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Wireless: Ripe for global takeover

Posted: 09 Jan 2008 ?? ?Print Version ?Bookmark and Share

Keywords:wireless device? WiMAX? mobile market? Wi-Fi?

The PC era, which powered explosive semiconductor growth in the 1990s, is all but over, replaced by a faster-growing market that places greater emphasis on equipment connectivity; ease of use; and data generation, distribution and processing.

The search is over for the next killer app. It is wireless, it is all around you, and it will leave no sector of the global economy untouched.

Current forecasts for wireless growth are bound to be wrong, because the technology keeps creeping into unanticipated segments of the economy. Wireless is poised to touch sectors beyond the traditional communications and data-networking areas, with potential for adoption in the industrial, manufacturing, medical, retail and service segments.

"As they do every year, mobile and wireless will set and align with many technology trends," said Gartner Inc. analyst Ken Dulaney. "Enterprises should prepare for increased virtualization, wireless networking in the office, dramatic developments from the iPhone and [any] negative developments in WiMAX."

Rising segment
The market is huge and growing rapidly. Whereas annual PC shipments are still tallied in the hundreds of millions, the market for wireless equipment!including mobile phones, PDAs, digital music players, game platforms and so on!runs in the billions.

Market watcher iSuppli Corp. estimates that total mobile phone shipments almost doubled in 2007 from four years earlier, to 1.15 billion units from 570,000. By 2010, unit shipments will climb to 1.47 billion, according to the research firm.

Experts say wireless connectivity will define our lives!and the electronics industry!for generations. It's a virtual certainty, for example, that the wireless handset sector will grow even more rapidly as businesses and governments extend applications into further areas to maximize productivity. The result, according to experts, will be increasing disruption in the technology world, but with benefits for all industry segments.

In a report predicting the major technology changes expected for 2008, research firm IDC states that the industry is primed for systemic shifts in many of the market's biggest segments, including servers, networking, telecommunications and semiconductors. "The shift will be so great that these disruptions will cease to be considered 'disruptions'; they will become the new status quo for competing in the IT marketplace for the next decade," said IDC analyst Frank Gens.

Race to the top
Wireless will underpin those changes. However, it's early in the race for market dominance, whether at the component, OEM or software application level. The winning and losing strategies are still being played out.

Industry history holds some lessons about what it will take a company to corner its segment of the wireless market. In the PC arena, decades of battles for dominance saw a mere handful of OEMs emerge victorious as the sector matured. Technology wasn't the determining factor; in fact, few would argue today that technology is a key differentiator in that fast-fading market. Rather, the winners were the companies with the best technology partnerships, the most effective sales and marketing organizations and, especially, the most efficient design and supply chains.

The wireless market won't be that different!although, for now, the stiffest competition in the nascent segment is occurring at the technology level.

But technology innovation is only one weapon in wireless competitors' arsenal. In addition to strong products, companies must have an effective partnering program that assembles optimal outside teams of component suppliers, contract manufacturers, designers, and astute financial advisers and financiers.

In other words, an excellent design and supply chain, the ability to network and to raise investment capital, and managerial excellence are all critical to survival and long-term success in a market that will be marked by rapid technology and process obsolescence.

But what will it take for a company to distinguish itself and win incremental success in the short term?

Wireless applications will play a key role in redefining the electronics market with a review of current industry trends and the strategies that companies are deploying right now!for better or worse!to gain an edge. Already, developments point to competitive differentiation and market share gains being achieved via a combination of technology innovations and design/supply chain machinations.

Not even the current crop of players could have dreamed up the scenario now unfolding in the wireless market.

Consider Serge Brin and Larry Page, who did not invent the Internet but have claimed a huge swath of its virtual real estate, along with access to the advertisers looking to rent room in cyberspace. They did it by redefining the Web search engine via Google. Now Google Inc., which has amassed a war chest that rivals can only dream of, plans to bid the minimum $4.6 billion for the C block in the 700MHz band.

Likewise, Apple Inc. did not invent the digital music player or the wireless handset, yet in recent years, it succeeded in redefining the tools of music sharing and wireless communication via the iPod and iPhone. What will consume the company's creative energies in 2008 is a gripping discussion for Apple watchers. Whatever the next big thing for Apple turns out to be, expect it to have a wireless component.

Here's one more example of a corporate transformation that shows how companies are using strategic alliances to improve their fortunes. If you have never heard of Foxconn Ltd, founder Terry Guo won't take offense. In fact, he's fine with it.

Ten years ago, Foxconn, with sales of approximately $700 million, did not register on anyone's listing of the top 20 global providers of electronics manufacturing services. By 2000, annual revenue at the Taiwan-based contract manufacturer had surged to $2.8 billion. In 2002, sales at Foxconn, which is also known as Hon Hai, jumped to $7.1 billion; in 2003, sales hit $10.7 billion; and in 2004, they grew to $17.2 billion. The tally climbed to $28 billion in 2005!the year that Foxconn became the world's largest contractor to wireless handset OEMs, with $6.3 billion in handset revenue alone.

The company is acknowledged today as the world's biggest EMS provider, with 2007 revenue expected to top $40 billion. A large portion of its growth has come through providing manufacturing services to wireless equipment OEMs, such as Motorola, Nokia and UT Starcom, as well as to wireless newcomers, like Apple.

- Bolaji Ojo
EE Times

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