VDC Research: Embedded Microprocessor, Board & Systems Market 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

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.

Cheaper Sensors, Greater Connectivity, More Sensor Fusion

As embedded auxiliary technologies such as geo fences and gyroscopes gain more popularity, the need for sensor fusion across device classes has become increasingly important. This importance has led to several mergers and innovative technology strategies from the likes of Fairchild Semiconductor and Kionix that will become more noticeable in the coming months. We expect sensor fusion to continue gaining traction in mobile/wearable device form factors and translate to the greater embedded market over the next several years.

Sensor fusion is the process by which data from several different sensors is fused together to compute algorithms too complex and resource intensive for a single sensory system to execute on it is own. In other words, sensor fusion combines data from multiple sensor types to enable greater functionality in a given device.

The entire market for sensor fusion in embedded hardware is growing at an extremely fast rate. Rich Collins, Marketing Manager of Synopsis, believes that the growth in sensor fusion is due to the need for additional processing capability and software for embedded systems which have generally grown increasingly complex. Some of the most compelling solutions have come from companies such as Synopsis, with its DesignWare Sensor Subsystem, as the current desire in the embedded marketplace is for more integrated solutions. Another interesting innovation has been seen from Kionix with their MEMS sensors which are scalable across multiple operating systems and support third-party software. Kionix is becoming increasingly notable from their developments in exercise technology and 3D gaming.

As a result of the increasing desire for embedded sensory integration, several major players in the sensor fusion market have seen mergers and acquisitions in the past 12 months. For instance, in May 2014, Fairchild Semiconductor, a provider of high performance semiconductors, announced its acquisition of Xsens, a Dutch company known for its motion tracking software. In June 2014, Audience announced it was acquiring Sensor Platforms. The fusion of these companies is leading to creative new ways of writing the algorithms required for sensor fusion. The escalating activity within the sensor fusion market will also drive growth within the MEMS market, of which several of these players have close ties to.

Sensor fusion is already translating well from consumer devices to the embedded market as a result of increasing connectivity, decreasing prices for sensor devices, and the internet of things. The limitless applications for sensor fusion will have major implications for future embedded systems.

by Joe Botsch, Research Assistant

For Microprocessor Vendors, The Enterprise Is Not the Future According to New Research from VDC Research

VDC is pleased to announce the publication of its annual outlook for the global market for embedded CPUs, MCUs and FPGAs.  This research is an invaluable strategic and tactical planning tool for chip, tool, and board vendors. 

Hightlights include:

• We expect ARM to continue to take CPU market share from Intel in the years to come, though Intel will succeed in defending its position in high-performance applications.

• Xilinx will cede FPGA market share to growing competitors Altera, Lattice Semiconductor, and Microsemi – who all stand to benefit from strong global demand for communications equipment, and OEMs’ continued migration away from ASICs.

• The MCU market will grow rapidly, with the automotive sector representing an increasingly large share of the market.

• Heterogeneous computing will drive big changes in the markets for all discrete processing technologies. As integrated architectures are used to consolidate functionality and boost processor efficiency, traditional vendors will need to deploy new business strategies to drive growth and margins.

• The importance of tools when selecting a chip will drive additional M&A activity, as large chip vendors swallow smaller tool providers.  Potentially attractive acquisition targets include DDC-I, IAR, or Lauterbach.

• The market for these embedded processing technologies (CPUs, MCUs and FPGAs combined) will grow to over $US 40 billion by 2017, at a compound annual growth rate of 6.9% overall.

To learn more download the executive brief now or see our recent press release here.

Embedded Processor Revenues (2012-2017)

Intel stacks more chips onto its existing M2M wager

The wagers being played in the high-stakes M2M game are definitely getting higher. As we noted last week, Eurotech, who has long being seen as a leader in edge gateways and M2M solutions, divested its Parvus asset in order to place increased focus on its core markets.

