During a panel discussion at the Semico Summit a couple of weeks ago, Moshe Gavrielov, president and CEO of Xilinx Inc., said something that had to make every marketing/PR type in the room wince. Gavrielov said advertising and branding don't have much sway in the chip world because the target customer is an engineer.
"It's a 'show me' thing," Gavrielov said. "Engineers will try it out, but if it's not the fastest, cheapest, lowest power, etc., then they don't believe you. It's a very technical audience that isn't going to be fooled."
Other members of the same panel agreed with Gavrielov.
Daniel Mahoney, president and CEO of Renesas Technology America, said that in the semiconductor business, at best, brand perception is a tie-breaker. He said he has seen many companies displace companies with established brands because they had a better solution.
"The reason why is because we aren't selling semiconductors directly to consumers," Mahoney said. "We're selling to engineers."
Peter Gammel, chief technology officer and vice president of engineering for SiGe Semiconductor, noted that his company's business model is entirely engineering-driven. SiGe is a $100 million company, he said, yet has only five sales people.
Hold the phone here. Can this be true? Branding, marketing and advertising are meaningless in the semiconductor business? How about "Intel Inside" with the catchy theme music? What about bunny suits? The Blue Man Group? What about the great exposure Applied Materials gets to hockey fans everywhere each time someone is checked up against one of the company's signs at the HP Pavilion in San Jose?
I have no doubt that a great many people who make a living doing advertising, marketing and branding for semiconductor and related companies would have a few things to interject here. But Barbara Kalkis of Maestro Marketing & PR was on hand and quick to express disagreement. Here, in a nutshell, is what she had to say on the topic:
"Although brand marketing is the life blood of consumer companies, it has had a roller-coaster ride in the semiconductor industry because CEOs see sales as an engineer-to-engineer communication. While that is true, perception is reality and engineers are still people making judgments on a number of factors that reduce the risk of their supplier selection process. That's where brand perception comes into play. Among other things, it addresses the risk factor."