VDC Research: Embedded Microprocessor, Board & Systems Market Blog

VDC to Explore Storage Trends within Embedded Integrated Computing Systems

For the last decade, storage has been a commoditized component of Embedded Integrated Computing Systems (EICSs) with the most cost effective solutions utilizing hard drives. Hard drives have maintained market dominance with respect to cost per MB stored as form factors have gone down and data rates and capacities have increased through higher rotation rates and platter densities.  The largest weakness for this mature technology is the higher likelihood of problems because of the spinning media and sensitivity to vibration, impacts, and environmental conditions. This has left the EICS market for hard drive based storage susceptible to disruptive technology and VDC believes this transition is under way.  In fact, we see many of the embedded system suppliers rapidly adding products and services to facilitate the transition. As we begin to set the agenda for the 2013 embedded hardware service, we believe that storage will be a key area to focus on with three alternatives to hard disk storage technology leading the charge.

Solid State Drives: Solid State Drives (SSDs) are designed to be deployed as drop in replacements for legacy hard drives removing the second barrier to entry after price per MB.  SSDs do not have moving mechanical parts and are therefore much more reliable which makes them increasingly sought by the OEMs and customers of EICSs. As the prices for these SSDs units have come down and the capacities and performance has, at the same time risen, they are now suitable for many price sensitive OEM vertical markets and applications. They also use much less power and generate less heat which increases operational savings. There is one potential drawback in that the lifetimes and performance of SSDs are not unlimited. Storage cells can only be written to a finite amount of times before they become unreliable. The controllers inside the SSDs account for this by ensuring that wear is distributed evenly across the storage cells but, how well/fast they do this may vary significantly by product. As a typical SSD reaches the end of its useful life, it will become appreciably slower as the controller has more difficulty allocating the write function to available/reliable cells.

Deeply Embedded Storage:  By eliminating the traditional hard drive form factors and data bus structures, the semiconductor storage components can be utilized more efficiently by being embedded in very close proximity to the processing components. These can be plug-in modules that go into backplane or mother board slots or components mounted directly on the computer board. These solutions can be used in embedded applications that require high processing capability but, at the same time are constrained by weight and power limits.

Remote / Network Attached Storage: Embedded and/or cloud storage products in many cases provides OEMs and their customers with an alternative storage method suitable for many EICS markets and applications.  In these cases, groups or individual pieces of equipment containing EICSs have local storage needed for immediate operation but the bulk of the needed storage is provided from a private cloud using network attached storage or contracted from a cloud service provider on a pay as you go basis. In either case, this remote storage technology can have valuable product features to avoid data loss and/or unnecessary duplication while assuring availability.

If you are a storage, SSD, and/or EICS supplier, we look to your opinion on storage within the embedded system market. 2013 looks to be an exciting year for embedded systems.

Unlike the IT Service Market, the Embedded System/OEM Service Market is Growing

As we kick off the VDC Research project focused on engineering and support services provided by embedded computer system suppliers I could not ignore the recent news about HP’s charge of close to $8 billion related to its services business. This was big news in that the services business for HP had represented approximately 28% of total revenues. Despite this setback for HP, the outlook for services for embedded computer suppliers is still positive. In this blog, I will explore how the embedded services business will benefit from many market drivers including the cloud.

Business / IT Services:  The main decrease in services business that HP is reporting is for IT related services. The IDS business that HP acquired in 2008 specialized in providing complete data center operations services for enterprise type customers and large government sector agencies. As many companies are now taking the next step and are migrating to the cloud, there is a subsequent decline in direct IT services for companies like HP. Although IT/Business is central to HP’s services offerings, the OEM/embedded market is also important to HP, Dell and IBM among other IT suppliers. 

