Some say it is easier to learn the important lessons of business in a down cycle than in a growth market. Clearly, the boom of the late 1990s and the current economic downturn validate that position. The combination of a robust economy and a high-tech boom offered companies the unique opportunity to ignore many of the fundamental tenets of good business. Few electronics silicon suppliers can afford that luxury today.

What did the electronics industry forget and what is it relearning as it nears the bottom of a two-year trough? In a nutshell, that the basics still apply.

The key to staying competitive in the electronics industry is to listen to customers, identify and nurture distinctive competencies and target markets precisely based upon these competencies and product differentiation.

Making the right strategic decisions will ultimately determine whether a company survives in today's market and prospers when the inevitable turnaround occurs. Despite the unfavorable economic climate, companies must continue to invest in R&D and develop products today before the market telegraphs its demand. First and foremost, this approach calls for a solid understanding of the market and a willingness to adjust strategy as conditions change.

For programmable-logic suppliers, this means companies must recognize that FPGA suppliers serve two distinct customers. High-speed communications OEMs demand FPGAs with some combination of high density, extremely high speed, large numbers of I/Os and massive amounts of on-chip memory. Typically, this market places a higher priority on features and functionality than cost.

The second set of customers is best characterized as the ASIC-alternative market. These customers design products for a wide variety of apps. Despite this differentiation, however, many of their needs are similar. As in most traditional markets, economics drives product selection. Customers place a high priority on unit cost, areal density, power consumption and the other traditional metrics used in product selection. Design security is also becoming an increasingly important issue.

At Actel, we believe an FPGA supplier cannot serve both of these customers with a single product. Instead, we have targeted specific product types for each application.

The current economic downturn should not have surprised anyone in the electronics industry The key to surviving the current downturn and profiting in the coming turnaround will ultimately be determined by each company's ability to foresee trends and carefully invest scarce resources to target future product needs.