A company can build the most technologically exciting product and still go broke, while another prospers while developing run-of-the-mill gadgets. . In our industry you can count on one hand the number of companies that became successful solely on the strength of their technology, and even then, market timing played a major role.
In his March 9 Consumer Blog, Dylan McGrath looks at how Apple Inc. has achieved its place of prominence in the Consumers Electronics market. For me, an inveterate technologist who spent most if his time trying to prove engineering prominence over marketing, this is yet a bitter pill to swallow. But it is a medicine I wish I had taken much earlier in my career. It is true that a company can build the most technologically exciting product and still go broke, while another prospers while developing run-of-the-mill gadgets. It is a lesson EDA startups have yet to learn. In our industry you can count on one hand the number of companies that became successful solely on the strength of their technology, and even then, market timing played a major role. Take Synposys and digital synthesis, or Cadence with place and route, or Magma with its integrated, timing driven, RTL-to GDSII flow. All other EDA entrepreneurs who managed to have their companies acquired, became millionaires because the acquiring company saw a market opportunity, not a brilliant piece of engineering.
Dylan covers the reasons for Apple success with both its line of personal computers and the Ipod masterfully. You can trace the source of the success back to Steve Jobs creativity and market timing, but Dylan fails to emphasize one extremely important aspect of the winning strategy: know your market. It is fair to say that the markets for the Apple personal computers and the Ipod are totally different. The Apple computers appeal to a set of users that is in love with elegant technology, user-friendly graphics, and the mystic of the underdog. These people do not mind spending more money to own and operate what they consider a superior device, are technology savvy, and make purchasing decisions based on the technical worth of the product. People that buy an Ipod do so for its convenience, the inventory of songs, the ease of use and the fact that all their friends have one. In addition, the after market for accessories is small for computers and very large for the Ipod.
The Apple genius rests on its ability to find a market outside of its established personality. It was able to transform itself from a company serving the slow growing elite personal computer users market, to a company that can talk to people like my friend Frank, who still considers his computer a dangerous tool but has spent well over $1,000 on his Ipod and accessories. In fact, he just purchased an external hard disk for his computer (not an Apple product of course) just to backup the contents of his Ipod.
All this came to mind as I read yet another "Apology of Si2" by its CEO. Since taking over, Steve Schulz has spent most of his time marketing the organization to both semiconductors and EDA companies, with remarkable success. Income for what was a struggling consortium, has skyrocketed since he took its reins. Deliverables, of course, have been few and, although Si2 continues to call them "standards", none of them have been sanctioned or approved by any properly chartered standard making organization.
But people that sign checks for membership do not use standards, and in fact most of them would rather have a "de-facto" (read "market leading") proprietary "standard" than a real standard. And Si2 is eager to accommodate what the customer wants. So, marketing counts, whether you are selling computers, consumer products, or memberships. And then we wonder why so few high school graduates choose an engineering college degree.