Uniting the Electronic-component Industry

It is obvious that the players in today's electronic-component industry chipmakers, distributors, original equipment manufacturers (OEMs) and electronic manufacturing service (EMS) providers are facing tremendous pressure due to the breadth and complexity of products, shortened product lifecycles, mergers and acquisitions, price erosion, increased time-to-market pressure, and more. But what might not be so obvious is the fact that one of the fundamental contributors to this pressure is simply a lack of effective means of communication.

For example, with more than 1,000 chipmakers collectively offering several million electronic components to hundreds of thousands of OEMs and EMS providers, either directly or through component distributors, each segment of this industry is tasked with quickly and regularly disseminating vast amounts of information to customers, partners and suppliers as well as obtaining equally vast amounts of information just as quickly in return.

With thousands of electronic components introduced and discontinued every month and chipmaker mergers and acquisitions announced almost daily, OEMs and EMS companies face ever-increasing difficulty in the task of staying informed of the latest component information. This issue is even more critical given the fact that, with shortening profitability windows, OEMs and EMS providers are under heightened pressure to conceive, design and produce tomorrow's products with a competitive edge, which requires the very latest in component technology. And, surprisingly, most chipmakers even the world's largest do not have intuitive, easy-to-search online catalogs of their components on their own sites.

Here's a brief breakdown of some of the problems facing each of these key players.

Chipmakers are focusing more and more on components targeted at specific industry segments such as telecom, the promotion of which requires the creation of reference designs. Chipmakers are looking for a more effective mechanism by which they can distribute reference designs and use such designs to create demand for their components. Additionally, because design wins happen at the new product development's discovery process and not at the implementation phase, it is crucial that design engineers are given reference designs and related component information in a timely manner. According to a marketing manager at a major chipmaker, manufacturers are currently spending several million dollars per year to create reference designs to influence design engineers, but lack a cost-effective means to deliver such designs online to Internet-savvy engineers in the discovery phase. This represents an estimated $2 billion of inefficient marketing expenses. Furthermore, most chipmakers lack a comprehensive, dynamic XML component database, which inhibits them from implementing RosettaNet (an e-commerce standard) for conducting e-business with customers and distributors.

OEMs face shortened product lifecycles and an increasing need to differentiate products. Design and component engineers and purchasing managers still find it difficult to evaluate and compare parts by functionalities, assess risks and obtain timely technical support from experts with the right domain knowledge. Design engineers spend an average of two hours per day on time-consuming discovery work that consists of conceptualizing, searching, selecting, checking and documenting. They pore over catalogs, talk with sales reps and visit multiple Web sites (55 minutes per day, according to the 2001 International Internet Usage Study conducted by publishing company CMP). This amounts to approximately $15 billion of ineffective discovery-related engineering expenses per year. In the course of doing discovery work, engineers also need access to the performance characteristics of components, a means to collaborate with others on the same project, ways to document their thought processes, and a place to store and retrieve the work they have done.