VDC Research: Embedded Microprocessor, Board & Systems Market Blog

Alcatel Lucent and Radisys New Product Strategies to Drive Embedded Networking Shares

Yesterday’s  news of Alcatel-Lucent attempting to gain share of the lucrative Core Router market with the introduction of the 7950 routing system is making things interesting.  This new 7950 product line would be leveraging their market share in the edge routing market in order to compete with Cisco and Juniper for a share of the core market. The new 7950 system is claimed to have a 400 Gbps processor capable of handling 70,000 high definition video streams. While this capability is impressive it is also worth noting that it achieves this at a much lower rate of electrical power usage.

The question is whether this huge leap in capability and efficiency is enough to have the major telecoms consider a heterogeneous architecture with the new products coexisting with the incumbents or make the leap of faith to committing to the new Alcatel Lucent product line. No doubt Cisco and Juniper will have products in the pipeline as an answer but the timeline for these being released is uncertain.

One way that Cisco and Juniper can defend their shares is by developing the new products as backwards compatible with the installed base or, at a minimum to the system/backplane units being sold today. That is to say that the new blades/modules could be inserted in equipment/racks that their customers already own or are available today. Otherwise, a complete platform/architecture shift removes a barrier to entry for other companies like Alcate-Lucent. As an example,  we recently observed a new T-Series Radisys 40G ATCA platform introduction where they had employed a flexible compatibility strategy. From what I understood, their customers could introduce the new blades while not having to mothball the older ones until all the slots were filled.Until the new Radisys products shipped, their customers could continue to expand their systems without worry that they would be rapidly obsoleted.

As VDC begins its exciting new research project looking at the Rich Media & Big Data markets we expect that there will be many interesting findings and these recent and anticipated new product offerings certainly are evidence of that.

New VDC Research Program Will Provide Valuable Insights into Rich Media & Big Data in Embedded Systems

We wanted to let you know about an important new annual research program we are launching called The Voice of the Customer Series: Rich Media & Big Data in Embedded Systems. The series, which is based on extensive primary research of embedded vendors and intelligent system OEMs, will provide you with the information you need to formulate and implement a best-in-class strategy for addressing the issues around and opportunities arising from rich media content and big data.

We’ve designed the program to help engineering managers at large OEMs and the embedded technology vendors who provide them with critical products and services.   Engineering managers will get expert guidance and insight into best practices and trends in the development of embedded systems that create and manage rich media and big data, and the business opportunities these new systems are creating for them and their customers.  Technology vendors – including processor, board and software vendors – will get deep insight into the rapidly evolving needs, requirements, and selection criteria of their OEM customers who are developing systems that leverage rich media and big data.  Some of the issues we’ll be looking at during the next 12 months include:

• What underlying factors are driving rich media and big data in embedded systems, and how do OEM’s approaches vary?

• How are cloud services and analytics changing OEM business models and infrastructure investments?

• Which technology vendors are best positioned to support OEM’s rich media and big data projects and programs?

• How OEMs are enabling new functionality through embedded hardware?

Want to learn more? Click here to download the Research Outline.

Curtiss-Wright Controls Sharpens Focus

Curtiss-Wright Controls, parent company of Curtiss-Wright Controls Embedded Computing (CWCEC), announced on January 9 the formation of a new business unit, Curtiss-Wright Controls Defense Solutions (CWCDS). The new unit will incorporate both CWCEC and the firm’s former Electronic Systems unit. Ref. http://www.cwcdefense.com/media-center/press-release/50.htm

The ultimate parent company, Curtiss-Wright Corporation, was formed in 1929 through the union of fifteen companies affiliated with aviation pioneers Glenn Curtiss and Wilbur and Orville Wright. Today the firm, with annual sales exceeding US$ 2 billion, operates in three primary market segments: Flow Control, Motion Control and Metal Treatment. Defense-related products and services comprised approximately 40% of overall income, covered under the Motion Control segment.

Curtiss-Wright Controls, headquartered in Charlotte, NC, is the Motion Control segment of the overall company. Both the former Embedded Computing and Electronic Systems units were part of this group.