Yesterday, Intel announced a commitment to deliver intelligent gateway solutions in early 2014, offering a combined platform of Intel, Wind River and McAfee products.   These new, pre-validated products will allow embedded computer suppliers and their customers to more easily support M2M deployments targeted at legacy equipment as well as new products. The Intel M2M gateway solutions will be scalable from small deployments of a few supported things using Intel’s new Quark or Atom processors to large-scale deployments driven by higher powered Xeon products.

Why are companies such as Intel and Eurotech so focused on gateways? VDC’s previous and continuing coverage of scalable edge computing products has the answer. Unlike many markets, there is and will continue to be solid growth in all regions as the Internet of Things (IoT) and M2M become increasingly vital for saving operational costs and providing new revenue streams.

In 2014, VDC will again be reporting on intelligent edge node gateways. We look forward to your company’s participation as we shape the report scope and conduct the required research. For more information contact us at [email protected]

Calling all Embedded Board & Module Suppliers – Stand up and be Heard!

The winds of change are blowing through the embedded computer board and module market. As 2014 approaches, recent market consolidations and reorganizations will solidify. 2013 will go down as one of the most important years for suppliers to make their voices heard by VDC. Why is this so important? In 2014 and beyond there will be significant shifts in demand for embedded board and module products as seen by these results from VDC's 2013 survey.

Many OEM engineers will be designing their new products and, for the first time they will be using embedded modules as opposed to other product alternatives. At the same time, existing module users will be looking to migrate to the latest x86, ARM and/or FPGA processors and module types. These OEM engineers will value an authoritative 3^rd party source to better allow them to determine which product types are strongly supported and, which product types not gain the necessary market traction.  On a similar note, these OEM engineers and other entities with interest in the embedded market are looking to VDC to determine which suppliers are becoming the most resilient, innovative, and successful in the markets they serve. VDC provides this industry-wide guidance by taking a 360 degree view of the market but, even so, the supplier inputs we receive are, among the most valuable.

At present, VDC has been in contact with over 90 suppliers we believe are significant to the market and after many initial discussions have provided our top-level estimates for their company. We are following these e-mails and calls with our 2013 survey that has detailed estimates. If you have NOT received these e-mails, calls and survey and, you believe your company should be represented, please contact us immediately. If you have received this survey it MUST be received by Friday October 4 to ensure any corrections or fresh guidance are included in the VDC models that drive our reports.

 

Intel’s Sub-Atom Quark is a Big Opportunity

Intel finally announced earlier this week its answer for branching into true low-power embedded applications – the Quark SoC. Quark is Intel's first product for low-cost, small form-factor embedded markets, which often prioritize power consumption and footprint over performance. Though Intel faces tough competition in the embedded space from a variety of players, the growing opportunity generated by the pervasive Internet of Things will be large enough for Intel to carve additional share outside traditional PC and enterprise-computing markets.

Quark is Intel's first synthesizable CPU core, allowing others to incorporate third-party silicon IP into the SoCs Intel will manufacture. Technical details are scarce, but what we do know is the demonstration chip presented at IDF 2013 is x86 compatible, measures 1/5th the size and 1/10th the power consumption of the Atom processor, and contains a single-core, single-thread 32-bit architecture.

The market opportunity for Quark is great. Connectivity is creeping into ever-more devices and applications, including the new SoC’s initial targets such as industrial automation, medical, and wearable devices. Though prospective customers can integrate various WiFi/cellular radios to enable connectivity, software remains the chief barrier to successful implementation. Intel hopes to mitigate development efforts through incorporating a software stack that includes security, manageability, and connectivity features. No word yet on supported standards.

However, IP-licensor ARM and processor suppliers such as Freescale and Qualcomm already have a firm foothold in several embedded markets. The ARM architecture has flourished in low-power designs, and now intends to challenge Intel in high-density server and high-performance computing markets. Quark is poised to compete with ARM’s Cortex-M series processors, the most used ARM architecture cited by over half of respondents from our 2013 Embedded Hardware End User Survey. The rich ARM ecosystem offers vast resources and integration support that no single company can completely encapsulate.