Embedded Computer / OEM Services:  With respect to services, there are some very important differences in the embedded/OEM market as compared to the business/IT market. The following diagram shows the service markets that VDC is covering and where they fit in the OEM / embedded system lifecycle:

An embedded integrated computer system supplier usually has the inside track when an OEM or end customer is looking for embedded system solutions. With an economy that remains stagnant and some markets such as Mil/Aero looking at cutbacks, VDC believes that leveraging a supplier’s engineering expertise can often be the best strategy for reducing product development costs and timeline. The cloud also provides many opportunities as customers look to the advantages of Machine to Machine (M2M) connectivity for their products.  As the number of M2M connected products grows, the data that is generated by them can drive actionable intelligence when aggregated and processed in the cloud. The most recent VDC estimate for embedded services indicated a CAGR of over 7%.

In 2012, as we begin the latest research VDC believes that it is certainly possible for the projected growth to be in double digits in the immediate future. The caveat being that embedded system suppliers will need to streamline their service product offering to be in line with customer needs. If not, there are other market participants ready to expand their presence.

Competitive Landscape for Embedded Computer / OEM Services: The embedded computer suppliers do not have exclusive presence in the services market. As mentioned previously, the major IT suppliers such as Dell, HP, and IBM sell into the OEM market and provide many services to integrate and/or customize their products. Suppliers such as VMware and Wind River will also be competing for services business that leverages their software expertise. On other fronts VDC sees that systems integrators, value added resellers and consultants will also be competing. The strengths of these competitors will be their ability to offer the customers a complete solution that leverages best in class software and hardware from multiple companies.  

Looking for Your Opinion and Guidance: For this 2012 report, VDC is looking to profile as many companies (large and small) as possible. We intend to describe the strategies and product offerings that differentiate the profiled companies from their competition. If you believe that your company participates in the services market for OEMs / embedded systems, please contact [email protected] for an informative 2-way briefing. Research and outreach have already started and publication will be at the end of September, so there is still time to be included.

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.

Channels of Distribution Expand as Computers-on-Modules Market Grows

Our Embedded Hardware and Systems research team recently published critical global findings of the rapidly expanding Computers-on-Modules (COMs) market.  Based on our analysis, COMs dollar volume shipments over the 2009 - 2014 forecast period are projected to grow at a rate faster than nearly all embedded hardware technologies which VDC analyzes.  In fact, based on extensive supply-side and demand-side primary research, we are forecasting the total global COMs market size will reach just over $910 million by 2014, and display a compound annual growth rate (CAGR) exceeding 23%.  

Among the clear drivers of COM shipment growth are (1) the system expansion and application-specific customization capabilities of the technology, and (2) the relatively low power consumption and small form-factor dimensions the technology possesses.

Another influential factor is time-to-market advantages OEMs, SIs, and independent hardware designers gain, as this audience continues to seek significant reduction in development time of embedded systems in industrial and commercial applications when utilizing COMs.                                    

From the channels of distribution perspective, our research suggests the marketing and sales of COMS will begin to fragment somewhat, as suppliers look to add more third-party distributors, VARs, and other resellers in an effort to capitalize on the expanding COMs market. 

In summary, VDC believes as the complexity of embedded hardware design and implementation accelerates, an ever increasing number of vendors - third-party distributors, and VARs, etc. - will continue migrating into the embedded space, with COMs and COMs-based solutions.  In fact, many large distributors have already begun offering development kits online, as well as offering other support services, that will help enable a more rapid solution development cycle.

Let us know your thoughts about global COMs market opportunities and how the channel will impact pricing, availability, and hardware and software integration.

An xITX Standards Question Answered

An important question with any standard computer architecture is what comes next? Any standard or family of standards that hopes to remain relevant must continually reinvent itself through new iterations. This can happen in various forms - reducing the board size, adding higher speed interconnects/switch fabrics, reducing power, etc. At the same time some standard families offer multiple paths forward in the form of multiple new standards and not all of these are always well adopted. In these instances where there are multiple iterations there are always question marks about whether all of them will gain enough market traction to be relevant and which ones will be the successful ones.

In the case of Mini-ITX, the extremely successful embedded motherboard form factor first created by VIA Technologies, VIA has done a very good job of providing a future road map for the standard and keeping it relevant by turning out a family of xITX standards. Since Mini-ITX VIA has added Nano-ITX, Pico-ITX, and Mobile-ITX - all smaller versions of Mini-ITX to address the constant need for ever smaller form factors in embedded applications.