Curtiss-Wright Controls Embedded Computing (CWCEC) was formed in 2002 through the acquisition of certain assets of Lau Defense Systems. Over the next several years, CWCEC grew to be a powerhouse in the military/aerospace segment of embedded computing, particularly on the merchant boards side. Growth was both organic and via acquisition. Succeeding acquisitions included Collins Technologies, Peritek, Systran, Novatronics, Dy 4, Prima Graphics, Synergy Microsystems, Indal Technologies, Pentland and Vmetro asa.

Military, Aerospace and Defense has, historically, been not only a primary market for CWCEC but also one of the fastest growing and most stable segments for merchant computer boards, in particular. In 2010, this market segment accounted for US$ 694 Million in shipments; this is projected to increase to US$ 912 Million in 2013. CWCEC was the number one supplier of boards to this market segment, with a market share of substantially greater than 17%. GE Intelligent Platforms was number two, with a market share slightly above 14%.

However, the projected 131% 2010-2013 increase in Mil Aero board shipments is actually less than the projected shipment growth for boards in general – 153%. Even this may prove to be optimistic, if certain massive cuts proposed for the military budget are implemented. Therefore, suppliers to this segment should be pursuing aggressive marketing and customer service policies in order to grow not only market share but actual shipments as well.

The establishment of the new Defense Solutions business unit within Curtiss-Wright Controls will not only address these issues, but will also produce a larger, yet more nimble, operation. It will also provide a sharper focus to Curtiss-Wright’s embedded efforts, targeting bread-and-butter elements of the business and reducing distractions from less critical aspects of the business.

The Embedded Cloud – A Logistics Based M2M Solution to Many Worldwide Problems

As we read the news on an almost daily basis we see stories where counterfeit and/or inferior products are being sold to unsuspecting consumers and companies.  In other similar cases, the products are correct and/or close to what they should be with respect to quality and identity but their places of origin have been misrepresented. Then, we have the cases where products have been mishandled or contaminated but tracing them back to the sources is almost impossible or at least time consuming. Lastly, there are always concerns about the control, tracking, and inspection of cargo at ports of entry. So, in summary there are global concerns including health, safety, ecology, crime/fraud, and economics that could all be addressed by the embedded cloud.

In some industries like Pharmaceutical, there are new systems/solutions coming into play that use elements of machine to machine (M2M) Embedded Cloud connectivity. At present, what is lacking is a global, fully comprehensive system that tracks all types of products and materials from their sources all the way to where they are used in manufacturing/processing and/or sold to the end customer.

How would this comprehensive system work and how would M2M embedded cloud technology enable this? Let me show you a hypothetical solution that uses M2M connectivity in many cases aided by units we call Scalable Edge Nodes (SEN). The process would involve several steps as outlined below:

1.)    As a key to the whole process you would have to have a Global Certification Agency (GCA). This organization would have many standards for data tags, RFID, and Barcode as well as reporting units. This organization would be responsible for the tracking and reporting but the infrastructure could possibly be delegated and/or outsourced.

2.)    Next, you would have to have a source of certified RFID/Barcode tag products. These tags could be constructed in many ways to allow tamper detection and also include many sensing/detecting elements.

So, at the first stage, you have (GCA) certified manufacturers of these RFID / Barcode tag products and there would be M2M connectivity between the machines that manufacture the tags and the GCA to ensure each tag has a unique combination of RFID/Barcode serial number.

3.)    At this point in the process, the tag manufacturers then sell the tags to GCA certified suppliers of a given product. This transaction and the physical transfer of these tags would be tracked by the GCA. If the shipment of tags went astray, they would be revoked by the GCA.

4.)    The certified supplier of a given product wants to make a shipment and they register it with the GCA as being some quantity of a specific grade of product and link it with GCA certified tags/seals as appropriate.

5.)    Throughout the shipment process, each transportation/handling company would be certified by the GCA and have M2M connectivity to record scans of products as they pass. Coordinated systems between the RFID sensor tags on the products as well at the transport/storage systems would ensure proper handling and traceability through the system.

6.)    If, at some stage(s), the product is used by a manufacturer to make another product or divided by a distributor/retailer. In each case those entities would be registered by the GCA and have M2M connectivity and, if needed, new tags for their outgoing products.  The GCA would prevent or, at least flag cases where certified outgoing shipment of products exceeds the certified incoming products. The manufacturer, distributor, and/or retailer could also verify that the goods had not likely been damaged or had not deteriorated during transport.

