It’s springtime here in Central New Jersey and my walks with Pepper, the dog from the animal rescue shelter who adopted us last year, are now punctuated with sightings of new bulbs that have erupted overnight and the fragrance of my neighbor’s cherry blossoms. In another week or so the air will be filled with the scent of the lilacs that grace my backyard. These luscious sights and smells are a welcome relief from the gray winter months and a reminder that there are some things which are not affected by the economic recession that appears to grip nearly every aspect of our lives. Much like those bulbs, I’m also seeing at least a few tender green shoots of market opportunities within our industry and a number of companies that seem to be smart enough to make the best of these tough times.
Make no mistake about it, these are tough times; but I still think that companies that did not fall prey to chasing phantom markets, stock manipulation schemes, and other excesses are in a good position to ride out the recession with less hurt and, in many cases, even emerge stronger. We’re already seeing companies who managed to enter the downturn with some cash reserves beginning to use them for strategic investments in personnel, technology, and even acquisitions to position themselves for upcoming opportunities. Intersil’s acquisitions of D2Audio, Kenet Inc, and Zilker Labs during 2008 are an example of how strong companies are taking advantage of weak markets to buy their way into innovative technologies at a bargain price. (I do have my reservations about the real value of the Zilker purchase, but only time will tell). And while I’m not quite comfortable with some of the details of the financing, Gennum’s recent move to
purchase Tundra comes to mind as another example of the value-priced strategic consolidations we’ll be seeing over the next 12 - 18 months.
Smart companies are also busy picking up key personnel who would have been too costly or just plain impossible to recruit in better times. I won’t go into how unnecessary and short-sighted National’s Semiconductor’s recent layoffs were since that topic’s already become an on-line piñata (see our
blog for details), but I’m told that several other analog companies are cashing in on Brian Halla’s panic-driven decision and picking up some top design talent: that will put them in an enviable position when the demand for new semiconductors resumes.
The weak economy does seem to have slowed down the usual torrent of new chips I see each spring to a much more modest flow: at least in the areas I cover. Gone for the moment are the days when I’d have up to a half-dozen networking chip companies all vying for my one review slot for a given week. On the other hand, there has been a big increase in the number of evaluation kits and reference designs being announced around existing product lines. In most cases, this is a very smart investment for companies to make because it helps get gets their products into interested developer’s hands more easily. Just as important, these near-turnkey designs go a long way towards making it possible for of layoff-ravaged design teams to still be able to bring their projects in on near-impossible schedules. Whether inspired by brilliant marketing, or the desperate circumstances of the market, this sudden bloom in genuinely innovative evaluation kits is helping some companies open new markets and will likely remain a permanent feature of our industry after the tough times have passed.
While it’s pretty apparent that the smart electronic companies are learning to get the most from the limited resources they do have, I’m also hoping that consumers start to do the same thing. It may be just wishful thinking but I’m hoping that the slower economy will help re-orient the consumer mentality away from low-priced disposable products to higher-quality, longer-lasting ones. Although not always true, it’s safe to say that, in most cases, longer-lasting products tend to be easier on the environment. And since energy efficiency has now penetrated the consciousness of both consumer and business communities, it would be interesting to see if manufacturers could start selling their products on the basis of quality, longevity, and total-cost-of-ownership rather than the lowest possible purchase price. My common sense tells me that expecting any meaningful changes in consumer purchasing habits is just wishful thinking and we’ll probably see a quick return to our old wasteful ways if we ever manage to pull ourselves out of this deep financial pit. Nevertheless, I think about my own parents and the other family members of their generation and see how much their depression in the 1930s helped shape their fugal habits and have hope that we may yet learn some valuable lessons from these tough times.
Questions? Comments? Hopeful signs or important lessons you’d like to share? Write me at
lhg at en-genius dot net or post your comments on our blog.
