VDC Research: Embedded Microprocessor, Board & Systems Market Blog

VDC Research has a fresh look!

VDC Research has a fresh look! Come check out our new and improved IoT & Embedded Technology blog at http://www.vdcresearch.com/News-events/iot-blog/

IoT Forcing Embedded Boards and Systems Vendors to Adapt to Survive

Emerging embedded hardware requirements are stirring up competition for motherboards and integrated systems while driving demand for more IoT-related systems integration services.

The global markets for embedded boards and integrated computer systems will see growing competition over the next five years, according to a new report by VDC Research (click here to learn more). The embedded hardware space is vast, continually evolving, and extremely fragmented with larger organizations often supplying several different board and/or system form factors as well as potentially a variety of SKUs featuring different configurations thereof. Systems integration services, in turn, are benefiting from the growing complexity of modern (connected) embedded systems and are seeing greater use for IoT designs.

“Complacency now will seriously hamstring the long-term development and growth potential for all embedded hardware players,” says VDC analyst Daniel Mandell. “Ramping requirements for processing performance, footprint, and scalability are forcing embedded hardware suppliers to adapt and adopt to new product form factors such as MicroATX, VPX, and xITX. Some more mature hardware form factors like ATCA will continue to see slight growth through the next five years, though new organic revenue generating opportunities for incumbent suppliers will be scarce and increasingly challenged by alternative architectures.”

For small-form-factor embedded systems, computer-on-modules (COMs) have emerged as a convenient solution for enabling cost-effective hardware flexibility. While a variety of COM standards have fragmented the market, some form factors such as COM Express and Qseven are expected to see strong market growth. Kontron is the longstanding frontrunner of the embedded COMs space, having pioneered the concept. Unlike COMs, the global market for PC/104 family modules is expected to remain relatively stagnant through the next five years as suppliers look to adopt newer and more heterogeneous form factors like EPIC.

The market share leaders for embedded integrated systems have focused their recent acquisitions and collaborations on facilitating software development and enabling broader industry application support. The potential acquisition of EMC Corporation by Dell could produce a new leader in the embedded integrated systems market. HP Enterprise has made some dramatic acquisitions in 2015 to expand its portfolio of LAN offerings and help its customers transition to hybrid cloud environments. To remain competitive with new and traditional market players, embedded systems suppliers must bolster their support and development offerings for more of the solution stack.

Online Resources: VDC's Embedded Boards, Integrated Systems, and Systems Integration Services Research Program - Learn About The Research Program

IoT Market Complexity Demands Buyer Personas

The complexity of the market for IoT products and services creates enormous challenges for the IoT solution marketer. An unlimited set of applications, a complex ecosystem of partners and channels, a wide range of decision makers and influencers, and a continuously changing competitive set can leave the marketer forever chasing his tail. Critical decisions about the content, placement, and timing of marketing messages become extraordinarily difficult in the face of these complex and dynamic conditions. 

Observing these challenges, VDC undertook a disciplined search for tools and methods that could help IoT marketers think and act more strategically, and achieve better results. Given how critical content marketing is in the IoT space, we focused on identifying tools and methods that would improve digital marketing effectiveness, defined as improving lead generation in terms of both lead quantity and lead quality. The tool we identified as being the most valuable – when deployed correctly – was the buyer persona.

Download our new whitepaper on the benefit of buyer personas for IoT marketers to learn more about they can help your company supercharge its marketing, sales, product development, and customer service.

 

IoT Gateways Paving the Way for New Corporate Relationships

IoT gateways are not only connecting device and sensor networks, they are also accelerating the development of a broad variety of new corporate partnerships and collaborations between hardware suppliers and ISVs, OEMs, MNOs, solution/service providers, and others throughout the broader IoT ecosystem. The past several months have seen a flurry of activity among gateway technology providers of all sizes looking to augment their own portfolios with more functionality, integration support, industry-specific capabilities, and more. The gateway device class will continue to be a critical element of IoT solutions and enabling new channels of distribution for hardware, software, and service providers looking to enter the space.