7.)    Finally, the product makes its way to the end user / consumer.  They could scan or enter a bar code on the product and see many things. Where did their medicine or seafood product come from? Was it fresh/handled correctly? Is a product really 100% organic? Did it come from a sustainable “Green” ecologic source? Is the DVD or handbag they purchased legitimate or is it pirated / counterfeited? Is the wood in the chair really mahogany? Many, if not all of these questions could be answered with reasonable assurance.

Is this process possible? As mentioned previously, some industries such as Pharmaceutical have some ongoing efforts.  Even so, the market for these types of products/systems is extremely fragmented.  In other industries this type of M2M system is virtually non-existent. This is where scalable edge nodes could help de-fragment the industry by converting existing data formats/standards to the unified GCA standard that would be used in all markets. Then the markets can flourish based on a unified set of standards and systems.  In my opinion, a global unified M2M embedded cloud system is the only way this works.

In conclusion, the GCA system would allow competition with regards to the RFID/Barcode tags as well as the embedded computing and M2M sensing and transmitting / networking products. Product suppliers and logistics/transportation companies could also compete based on the extent and quality of their M2M systems. Would the globally unified GCA system be perfect? No, it still relies on the human element of someone certifying that a product or material they ship/sell has certain properties or attributes. The GCA system would, over time, allow the people that cheat to be identified and de-certified as well as in certain cases prosecuted. At the same time, the benefits to those who are in compliance would be extensive.

GE’s 4th Quarter: The Industrial Crystal Ball for Embedded Hardware in 2012?

General Electric released its 4^th Quarter 2011 earnings today. As many know, GE has grown from its humble beginnings in light bulbs to provide a spectrum of products from aircraft engines to financial services. While GE Intelligent Platforms makes embedded hardware, GE as a whole goes far beyond the world of embedded.  As a former GE engineer myself, I have seen firsthand the world-class technology GE brings to market. Since it is a global company with diverse industries, it is typically seen as a bell-weather indicator for the general economy that drives the vertical markets of the embedded industry.

So, what can we glean about the future of the embedded hardware markets from GE’s 4^th Quarter Earnings announcement?

First, off, CEO Jeff Immelt mentions “continued volatility for 2012” and restructuring GE’s business in Europe to match market conditions. Obviously, volatility is never a reassuring term. And the situation in Europe appears uncertain. VDC expects that this will mean fewer embedded hardware shipments to Europe, shifting the market share percentages towards the US and Asia-Pacific regions.

Total GE revenues for the quarter were $38 billion - down from many analysts’ expectations, and down 8% from the 4^th quarter of 2010. However, this was mostly due to the impact of GE’s sale of its majority stake in NBC Universal. GE is most likely making the right decision to focus on its core competency: industrial products.

But, GE’s global direction aside, what do their division results say for the future? Energy Infrastructure was up 16% Y-o-Y, which is promising. This energy infrastructure would have opportunities for a host of embedded processors, from smart grid applications to wind farms to gas power turbines. For GE, that meant $43.7 billion dollars in revenue. Lots of opportunities going forward assuming this kind of growth continues. Aviation and Healthcare were a more modest 7% growth Y-o-Y, but still over $18 billion in revenue for each segment. Surely there is some embedded hardware associated with that project revenue as well: microcontrollers into engine related equipment; CPUs, GPUs, and more into MRI, CT, X-ray, portable medical equipment, etc. Perhaps most impressive from a revenue growth perspective is Transportation: 45% Y-o-Y.  In 2009 and 2010, this segment posted revenue declines. 

What are the embedded hardware opportunities in transportation?  First, a closer look at what GE defines as Transportation.  This segment includes diesel locomotives, transit propulsion equipment, motorized wheels for off-highway vehicles, and a variety of other motor and system devices.  As the BRIC economies continue to expand, they are no doubt demanding a range of transportation technologies such as the ones GE offers, which all will likely require embedded hardware at some point in their deployment, so the opportunities for embedded hardware here are substantial.    