While there is no off-the-rack market for Quark, OEMs and other embedded processor end users will greatly value the advanced production process and additional features. The limiting factor of Intel’s success will be price. The company isn’t accustomed to selling lower-cost units beyond its Atom line – which are still too costly for many high-volume embedded applications beyond tablets and handsets. Nevertheless, we believe Intel’s strong brand and ample resources will allow Quark to penetrate several new embedded market segments once production begins later this year.

ALPR = Big $$ for Embedded Hardware Suppliers

An interesting opportunity for embedded hardware suppliers caught the attention of the VDC M2M Embedded Platform team. The opportunity was highlighted in a Boston Globe article this week about a local police department that equipped a cruiser with a $28K Automatic License Plate Reader (ALPR) unit. There were a number of eye-popping statistics starting with the fact that the unit apparently paid for itself in the first 11 days it was deployed. The ROI was accomplished from revenues generated by identifying vehicles and drivers with expired licenses, registrations, inspections, or other unpaid fines and fees. ALPRs can also be used for parking enforcement particularly in areas where civilian officials want to encourage shoppers with low cost short interval parking spaces. In this parking application, an official uses an ALPR to detect commuters and/or store workers that try to take advantage of the potential arbitrage and fine them.

Now let’s look at the $28K bundle of embedded hardware and software and speculate a bit on what is likely to be involved. The ALPR cited by the Boston Globe had the capability to read 1,800 license plates per minute and cover 4 lanes of traffic simultaneously. It can make those readings at differential speeds of up to 150 mph. This is a key factor because the unit is mounted on a cruiser as opposed to a parking or toll-taking lane where only the vehicle would be moving and the zone where the license plate would be is more predictable. Therefore there has to be a camera system capable of capturing a wide field at varying focal lengths and light conditions. The torrent of data from the camera system has to be rapidly processed to identify license plates and simultaneously perform Optical Character Recognition (OCR) on 4 or more plates in the field of view. Additionally, the system has to identify the state that issued the plate. This is challenging because many states like Massachusetts issue multiple types of specialty plates for sports teams and other organizations or causes. States also control costs by not replacing license plates until they practically fall apart. Therefore, it is fairly safe to say that there would be approximately $10K in optics and high performance processing inside the ALPR to accomplish the OCR function.

What happens next is important. We are going to make an assumption and it is a big one. We will assume that the ALPR generates data that supports law enforcement but this data will not be a cornerstone for court cases. This means that the raw video would not need to be compressed and stored for future reference while preserving chain of custody. For example, if the ALPR were going to be used for moving traffic or criminal violations it would need to have irrefutable video evidence that identified the driver as well as speed measurement data. Because of our limited OCR assumption, the captured data only needs to be combined with time stamps, GPS coordinates and, perhaps a few operational parameters. As a result, this limited data set would be in the order of kbytes per record as opposed to Mbytes per second for full video archiving. Even so, this still represents several thousands of dollars per ALPR unit for the additional embedded sensing, processing, storage, HMI and communication hardware.

In our estimate, the next part of the ALPR application would optimally involve cloud-based Big Data resources. The ALPR would transmit captured data in real time and processed for matches in multiple databases. The response back to the police cruiser would have to be rapid to be effective. The most effective ALPR supporting infrastructure would have to combine data from all municipalities, states, and federal agencies relevant to a particular region. Suffice it to say, the cloud-based and communication services could easily amount to several hundred dollars per month for each ALPR deployed.

The Boston Globe article stated that there were already 87 ALPRs deployed in the state with another 7 Boston area police departments adding 21 additional in the next month. Considering that Massachusetts alone has over 350 cities and towns but the entire US represents over 36,000 municipalities, the potential market for ALPRs and the embedded hardware inside them would appear to be a huge and rapidly growing opportunity.

