Go shopping for consumer electronics today, and you'll find products that use Intel processors, run Microsoft operating systems and feature brand names like Dell and HP. It's remarkable to see so many familiar names from the PC world showing up in consumer electronics-remarkable, but not surprising. The PC market once drove the digital revolution but now is fairly mature and stable. Today, the action is in consumer electronics, where growth is strong and innovation abounds.
This shift affects a broad swath of the electronics industry. Chip suppliers, retailers and everyone in between are trying to use their experience in PCs to jump-start their consumer electronics businesses. Some have been able to translate their PC strengths into consumer electronics success; others have not.
One company that has made a successful transition is Apple. In the first quarter, it sold more iPods than computers. In contrast, Intel has not parlayed its dominance in PCs into a lead position in consumer products. Intel's communications division, which sells chips for mobile devices, lost about $850 million in 2003.
Why have some PC-oriented companies done well in consumer electronics while others have struggled? One answer is that PC buyers care more than consumer electronics buyers do about the underlying technology. For example, PC buyers often compare computers on the basis of processor clock speed, but consumers don't care how fast the processors in their MP3 players are.
What does matter in consumer electronics design are good looks and ease of use. This may explain Apple's success selling iPods. Apple is as much an industrial-design company as it is a high-tech company, and its ability to make slick-looking, easy-to-use machines is a great match for the demands of consumer electronics.
To succeed in consumer electronics, companies must deliver features consumers care about. This is a tough challenge for semiconductor vendors, which have only limited influence over the user experience.
Nonetheless, semiconductor vendors hoping to succeed in consumer electronics markets must carefully consider consumers' needs when designing and promoting their chips. And they cannot assume that success in other markets assures them any success in consumer electronics.
Jeff Bier is the general manager of Berkeley Design Technology Inc. (www.BDTI.com), a DSP technology analysis and software development company. Kenton Williston of BDTI contributed to this column.