The electronics industry, and the engineering that underpins it, has been fueled by risk, uncertainty, genius, hard work and occasional luck.
The electronics industry, and the engineering that underpins it, has been fueled by risk, uncertainty, genius, hard work and occasional luck. As a result, we've developed an enormous, hugely successful industry with influence on the global economy that goes far beyond the boundaries of ICs and related components. Many leading-edge companies have achieved multibillion-dollar annual revenue.
But a lot has changed in the past few years. As these companies expand, they need ever-larger markets and customers to provide the year-to-year growth the financial markets expect: 5 percent, 10 percent, 15 percent and more. Good news: The extraordinary growth of mass markets, such as the PC and cell phone, makes these numbers achievable. And conversely, the reverse is true: Much of this growth comes from companies enabling and driving these markets to where they are, as well. It's a win-win all around.
Or is it? The problem is that making these growth numbers year after year requires finding and winning large accounts, and the customer base for many vendors has morphed from thousands of smaller accounts to a handful of major ones that deliver multimillion-piece purchase orders. It's the Intel/CPU model.
Yet like so many relationships, one year you're a valued, key partner, and the next year that customer says, "Hey, it's been fun, but it's time to move on." Suddenly, you have a huge revenue hole to fill.
But more than the financial impact, I am concerned that the focus on big customers is eroding the risk- taking mindset that previously drove our business. The "let's take that chance" thinking about new products, customer support, undefined or embryonic niches, and innovative small customers starts to fade. Instead, there is a relentless focus on the larger, more obvious opportunities with their immediate, more visible pot of gold. But as the old maxim goes, "All that glitters . . . "--well, you know how it ends.
Fortunately, even some of our bigger integrated circuit vendors still thrive nicely on lots of smaller or midsize customers, rather than the mega-customer. Good for them--and for us, too.