However, a big question mark around these smaller xITX form factors was which would become the most successful? Our latest research on the embedded motherboards market seems to provide some insight.

Our numbers indicate that Pico-ITX is gaining the most traction throughout the market and will likely become the next most successful member of the xITX family after Mini-ITX. By 2012 total market dollar volume shipments of Pico-ITX are projected to be nearly double those of the slightly older Nano-ITX standard.

It appears that both Pico-ITX and Nano-ITX will have a place in the embedded motherboards market and both are important in offering customers a range of choices through the xITX family of form factors, but Pico-ITX is becoming more widely adopted in both suppliers' product portfolios and by customers.

Mini-ITX Success a Metaphor for General Embedded Market Trends

Having just finished the 2010 edition of VDC's Embedded Motherboards research I have spent the last month analyzing the embedded motherboards market and with it the Mini-ITX segment of that market. The level of success that Mini-ITX has been able to achieve in such a fragmented market and in such a short period of time still amazes me every time I look at this market.

But really the success of Mini-ITX is a metaphor for the major trends of the overall embedded market. Mini-ITX was designed specifically to provide low power consumption in a small and compact form factor. And to do so cheaply by creating an active backplane standard that is able to take advantage of the latest x86 silicon solutions.

Mini-ITX not only had the largest sales figure of any single embedded motherboard form factor in 2009 (eclipsing ATX by a few million dollars in dollar shipment volume), but it is also the most diversified embedded motherboard form factor by vertical market segmentation.

The reason for Mini-ITX's rapid growth and success across most embedded verticals is that size, weight, and power (SWaP) reduction has become one of the most important requirements for embedded customers across segments, if not the most important, as it is for so many customers today. Customers have become borderline obsessive about SWaP reduction, which is the very value proposition that Mini-ITX was founded on. It has been the success of Mini-ITX in reducing SWaP cheaply for customers that has made it so successful, which is also the very same thing that will enable the success of the next iterations of the standard - Nano-ITX and Pico-ITX.

2010 VDC Slot SBC Research Released

We have just finished the Slot SBC report module of our annual Embedded Hardware Market Intelligence Service.

Some of the highlights from this report include:

• The latest data shows that the total global slot SBC market is poised to return to growth of  just over 6% in 2010, to follow what appears to have been a tumultuous 2009 for the slot SBC market.
• • Lower cost, legacy architectures such as PICMG 1.0, traditional PCI, and ISA appear to have been hit particularly hard with nearly $200 million of market value being wiped away from those segments combined when you compare the 2009 actuals with VDC's most previous forecast for 2009 (released in early 2008).
  • It is true that these architectures were already in decline before the recession, however, the industry downturn caused by the recession appears to have accelerated that decline.

• The growth of the slot SBC market rests squarely on three architectures: ATCA, VPX, and PICMG 1.3. These latest generation fabric-enabled, high bandwidth architectures are driving growth in their respective verticals - ATCA in communications, VPX in mil/aero, and PICMG 1.3 in most of the other commercial segments.

For more information on this research please visit our website or contact Cyril Bernard at [email protected] or (508) 653-9000 x142.

The Embedded Hardware Boards & Systems Market a Year Into the Recession: How Has the Market Shifted and What is the New Course?

VDC hosted a live webcast today which highlighted our market research on the embedded boards and systems market.   We not only covered the challenges facing embedded suppliers and how they will have to adjust given the current economic climate, but also answered questions like:

• In which vertical markets, applications, customer types, technical solutions is demand strongest?  Weakest?
• How will supplier consolidation affect the market overall?
• Who is the competition?
• What are the key product and vendor selection criteria driving OEM and integrator adoption of embedded boards?  
• What types of professional services are customers demanding from their board suppliers?

If you missed the webcast, you can scroll through the slides below, or register to view the recording at your leisure. 

View more documents from VDC Research Group.