5 Keys to Winning and Holding Embedded Computer Share in the Semiconductor Test Market

With respect to Embedded Integrated Computer Systems (EICSs) the semiconductor test market has some unique attributes that may not be immediately obvious or logical to outsiders. The recent VDC report on EICSs used in the industrial automation market estimated 2010 revenues of ~$210 Million for semiconductor processing making it an attractive market to enter. Embedded computing suppliers that thrive here are likely to follow these 5 key rules.

Make it small: Floor space is at a premium in wafer fabrication/semiconductor test facilities. These facilities are often very carefully controlled for dust, static, electrical interference, vibration, temperature, and humidity and therefore represent some of the most expensive square footage in the industrial automation market with respect to operating costs. Computers that can be embedded inside or flexibly mounted to take advantage of available niches in test cells and or test equipment are well received.

Make it Fast: Reducing test times for a given device by even a few milliseconds or having the ability to test many devices in parallel are keys to winning the tester sale. EICSs in addition to deeply embedded Digital Signal Processing (DSP), Field Programmable Gate Arrays (FPGAs) and Application Specific Integrated Circuits (ASICs) are often used in high quantity to achieve this goal. It is important to remember that a semiconductor tester has to be faster than the state of the art devices it is testing. In this blog, I am focusing on EICSs but many of the 5 keys are applicable to deeply embedded computing components as well.

Make it easy/fast to service: Semiconductor testers are extremely expensive with it being quite easy for a well configured unit to cost several million dollars. Even so, the return on investment can be made in only a few weeks to the owner. Therefore, any downtime is very visible and Mean Time to Repair (MTTR) is expected to be in minutes, not hours. Suppliers should design EICSs to have very high reliability but also with easy to access mounts, enclosures, and internal components that allow them to be serviced while wearing a clean room suit and gloves.

Make a flexible configuration: The EICS that is required for a semiconductor tester varies depending on the role it is asked to perform. A production tester needs only a simple Human Machine Interface (HMI) but one that is used for test program development and debugging will need more memory depth and graphics capability to allow the engineer to see and manipulate test patterns as well as analyze the data that is captured while tests are run.

Make it exactly the same – for a long time: A semiconductor test platform will usually be actively sold for at least 5 years but often needs to be supported for at least 10 years and sometimes even longer. Once a tester platform is discontinued a market can develop for the used ones and, in some cases for them can be equal to or even exceeding their original factory price. This can happen when the demand for some legacy semiconductor devices becomes higher than expected. Once a test program has been written and specialized probe cards for wafers and/or interface boards for packaged device handlers have been designed it is extremely expensive process to move them to another tester platform.

Throughout the entire tester platform lifecycle, any changes in embedded computers can require that thousands of hours be spent to re-certify test programs and debug them if problems are seen. Faster computers will often be problematic if, for example, the programmer did not have enough settling time after an instrument was set up before making the measurement.
Changes to an EICS can also lead to increased inventory costs. Because of the MTTR concerns discussed earlier, caches of spare parts are stocked in globally dispersed warehouses and even right at customer sites to allow instant or very quick availability should a failure occur. Changes to an EICS can require multiple sets of slightly different inventory to be stocked.

In summary, a key to winning an embedded hardware product sale to a semiconductor tester company is being active in the design phase and then executing a commitment to provide a stable product through the entire tester product lifecycle. The surprise can be that a newer, faster, or cheaper EICS product will typically not unseat the incumbent unless the original supplier falters in one of the 5 key areas.

Chips Down in Mobile, Intel Ups the Ante in 2012 with its Medfield Platform

A stamp of approval from MIT’s Technology Review, the world’s oldest technology magazine, suggests smartphones based on Intel’s Medfield CPU may give us even more to celebrate in early 2012.  Having struggled for years to enter a mobile space dominated by ARM-based CPUs, Intel’s recent release of prototype reference designs, for Medfield-based smartphones and tablets, may lift the hopes of a market previously skeptical of x86-based smartphones / tablets.  According to Technology Review, Intel’s system-on-a-chip (SoC) Medfield CPU has enabled “a chip that can match and even surpass established mobile chips.”  