One example of the newfound relationships being established between IoT gateway vendors and connectivity service providers includes Eurotech’s recent partnership with Arkessa in August 2015. The partnership helps facilitate the development of cellular IoT solutions by adding managed connectivity services to Eurotech’s gateways, hardware, and supporting software platforms using Arkessa’s global multi-network cellular and satellite services. Several other gateway hardware suppliers are taking a similar approach to expanding their regional market addressability through broader cellular network support – the most supported wireless connectivity technology among IoT and intelligent gateways being shipped today.

Arrow Electronics, a leading global distributor and provider of value-added services to electronic components and computer products, teamed up with NetComm Wireless, a global developer of M2M devices and gateway systems, in September 2015 to launch the first phase of its new Arrow Intelligent Services framework. The new framework, which represents a first venture for Arrow Electronics from its traditional product offerings and engineering services, looks to simplify and expedite IoT deployments worldwide with edge-to-enterprise integration using standard web services and APIs. Arrow Intelligent Gateways, the first part of the new framework providing off-the-shelf management capabilities for a number of product categories, will help normalize configuration and management of NetComm Wireless’ devices.

The IoT is largely about connecting and integrating hardware with new software platforms and services. Establishing end-to-end IoT solutions will continue to require a variety of new corporate relationships. Gateways have become a fundamental part of the IoT solution stack and establishing connections with these vendors will be critical to the success of new connected products and offerings.

To learn more about VDC Research’s recently published report on the IoT & Intelligent Gateways Market, see our Executive Brief here.

Community Development Critical for IoT Success

The IoT has democratized product engineering and innovation. Increasing device connectivity and open APIs are enabling new types of organizations and developers to innovate in a world previously confined to engineers with highly specialized skill sets. While the traditional embedded ecosystem and its engineers will remain at the heart of the IoT device movement, this new cadre of potential developers and entrepreneurs comprise an important part of the creative base designing future IoT systems.

And from giant conferences to local maker fairs, the technology ecosystem has recognized the importance fostering the growth of this “citizen developer” community. In fact, VDC is involved in an upcoming developer tournament focused catalyzing innovation for the IoT – the Global Mobile Innovators Tournament. I will be serving as one of the judges evaluating submissions.

What is the Global Mobile Innovators Tournament?

IBM, 4YFN (4 Years From Now) and four global telecommunications companies have joined forces to bring you the Global Mobile Innovators Tournament (www.glovators.io). In a worldwide global effort to foster innovation in technology, this tournament empowers developers and startups to create mobile and cloud applications that provide innovative solutions for how businesses and individuals operate and interact with the world around them.

Centered around three Internet of Things topics, the tournament includes fifteen virtual challenges and five regional demo days, culminating with a grand finale on stage at the 4YFN (“four years from now”) conference in Barcelona in February 2016 (http://www.4yfn.com/landing/attend.html). 4YFN, the global conference for mobile innovators, is affiliated with the Mobile World Congress, which takes places concurrently in Barcelona.

This tournament runs on Bluemix (https://console.ng.bluemix.net/home/), IBM’s platform as a service software. The tournament fosters industry innovation, world-class skill development, and mentorship programs for developers and entrepreneurs.

Registration opened on September 16 for the virtual challenges that kick off the Tournament. Demo days will happen December 9^th – January 20^th and winners will be announced February 22-24^th at 4YFN 2016.

Please let me know if you have any questions about how to participate.

Embedded Processor IP Leaders Laying the IoT Foundation

In an effort to foster widespread adoption of their respective architectures and IP, leading embedded processor technology providers have been steadily building IoT-focused development platforms for their engineering ecosystems. ARM, Intel, and Imagination Technologies market comprehensive platforms focused on facilitating interoperability, software development, and security. Each organization is expanding on their development support and embedded hardware and software offerings in an effort to promote the reach of their respective core architectures. Despite some overlap, these leading embedded processor core architecture providers have actually embarked on fairly different paths for the IoT.