VDC Initiating Coverage on SMARC Embedded COMs

Supplier interviews for VDC’s 2013 Embedded Hardware Service for Embedded Products are currently underway. As a result of a recent SGET (Standardization Group for Embedded Technologies) announcement, we will now be including SMARC as a separate form factor in VDC’s embedded COMs report. SMARC, formerly known as ULP-COM, comprises a Kontron-proposed SGET standard for ultra low power COMs. In 2013, Kontron has announced the release of 3 new SMARC products utilizing one of Freescale, TI, or NVidia ARM-based processors. Somewhat similar in appearance to the DIMM-PC COM form factor which originated with JUMPtec (acquired by Kontron in 2002), SMARC modules are edge-connected rather than pin-connected as are many other COM form factors.

We expect low power computing modules such as SMARC which take advantage of new low power SoC products will find traction in many embedded markets, particularly in M2M applications. OEMs should be very interested in products that can be added to their existing platforms to add M2M functionality. In cases where an OEM’s products were not future-proofed with respect to available space or power supply capacity, being able to add new computing modules that support M2M without costly retrofits can be a huge advantage. In cases where M2M is being designed into a new system, these ultra low power computing modules can add the necessary functionality without having a huge impact on Bill of Material (BoM) costs.

We believe that VDC’s coverage of SMARC and similar embedded devices is of critical importance, both to suppliers of those products as well as to their customers. To put it simply, nobody wants to “bet on the wrong horse.” For an embedded product standard to be successful, it would have to be supported by several suppliers and purchased by a solid and wide customer base. Given any uncertainty, customers and suppliers are more likely to commit their money to proven products and standards, no matter how compelling the new developments might seem from a technology standpoint.

In 2013, VDC will work with both suppliers and their customers to determine which new products and standards are gaining traction and which, if any, product types or standards are losing share. It should be a very interesting year.

Securing Your Place in the Evolving Internet of Things Ecosystem

With the start of the 4^th quarter of 2012 VDC’s Embedded Hardware Practice is kicking off the project to produce the 3rd exciting volume in the FastForward: Insight for Leaders series. We look forward to your participation as we look to profile several dynamic companies that are active in the ecosystem that is driving the Internet of Things (IoT) revolution.

Does your company have an interesting success story that involves some of these elements?

• Solving problems through M2M connectivity
• Monetizing data that had been stove-piped in embedded systems
• Partnerships between your organization and others to provide advanced product packages that involve M2M/IoT
• Cloud based resources
• Green initiatives to save and/or generate energy
• Interesting solutions that involve mobile devices
• IoT connectivity solutions in Mil/Aero, Medical, Retail, Transportation, and/or Infrastructure related markets

If so, one element of this report will be detailed case studies of interesting IoT solutions as they demonstrate the evolving ecosystem of market participants and the technology and business strategies that are being employed.  This VDC report will be a key platform to showcase your company and your IoT success stories to VDC’s  typical audience of suppliers, investors, and potential customers. Please share your story with us and, if possible, we will include it in the report.

If you are interested in participating by contributing and/or purchasing, the full proposal is included here:

 

The Internet of Things is fundamentally redrawing the lines that have defined the embedded computing industry for years. Once the domain of specialized, niche-focused technology suppliers, embedded computing is now attracting enormous attention from virtually every major enterprise IT player (as well as a wide range of start-ups), all of whom increasingly recognize the huge business opportunity resulting from the emerging Internet of Things. At the same time that these major new entrants are appearing in the once staid embedded marketplace, established embedded technology vendors are finding themselves increasingly uncertain regarding how to defend their hard-won turf in specialized verticals and applications, as well as how to stake a claim to a part of Internet of Things explosion. For this report we will develop an industry roadmap that projects the future of the IoT vendor ecosystem, with our view on the changing roles of established embedded industry participants, and the role new entrants are likely to play. In addition, the report will identify core capabilities that established players will need to develop in order to be successful and to secure a prominent position in an industry that could look radically different than it does today.