Intel’s Strong Push in Mobile 

Strategic investments by Intel in research, development, and production technologies have enabled Intel to achieve significant power savings with Medfield CPU – a relative weak point for Intel’s x86 CPUs – while preserving the strong processing capabilities upon which Intel has built a name.  The smartphone reference design demonstrates the effectiveness of Intel’s combination of the Medfield CPU with a PowerVR GPU (GMA 3600), with an eight megapixel camera able to capture 10 full-size images at a rate of 15 per second in “burst mode.”  The imaging and image processing capabilities enabled by the CPU are a big step ahead for Intel, which has struggled to match the advanced graphics of competitors NVIDIA and AMD. 

However, beyond competing with the power-efficiency and cost-savings enabled by ARM-based CPUs, Intel must also assure that its x86-based devices are supported by a strong software ecosystem.  A mobile device with an Intel CPU would be useless without a range of operating systems designed to take advantage of the unique strengths of Intel’s x86 hardware, and the support of developers ready to create software for these products.   Through acquisitions, partnerships and investments, Intel has developed a more robust software ecosystem to compete in the mobile environment – most notably through its 2009 acquisition of Wind River and its recent partnership with Google to optimize Android for x86 devices.

2012: Intel versus ARM

While Intel’s circulation of these prototype designs represents a significant milestone for a company that has struggled to prove its potential in mobile, Intel has a long road ahead before companies such as Qualcomm, Marvell, and Samsung will see it as a threat.  The companies’ substantial infrastructure, including strong supplier relationships, worldwide distribution networks, advanced manufacturing facilities, and financial capital comprise a solid base for this multi-billion dollar company.  Initial reports regarding Intel’s Medfield prototype alleviate many concerns VDC has expressed regarding Intel’s success in mobile markets.

However, even Intel’s substantial base of resources cannot compensate for the significant advantage ARM maintains with a more highly-developed mobile software ecosystem.  OEMs and developers have invested significant time and money into these ARM-based devices, and may thus prove reluctant to abandon this architecture.  Intel’s work with Google to optimize Android for x86 and investment in programs such as AppUp (a fund financing applications and content development) cannot completely compensate for the porting challenges developers may face in switching to any new system architecture. 

More than anything, this news regarding Intel’s Medfield prototype represents a strong signal to mobile contenders of Intel’s determination to compete in mobile markets.  VDC believes we will see a rocky and drawn-out adoption process for Medfield phones, but these advances by Intel will serve as a strong fuel for competition amongst mobile processor manufacturers.  Competition in any market is generally good for consumers, as it attracts either innovation or pressure to lower prices.  We see this as a long-term play for Intel, building the foundation for further growth in mobile markets and setting the stage for Intel’s future.

 

UAVs, the “Social Networks,” of the Defense Supplier World, Attract Heavy Investment in 2012

New generations of sensors, high-capacity data networks, and integrated digital technologies emerging in military & aerospace markets have assured strong, continued investment for unmanned aerial vehicle (UAV) technologies – even in the face of current budget cuts for the US Department of Defense.  Ranging from the sizeable, high-altitude Global Hawk and Predator Class UAVs to man-portable systems capable of launch by hand or bungee slingshot, this disruptive technology has reshaped military strategy around intelligence, surveillance, and reconnaissance (ISR) applications.  

Viewed as the “social networks” of the defense supplier world, VDC expects coming years will see strong growth in UAV-enabling technologies, as new and existing players expand their portfolio of solutions targeted at the domain.  Much as early social media sites (e.g. Facebook, Myspace) attracted an influx of companies into social networking, VDC believes that increasingly sophisticated, real-time ISR applications – combined with the seemingly ubiquitous media attention given to UAV solutions – will drive even more players in the military & aerospace markets to invest in advancing UAV technologies.  

• Piloted remotely or - increasingly - autonomously, UAVs require high-performance computational systems capable of analyzing large amounts of data in near real-time.
• Advanced image processing and rendering technologies, including hardware accelerators, enable these systems to handle more processing, exploitation, and dissemination (PED) of data on the UAV.  For example, rather than streaming all gathered data to command centers for analysis, advanced UAV systems are capable of mining through this data to identify frames containing specific features (ex. green truck).  As this technology improves, UAV image processing will be accelerated to allow enhanced real-time transmission and analysis of mission-critical information.
• VDC also expects UAVs to be a prime market for small form factor embedded technologies, enabling potential growth for smaller CPUs (i.e. ARM-based, Intel Atom) and active backplane form factors (i.e. Mobile-ITX, Pico-ITX, PC/104).

