process (which the company is currently holding tightly under wraps), will undoubtedly bring a new generation of low-power, compact embedded computers to the scene.

While much of the current development is under strict non-disclosure by Intel, indications are that new lower-power versions of its recently released Atom will reduce power and heat generation by at least another order of magnitude. The result will unleash 32-bit processing power to the embedded community at new levels of price, performance and power efficiency.

And finally, we try to bring relevance to the market by looking at indicators that may impact the business in general. We look at supply lines and business health of materials and components—from semiconductors and connectors to PCB deliveries—critical to fabrication of many systems. These provide a snapshot of where the industry has been and in some cases, where it’s going.

In that regard, we looked at a study from Longbow Research that examined the EMS market in North America and Europe and saw that both January and February posted declines in the low to mid single digits in contrast to the historical data from the past three years that posted sequential increases of a similar or greater magnitude.
Not surprisingly the study looked at sales by end market where defense and medical (excluding large devices) remained stable while other segments of the market were flat to soft. It reports the telecom market weakened somewhat while industrial and automotive markets were very soft. An interesting statistic is that the consolidated (rigid and flexible PCBs) three month average book-to-bill fell to 0.89 in January—with shipments off 17% year over year.

Stimulus Dollars for Broadband Development

Stimulus money is still some distance from reaching firms providing broadband service, but already companies are facing off on how the services should be expanded. While it seems that there is agreement that stimulus money should be used for extending broadband to “unserved areas,” there is disagreement with the definition of unserved and how it differs from underserved. That difference could be critical in deciding who gets stimulus money and who doesn’t.

Midsize phone companies and others argue that some stimulus money should be spent on new Internet lines in areas that already have service. On the other hand, established broadband providers are worried that the government will give money to smaller competitors looking to build new and potentially faster service in markets that already have some broadband—thereby giving them a leg up on those traditional suppliers. Decisions on rules for granting the money are to be made soon and these decisions could impact technologies such as the emerging Wi-Fi. Exactly how the money is allocated will also likely affect a variety of embedded computer suppliers that sell into different broadband markets.

Headlines Impacting the Industry

Cisco Targets Data Centers: Cisco plans to begin making computers aimed at data centers looking for a turf war with rivals IBM and HP—and possibly Dell. It is reported that businesses will spend about $100 billion on data centers in 2009 according to analysts firm IDC. Cisco hopes to aim at some 25% of that with its Intel-processor-based blade servers. More as it’s available.

Sun Microsystems’ Final Chapter? According to sources, Sun has been shopping itself over the past several months and may have found a suitor in IBM. Intel President, Paul Otellini, in a talk to employees recently indicated that Sun “was shopped around the Valley and around the world in the last few months.” Was there an implication there that Intel might have been considered a possible suitor?

IBM Cuts U.S. Jobs, Expands in India: If you’ve been watching the news, you’ve probably seen that Big Blue’s latest employment initiative flies in the face of the new administration’s goal of keeping jobs in the U.S. The company is dropping almost 5,000 jobs in the U.S.—transferring many of those jobs to India. IBM has continued its current trend increasing the number of employees working abroad from 65% in 2006 to 71% now. IBM employs some 400,000 workers. Many of the jobs lost will be from the global business services unit. And while that doesn’t immediately affect the embedded computer industry, it sure indicates that nothing is sacred. Add to that the administration’s recent move to restrict employment of foreign professionals in the U.S., and it leaves the message that outsourcing may be the most practical solution.

Chip Makers in the News: Intel continues to reap its share of headlines this month as the latest version of the company’s Xeon family of server chips, code named Nehalem, will be brought out just before this goes to press. This entry is expected to be at the heart of the new breed of Cisco servers entering the market. But most of the other big server makers are also expected to make announcements when the chip is formally introduced.
In other Intel news, the company will be entering into a “strategic” collaboration with, of all companies, TSMC—a System-on-Chip maker and a very different kind of semi company from Intel. The collaboration allows TSMC to make chips that combine the circuitry of the Atom processor with other circuits. Intel hopes to get a leg up in the cell phone market and other embedded computer applications this way in order for it to diversify from the computer industry.

This may also be Intel’s foray into a wide range of products Intel calls MIDs (Mobile Internet Devices). Back several months ago, and again at an investor meeting late last month, Intel CEO Otellini said the company plans to more aggressively pursue a lot of SoC business. TSMC makes a variety of highly integrated chips for such companies as TI, Qualcomm and Broadcom.

And Intel’s largest adversary, AMD, has formally named the spinoff of its manufacturing capability calling itself Globalfoundries. The new company, backed by investors from Abu Dhabi, is based in Silicon Valley and continues to manufacture at other facilities here and abroad. AMD has retained about 34% of the new company, which is starting off with 3,000 former AMD employees. Reduced demand from a glut of manufacturing capacity due to the worldwide recession may have it off to a rocky start. In other AMD news, former 3Com Chief Executive Bruce Claflin has been named AMD chairman.

IGP Market to Disappear by 2012: JPR (Jon Peddie Research), a consulting firm for graphics and multimedia, completed a study that indicates the end of the market for the popular integrated graphics processor chipset, IGP. The study says that in 2008, 67% of graphics chips shipped were IGPs. In 2011, the company says it will drop to 20% and by 2013 down to less than one percent.

The study goes on to say that market shares will shift as suppliers of IGPs such as AMD, Intel, Nvidia, SiS and VIA find the opportunities for chipsets diminishing and will seek to develop new products that take advantage of their specific strengths. Evidence of that already is appearing as Nvidia strengthens its high-end offerings with development tools, and on the mobile side has introduced the Tegra platform, which relies on an ARM processor and Nvidia graphics. Also, AMD is going head-to-head with  Intel with its Fusion and embedded graphics CPU—yet still not giving up its plans for strategic markets such as netbooks.

All in all, it’s been a busy month. And I’d be remiss not to pass on—if you somehow missed it—that Bill Gates has regained his crown as the richest man in the world.