ARM’s mbed platform looks to bring simplicity and control to those wanting access to the IoT through its industry-leading Cortex-M IP. ARM is enlisting the market leadership of its MCU-based architectures as the base of its IoT expansion. In this way, ARM is selling itself as the convenient, low-power processing solution for IoT systems and further arming those who already use its processor IP with development tools and software stack components to facilitate creating end-to-end solutions. The mbed platform currently consists of ARM’s mbed OS, mbed Device Server, and mbed developer community. Moving forward, ARM is looking to expand its mbed ecosystem and its pool of cloud partners, OEMs, ODMs, system integrators, and silicon partners. Considering ARM’s leadership across several high-volume MCU markets and its strong developer community backed by leading embedded processor supplier partners, the company is in a very strong position to maintain its leadership in small footprint systems and mobile/portable devices through evolving connected hardware requirements.

Intel’s IoT Platform, on the other hand, is more malleable and not quite as grounded in one processor family or footprint. Intel’s platform is essentially an end-to-end IoT solution reference model supported by Intel’s processor families (e.g. Quark, Atom, Core), software from its McAfee and Wind River assets, and pre-integrated third-party solutions.  Intel has also made available IoT Gateway Development Kits – the DK50, DK100, DK200, and DK300 series – targeting a variety of leading connected industries with different hardware profiles. These development kits all come with fully-configured compute boards, wireless communication capabilities (with support for cellular, ZigBee, Wi-Fi, Bluetooth, and more), security, manageability, operating systems, and development tool sets. Further, Intel has also established the IoT Solutions Alliance, which now consists of more than 400 members, in order to promote IoT development and integration with Intel architectures. Intel is thus looking to expand usage of its architecture by offering more diversity to customers seeking to connect to the IoT.

Imagination Technologies’ Connected Processor IP Platform combines three individual products/components: Ensigma, Flowcloud, and MIPS processing. Ensigma is a set of communications and networking IP focused around radio processing and security. Flowcloud is an IoT device management platform specifically designed to accelerate the deployment of cloud-based applications. Perhaps its most ambitious push for wider MIPS adoption comes in the form of the Creator Ci20 board which launched in 2014 and was updated in May 2015. This development board is a mechanism by which developers, makers, and students can create applications for the IoT using Linux and Android. The Creator Ci20 is supported by the prpl foundation – an open source group that Imagination Technologies helped establish in May 2014 which supports MIPS to develop solutions enabling new datacenter-to-device portable software and virtualized architectures.

Although they are all expanding on their development support and partnership ecosystems, leading embedded processor technology providers are planning differently for the IoT. ARM, for instance, is further equipping its customers and partners with more of the software stack to facilitate the development of secure low-power connected systems. Intel is integrating software assets from Wind River and McAfee to accelerate IoT development across several of its processor families, growing the Intel IoT Solutions Alliance, and providing fully-configured intelligent gateway reference platforms for creating end-to-end solutions. Imagination Technologies is looking to spread the reach of MIPS through individual product adoption and open source development via the prpl foundation and its member partners including Broadcom, Cavium, Qualcomm, and more. The ability of core IP providers to net the growing IoT opportunity will be ultimately decided by the extent at which each can enable their current and prospective customers and partners to engineer end-to-end IoT solutions and services.

by Will Campbell, Research Associate

Highlights from FTF2015: Seeding Companies with Technology to Create Secure IoT Devices

• Several new Freescale processors announced from secure MCUs to multicore SoCs
• FTF product showcases spanned automobiles, hospital beds, IoT gateways, and much more
• NXP integration ongoing; expected to wrap up end of year
• Merger adds embedded security capabilities, ID solutions, sensors

Freescale hosted another successful Freescale Technology Forum (FTF) last week in Austin, TX at the brand new JW Marriott and the company kept everyone buzzing with its new product announcements, updates on the NXP merger, and product showcases. In addition, we were treated with expansive and interactive keynotes by CEO Gregg Lowe who demonstrated a variety of ways in which Freescale is fostering an ecosystem dedicated to accelerating the development of next-generation systems as well as Apple co-founder, Steve Wozniak. 