VDC will soon be publishing a study analyzing the commercial market for embedded integrated computer systems (EICS) market within the military & aerospace industry (“Military/Aerospace:  Volume 4, Track 3: Embedded Integrated Systems Supplier Analysis”).  In this report, our analysts more thoroughly outline current macro, technological, and industry-wide trends impacting the military & aerospace vertical, and how VDC sees the market evolving.

Will AMD's New Strategy Shake up the Semiconductor Market?

Likely fueled by a combination of the company’s recent manufacturing challenges, struggling profitability, shrinking market share, and the recent lay off of nearly 12% of the company’s workforce, AMD’s new CEO Rory Read appears intent to forge a more decisive, independent future for AMD. Although we will have to wait until February for AMD to publicly unveil the company’s new strategic direction, recent actions and announcements illuminate the depth of change we can expect to see from AMD in coming months. In a recent interview with Mercury News, company spokesman Mike Silverman explained: “we’re at an inflection point...We will all need to let go of the old ‘AMD versus Intel’ mind-set, because it won’t be about that anymore.” 

So, if AMD intends to divert attention away from competition with its archenemy in the x86 architecture space, we are left wondering what the future will hold for this multinational semiconductor player. While AMD’s core competencies and strong presence in x86 will likely preclude drastic measures such as adoption of the ARM architecture, VDC anticipates significant changes from AMD in coming years, such as: 

• Stronger investment in research and development of power-efficient CPUs to compete with ARM in the tablet, smartphone and other high-volume mobile device markets.
• Growing focus on the company’s higher-margin server business, which saw double-digit revenue growth in the past year.
• Potential exploration of the microserver market, optimizing its low-power CPUs to meet the needs of cloud-based companies such as Amazon or Twitter.
• Continued efforts to transition chip manufacturing from Global Foundries, a 2009 spin-off of AMD, to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest dedicated independent semiconductor foundry.  

For a company that has thus far appeared complacent playing second fiddle in markets dominated by Intel, developments such as these could truly represent the “inflection point” this Sunnyvale-based semiconductor company needs. VDC believes that while the degree of risk inherent in changes of this magnitude is indisputably high, these bold alterations to AMD strategy may finally set the company on a path to develop a strong and independent presence in the semiconductor market.  

Natural Disaster in Thailand Floods HDD Market with Disruptions in Both Supply and Demand

Severe flooding in Thailand has left players in the semiconductor market reeling as companies struggle to assess the full damages and impact of this natural disaster.   Thailand has developed into a strong base for hard disk drive (HDD) manufacturing companies.  Companies such as Western Digital, the leading player in the HDD market, lost significant inventory and supplies in plants affected by the floods.  These companies will also see significant long-term effects of the flooding, as factories and infrastructure may take years to fully rebuild.  Even companies not directly affected by the flooding, such as Seagate – the number two player behind Western Digital – project difficulty meeting increased demand levels due to disruptions across the HDD supply chain.  We will not have a clear understanding of these repercussions until the floodwaters begin to clear.

We also see the effects of this flooding reverberate across the market, affecting both suppliers and buyers of these IT peripheral manufacturing companies.  Suppliers are seeing reduced demand for their products and rising inventory levels.  Customers of these peripheral companies, such as Dell, Apple and Hewlett-Packard, have seen significant shortages in supplies and thus rising prices for these components.  

VDC expects the effects of this crisis to continue through the first half of 2012 before we see HDD manufacturers recover to pre-flood levels.  Until this time, we can expect to see shortages in the HDD market cause delays for companies producing devices that use this component.  Semiconductor companies outside of Taiwan – particularly in India and China – may see rising demand in coming months, as companies work to offset the limited supply available from Taiwan – these companies will likely increase production for the first half of 2012 to satisfy this demand.  

As with the tsunami in Japan, the local effects of the flooding have strongly impacted individuals and companies native to these areas.  These companies’ customers have been monitoring the flooding situation and continue to implement significant efforts to adapt business operations and financial projections.  However, even as we expect HDD manufacturers and affected markets to rebound more effectively in mid to late 2012, the lingering impact of the recession will likely suppress overall market growth in 2012 as affected regions gradually return to normal supply and demand run rates.