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  Articles  The changing landscape of 2013
Articles

The changing landscape of 2013

Ray Alderman, VITARay Alderman, VITA—March 26, 20130
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2012 is behind us, and it was bumpy for our industry in the last two quarters. In reaction to market conditions, a number of embedded companies reduced their headcounts. Decreased demand in many markets due to a number of factors make for uncertain times ahead, but some new prospects have shifted into focus.


21

Figure 1: Ray Alderman launched Embedded Tech Trends in January with his thoughts on the state of the industry for critical embedded systems.
(Click graphic to zoom by 1.9x)

Industrial

The business conditions in the industrial board markets deteriorated in 2012, particularly in Europe. Demand for manufacturing systems and upgrades are on hold, awaiting clarity on the world economic environment. Gross World Product (GWP) growth declined to an estimated 3 percent last year, after being near 4 percent in previous years. While this reduction in world demand for consumer products surely contributed to the decline in the demand for industrial systems, there’s another element to consider: We have become very efficient at manufacturing around the globe. We have automated our factories with advanced computing technology to the extent that capacity now exceeds market requirements. The future in the industrial markets will be focused on making those systems even more efficient.

Telecom

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The amount of data going through the telecom networks continues to increase at dramatic rates. That means that telecom service providers must install more equipment to handle the data volumes. The remaining telecom board vendors had a tough year in 2012, so where did that new equipment come from? Probably Taiwan and China, in the guise of commodity PC-based boards and systems. Smartphone sales are increasing dramatically, further increasing the data going through the networks. Telecom board vendors must drive down their costs to remain in this market, or develop newer capabilities like boards that can do deep-packet inspection or other functions that commodity boards don’t have the horsepower to accomplish. Telecom will be the toughest market for board vendors in 2013.

Medical

The medical equipment markets have moved to China and India in the past few years. The U.S. and Europe have already outfitted their hospitals and clinics with adequate diagnostic capabilities, but undeveloped nations are nowhere near the saturation point. New Obamacare taxes on medical equipment sales in the U.S. will depress demand here until the capabilities of the new equipment designs offer a significant economic reason to buy.

Military

Even with the “fiscal cliff” deal in congress, the MIL markets remain deeply uncertain about budgets for 2013. We won’t know which programs will be cut and which will be funded and at what level until March. But the best bets are in Unmanned Aerial Vehicles (UAVs), intelligence systems (SIGINT, RADAR, SONAR, Electronic Warfare, Communications Intelligence), and upgrades to existing platforms.

Shifting gears

There are two technology shifts that may offer opportunities to all the basic board markets. First is the shift away from PC-based processors (Intel) to cellphone-based processors (ARM). The Android operating system and the low cost (and great performance) of the ARM chips offer a compelling reason to move away from PC-based technologies, especially on small form factor and motherboard products in industrial and military markets (in low-level applications).

The second shift is the incredible advancements in sensor technology. Just recently, a new sensor capable of detecting certain molecules in the air at concentrations of a few Parts Per Billion (PPB) was announced. We have advanced image sensors that have amazing resolution both in the normal light spectrum and infrared. These new technologies have great benefits to many industrial and military applications.

So, in spite of the uncertainty present in our markets, there are opportunities to explore. I would bet on the sensor advancements as the next big market driver for 2013 and beyond.

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