The merger with NXP was an extremely hot topic with everyone clamoring for answers as to the implications of such a large acquisition for both sides. Back when the merger was first announced earlier this year, I found the unity to be synergistic  with little overlap. The area with the greatest overlap between the two companies, RF products, was resolved in May with the sale of NXP’s RF Power business to Chinese private equity firm JAC Capital. Both Freescale and NXP have teams of 30-40 personnel aggressively working towards the integration of the companies. It was apparent at the event, though, that much is still to be done in terms of planning for the alignment of specific product families and integrating solutions between the two organizations.

The motivation behind the acquisition of NXP is multifaceted. First, security is paramount to the development of IoT products and solutions. The addition of NXP’s security IP will amplify Freescale’s penetration of such connected applications and facilitate the development of more-comprehensive solutions. Not to be forgotten is that both companies have seen strong growth in terms of revenues and profit margin and investor requirements are pushing for consolidation within the maturing embedded processor landscape. The merger is expected to save the combined entity nearly $400M in OPEX and $100M in COGS. No plant closures are expected and the company is focused on making the transition at seamless as possible for customers (so no re-qualifying, no products being moved geographically, etc.).

Freescale took a unique approach to entering the Bluetooth Low Energy (BLE) realm (or Bluetooth Smart as they like to use) by also integrating an IEEE 802.15.4 radio (the foundation for ZigBee and Thread) on its newly announced Kinetis KW40Z wireless MCUs for a variety of IoT applications. In addition, Freescale’s royalty-free BLE host stack is planned to support the upcoming Bluetooth Smart Mesh networking protocol. The heterogeneous Kinetis KW40Z MCU (there will be SKUs with just Bluetooth or just 802.15.4 support as well) is ripe for adding further capability to many of the emerging HAN and IoT applications leveraging mesh networks including smart lighting, smart door locks, building automation, as well as asset or fitness monitoring.

Other embedded processor announcements included:

• S32K MCUs – A new automotive MCU line aimed to significantly simplify software development
• K8X MCU Family – Highly-secure ARM Cortex-M MCUs
• 16nm FinFET QuorIQ – Migration of Freescale’s multicore communications processors
• i.MX 6Dual SCM (single chip module) Family – First of its new SCM portfolio of small integrated systems; fits application processor, PMIC, flash memory, embedded sw/fw, and security on a board the size of a dime
• QorIQ LS1088A octal and LS1048A quad multicore processors based on ARM Cortex-A53 cores; lays the groundwork for the upcoming QorIQ LS2 processors with ARM Cortex-A72 cores
• i.MX 7 and i.MX 7Dual series processors featuring ARM Cortex-A7 and the ARM Cortex-M4 cores

Q&A with Freescale CEO Gregg Lowe and NXP CEO Richard Clemmer

My first ever rickshaw ride getting to the keynote

The Woz!

Tech Giants Come Together to Steer the IoT

The rising wave of embedded market opportunities is being carried by the Internet of Things. Technology leaders are quickly coming together to ensure their organizations (and hardware solutions) are compatible with new standards and third-party vendors. Open industry groups and alliances will be instrumental in accelerating the development, deployment, and support of end-to-end IoT products and solutions through the next several years - though this will not be the only approach.

