Electronics: New Gadgets = New Growth
The once-flagging industry is recovering with in-demand new products, global distribution resources, and cooperation between manufacturers.
Cynthia Kincaid , Kincaid Strategic Partners (Oct/Nov 07)
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Much of the growth and stability in the electronics industry in recent years has occurred because of collaboration, says Koenig. "The spirit of collaboration and partnership has grown proportional to the growth in competition," he says. "Companies are realizing they have to come back to their core competencies, and they can't really do and be everything to everyone." Therefore, the idea of partnership, acquisition, or merger has become a viable alternative. "The players in this chess game have had to be smarter about the moves they are making by focusing on core competencies, maximizing efficiencies, and outsourcing," he says. "It's that kind of smart business thinking that has become necessary because it's a global economy, a global marketplace, and a global manufacturing community."
Such was the case for the creation of the Xbox. "Microsoft went to IBM for the Xbox," says Itow, "and IBM helped them figure out how to get where they wanted to be. That was all part of the collaboration." Itow says the reason the product was so successful is that both companies listened to each other and worked together from day one, understanding the needs on both sides. "Companies are finding that getting to the market quickly with a product that will be very satisfying to the customer is a win-win situation for all of the players in a whole chain of activity," she says.
Kazmierczak emphasizes that collaboration is viable, but patent challenges can and do arise, particularly where electronics are concerned. "Something as `simple' as a microchip has tens of thousands of patents that go into it," he says. "If you run afoul of just one patent, that can hold up the whole process. Many times companies are not [patent infringing] for nefarious reasons, it's just tough to keep track of that many patents."
As for the future of the electronics industry, Kazmierczak sees a pickup in capital spending, in terms of both equipment and technology. In the early part of the decade, he says, businesses had purchased systems that far exceeded their capacity, and it took a few years to work through that capacity to a point of needing upgrades or changes to their electronic and computing systems. "Those things are beginning to happen now," he says.
The increasing demand for newer and better technology, as well as newer and better consumer electronic innovations, should continue driving the industry into the black for the foreseeable future.