Business barometer - Changes ahead?

1An analysis of VITA members’ recent news releases lends insight into what’s really happening in the industry these days, as far as acquisitions, design wins, and product announcements go.

Developments in the critical systems area of the embedded computing markets move very slowly. Trends are slow to emerge, even slower to change, and market data is very sketchy to say the least. One way to understand what is happening in an industry is to study the news releases being issued by the players. There is news aplenty flowing through these days. What are some of the key indicators coming out of that news from VITA members?

Acquisitions

In the first half of 2012, VITA members announced three acquisitions. The year started off with the announcement that Purcell Technologies was formally merging with CBT Technology to establish a leadership position in front panel and enclosure solutions for VME, , , , and many other popular board form factors.

Acromag Inc. made a move to get into the CPU board business by purchasing Xembedded, LLC in May. According to David Wolfe, Acromag President and COO, “The new ‘Xembedded Group’ will now join the existing Acromag ‘Embedded Solutions Group’ and the ‘Process Instrument Group.’” By forming this new group, Acromag is able to provide uninterrupted service to former Xembedded, LLC customers. Along with the products, Acromag has hired all of the employees of Xembedded, LLC in order to provide the expertise to design, manufacture, and support the many products in the “Xembedded Group” portfolio.

Acquisition veteran Mercury Computer Systems could not sit on the sidelines as they stepped into the game and made an offer in June to purchase Micronetics. Mark Aslett, President and CEO of Mercury, stated, “The proposed acquisition is well aligned with our stated acquisition strategy of growing our capabilities, services, and offerings along the sensor-processing chain. Micronetics’ unique microwave and RF capabilities will enhance our integrated digital and RF subsystem solutions for existing and next-generation defense and intelligence programs. This type of integrated solution is unique in the marketplace and is in high demand by our defense prime customers.”

2012 promises to present even more opportunities in the coming months. With the down economy, buyers with cash are going to find some great deals that will help them build their product portfolio, eliminate a competitor, or open doors to new markets.

Design wins

The design win is the ever-elusive measure of business. Most users of the technology do not want to share their story with the world until after their product is in production, if ever. Because it can take two to three years to complete a design and deploy in the field, the technology part is often old news by then. But there is a bright spot: Government users don’t have quite the same restrictions since most programs are publically bid to the prime contractors. For this reason, occasional announcements come in about a program being awarded. Unfortunately, most suppliers don’t like to give the details of which product was part of the award. So we have the case of no wins to announce and if there is an announcement, very little to indicate which products or technologies were part of the win.

Not to despair though, so far this year 17 design wins have been announced by VITA members. Nearly all were in the defense and aerospace market segment, with most using VPX products, though a handful were with VME or XMC/PMC modules. Many other design wins were recognized but not formally announced by VITA members, with most commenting that the design-in activity has been solid.

Product announcements

Product announcements are also a popular way to gauge market conditions. Here the news is much stronger with 66 percent of the VITA member press releases focused on product announcements. Twenty-two percent of the announcements was for PMC or XMC products (mostly XMC, showing the continued popularity of this form factor as a low-profile mezzanine card). System-level products accounted for 17 percent of the announcements, giving more proof that suppliers are trying to move up the supply chain with more integrated product offerings. Most of these system announcements were for very specialized systems such as data recorders, where the suppliers were trying to make life easier for their customers by taking on some of the demanding system integration issues and providing one-stop shopping.

Within these product announcements, more than half were for VPX products, which is no surprise given that VPX is the hottest VITA technology at this time. Suppliers are racing to round out their product offerings based on VPX, and this trend is expected to continue for some time. The overwhelming majority of system-level product announcements were based on VPX technology, strengthening the position that VPX is really a system solution.

Many of the single board computer products that were announced so far this year are a direct result of the latest Intel processor announcements of the third-generation 22 nm quad-core Intel processors, Intel Core i7-3612QE and i7-3615QE. Board suppliers are rushing to get this new processor on as many existing board families as possible because of the performance boost at much lower power consumption levels, making it a better match for many SWaP-restricted applications. A comparison of 59 announcements from VITA members in the first six months of 2012 is shown in Table 1.

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Table 1: A total of 59 announcements analyzed from VITA members in first six months of 2012
(Click graphic to zoom by 1.9x)

Summary

While the first half of 2012 has not been a stellar time for the critical embedded computing industry, are making progress with product innovation. Suppliers claim to be very busy, but the weather conditions appear to be subject to change.

VITA publishes a biannual industry report written by Ray Alderman, Executive Director, which goes into much more depth on the industry dynamics. For more information on the state of the VITA industry, be sure to read the latest edition at http://www.vita.com/home/NewsandEvents/MarketReports.html.

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