The Open Interconnect Consortium (OIC) and AllSeen Alliance are examples of similar yet different IoT groups. While both of their Linux-based open source projects, IoTivity and AllJoyn respectively, promote interoperability across a wide variety of vertical markets and use cases, they differ in technical implementation, licensing policies, and overall progress. For instance, the OIC, with founders including Dell, Intel, and Wind River, calls for companies to “license the technology contributed to the group”. The consortium plans to publish a standard this year and has just released a preview of its IoTivity project. Meanwhile, the AllSeen Alliance recently (January 2015) modified its IP Policy so users must comply with a patent pledge, does not plan to publish an open standard, and is preparing to release the third version of its AllJoyn protocol.  With dozens of members joining every month, founding organizations such as Microsoft and Qualcomm, and an upcoming third project release, AllSeen is currently ahead of the OIC in terms of development and membership base. However, with a soon-to-be finalized standard and its newly formed liaison with the Industrial Internet Consortium (IIC), we expect the OIC to gain much more momentum this year. 

Another group gaining traction is Thread Group, founded by ARM, Nest, and Samsung, which has a similar goal as OIC and AllSeen, but focuses solely on connected home appliances. Unlike the OIC and AllSeen Alliance, which consistently promote the openness of their IoT projects, Thread Group is a closed ecosystem of various organizations. Thread’s lack of openness will ultimately hinder its membership growth and potential expansion into new verticals, but will allow for more central control of the roadmap and supporting protocols and technologies. Regardless, membership is currently growing and Thread plans on releasing a product certification program later this year.

The Industrial Internet Consortium, founded by AT&T, Cisco, GE, IBM, and Intel, runs on a different purpose and recently formed a liaison with OIC to exchange “its use cases and architectural requirements focused on industrial markets”  for OIC’s promise to meet the requirements in its specification and IoTivity. This liason will “help to accelerate the delivery of an industrial-grade IoT architectural framework.” With almost 150 members, the IIC identifies “the requirements for open interoperability standards and [defines] common architectures.” Within a year, the IIC has already released its first energy-focused testbed and will release its reference architecture in the coming months. IIC’s new releases and partnership with OIC is a solid formula for an increase in members and development support this year. Despite its partnership with OIC, which is extremely open, the IIC only allows its members to view any of its contents. 

Founded by more than 10 companies including Cisco and Atmel in 2008, the IPSO Alliance promotes IP as a solution by documenting its use in technologies defined at standards organizations like the Internet Engineering Task Force. IPSO is currently working on an IoT architecture guidelines across multiple vertical markets with an emphasis on facilitating the usage and sharing of IP. Despite IPSO’s age and recent publications, the group’s membership growth seems to have reached a plateau at 44 companies. It is hard to see any further development from this alliance despite its duration. IPSO publishes all contents on its website, however it also requires a membership to be able to view its technical guidelines and use cases.

Focused solely on building a “strong and sustainable market advantage” through solutions based on Intel architectures, the Intel IoT Solutions Alliance is driven by “creating hardware, software, firmware, tools, and systems integration”. The group was formerly named the Intel Intelligent Systems Alliance. Intel’s alliance is steadily pumping out new solutions with a total of more than 2,500 currently available from its 250+ members. The Intel IoT Solutions Alliance primarily competes with ARM’s mbed initiative and supporting architecture partners.

Hoping to bring together different industries, sectors, and companies in Europe, the Alliance for Internet of Things Innovation (AIOTI) was launched less than a month ago on March 24th, 2015. With support from the European Commission, the AIOTI is gaining members quickly even in its early stages.

As the IoT industry is booming, so is the number of IoT-driven alliances being formed and looking to steer the [embedded] market. While the growing number of IoT consortia, specifications, and projects will help improve various different connected solutions, all groups are driven to unify  organizations by creating universal technologies, standards, and frameworks. But with each tech giant partaking in different alliances and creating standards in the hopes that others will adapt to theirs, the IoT is running into early fragmentation with a clashing of alliances fighting for their technology to be the one used by all. As most groups are in their early stages, much of the IoT has yet to be defined (and controlled). 

by Jamie Yang, Research Associate

NXP and Freescale: A Genuine Marriage

NXP’s acquisition of Freescale to form a $40B company is much more than two organizations unifying under a common banner – it is the wedding of leading embedded technology suppliers with similar, yet different, market focus and goals. Both companies provide a rich mix of embedded processors, analog and mixed signal solutions, wireless ICs, and other hardware. While there is some overlap in the companies’ microcontroller, RF, and sensor products, the rest of Freescale and NXP’s offerings are hugely complimentary to each other with cross-selling opportunities in a variety of markets including automotive, consumer electronics, and industrial automation.

While the acquisition is not a revolutionary change in direction for NXP and its target verticals, the new combined company will feature a much broader software portfolio, new products, and much greater corporate size that will enable it to compete more effectively with other semiconductor juggernauts and align with growing user requirements for facilitating development of the software stack.

Freescale has carried strong corporate momentum over the last few years as a result of its aggressive push into the Internet of Things (IoT) and investments made facilitating software development for embedded engineers. Freescale supports a variety of software development tools and environments in addition to providing the free MQX real-time operating system (RTOS) and its commercial CodeWarrior OSEK RTOS. Freescale also provides a variety of software libraries, frameworks, protocol stacks, and more. NXP, on the other hand, has done very little to facilitate software development on its MCUs and other hardware products or to supply crucial components of the software stack – instead relying heavily on its software partners for support. Embedded software has been vital to Freescale’s embedded processor market share growth and differentiation.

The acquisition of Freescale propelled NXP to become the second-largest supplier of embedded MCUs in addition to now being a leading vendor of SoCs as well. The combined assets and offerings of Freescale and NXP will also enable the company to better compete with its rival in the embedded processors space, Renesas. While there are a lot of similarities between Freescale and NXP, the general disruption of a massive merger such as this will certainly challenge the steady revenue growth enjoyed by both companies during the past three years. Nonetheless, the combined company expects to be able to shed hundreds of millions of dollars each year as a result of expanded buying power and annual cost synergies.

One of the new vertical opportunities for NXP produced by the merger is in the communications and networking space for applications such as gateways, small cell base stations, SDN switches/routers, and network attached storage with the QuorIQ platforms and PowerQUICC communications processors. While the company could divest this particular business to maintain its focus on other industries, VDC believes NXP should maintain Freescale’s communications and networking processor lines to take advantage of the rampant growth expected in that space through 2018 (5-year revenue CAGR of 10.8%) caused by the growing strain on network operators and service providers due to pervasive mobile computing and the IoT.

The proposed merger (expected to close in 2H 2015) is hugely beneficial for both companies. For Freescale, the acquisition means being able to shed some of the lingering restrictions from its long-term corporate debt issues. For NXP, it’s an opportunity to become a much broader provider of embedded technology with higher margin products. The move also greatly bolsters its software support which is becoming increasingly important to embedded hardware value every year. It will be imperative that NXP continues to develop and build its investments in enabling software and tooling support to ensure a lasting, beneficial marriage of the company’s traditional and new businesses, products, and solutions.

VDC Research is attending Embedded World 2015!

Contact us ASAP to schedule a meeting

VDC will be making the trip across the Atlantic again this year to visit the largest embedded technology tradeshow of the year, Embedded World in Nuremberg, Germany. Last year, the conference boasted 26,700 visitors and 856 exhibiting companies!.

While we are at the conference, we welcome the opportunity to meet with attending vendors to learn more about their embedded solutions and any show-related (or other recent) announcements.

You can arrange a meeting time with VDC by contacting us directly.

For meetings contact:

André Girard, Senior Analyst, IoT & Embedded Technology, [email protected], 508.653.9000 x153; or
Steve Hoffenberg, Director, IoT & Embedded Technology, [email protected], 508.653.9000 x143.

Haven't decided if you're attending Embedded World yet?

Please check out the Embedded World website for more information on the conference program as well as information on all of the companies that will be exhibiting.

We look forward to seeing you at the show!