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Surfing the Digital Consumer Wave in Technology
Atiq Raza
Chairman and CEO
Raza Microelectronics, Inc.
2
“There’s wind and then there is a typhoon,
there are waves and then there’s a tsunami!
Such a strategic inflection point [is] characterized by a ‘10X’ change …”
Andy Grove
Waves, Tides and TsunamisThere is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune;Omitted, all the voyage of their life
Is bound in shallows and in miseries. On such a full sea are we now afloat,
And we must take the current when it serves, Or lose our ventures.
William Shakespeare
3
Surfing the Technology Waves is Not Easy
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Digital Transformations
Broadband Communication and Information Processing
5
VCR to DVD: Digital Transformation
6
Digital TV Shipments in Japan
7
Cameras: Analog to Digital Transformation
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Digital Consumer Market
9
Makimoto's Waves - Sony View of Technology
• Simplified Atiq plus original graphic
ComputeProcessors
Next GenerationProcessors
• Compute processors drove the first wave• Running out of steam for the second wave
10
Digital Consumer Lifestyle
StudyMaster Bedroom
Kids Bedroom
TV Gateway
Family Room
Kitchen
Copyright© 2004. MIPS Technologies, Inc. All rights reserved.
Home
Minivans and SUV
11
The Digital Consumer and the Digital Home• Entertainment
– Passive with Higher Quality Experience – Television, Music, Radio
– Interactive with Premium on Gratification – Games, Browsing on the web
• Information Access– Work Related
– Unrelated to Work
• Comfortable and Safe Living – Environmental Control
– Security
– Remote control and management
• Minivans and SUVs gain Home Attributes– Television, Music, Radio
– Gaming
– Cell Phone with rich features
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The Digital Home - Future
Home Network• Wireless (802.11 a/g/n/e, UWB)• Wired (Ethernet, phone line, power line)• Digital (DVI, HDCP, USB, 1394)• RF (broadcast)
Entertainment & Information
Broadcast (RF)
• Multimedia content• Rich experience
Internet
13
Consumers and Home Network
• Home is primarily a Languorous Interactive Environment
• Digital Content is much more Important than Home Automation
• Distributed Control – TIVO, Environment, Security Systems
• Limited Automation and Autonomy in Home Controllers
• PC penetration in US Homes is 65%
• PC as Central Controller for Digital Home is less than 5%
• Driver for Home Networking is connecting multiple PCs
• Wireless Connectivity will be ubiquitous when it can deliver HDTV
• Ideal Control for Home will come through Learning Tools
• Global explosion in Digital Consumer Product Demand
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Global Economic Transformation
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Globalization – Emerging Markets
CHINA
INDIA
RUSSIA
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China’s and India’s Growing Middle Class
The Ansal Plaza shopping mall in New Delhi featuresa McDonalds and Nike, Reebok, Burberry's and Gucci brand products.
This advertising-filled Shanghai street exemplifies the growth from China's economic reforms.
17
Semiconductor Revenue Shipments by Geography
15%
20%
25%
30%
35%
40%
1999 2000 2001 2002 2003 2004
Asia Pacific
Americas
Europe
Japan
Source: SIA
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19
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• Richness of Experience Drives Customer Demand• Content sustains Customer Demand• Standards propel proliferation – MP3, MPEG, 802.11, VHS, etc.• Standards enable multiple Vendors and Brutal Competition• Consumer Products have enabled Affordable Usage Model
– Digital Camera chips, 802.11, Bluetooth
• Overall winning model is the Razor-blade model– DVDs, Digital Gaming Systems, Digital Cameras, Inkjet Cartridges, Cable/Sat TV
• Consumer Content and Services create Profits as Dessert– EBay, Google, Sony, Movies, Music, Games
• Opportunities for Start-up wins in Consumer Products– Atheros, Cambridge Silicon Radio, Portalplayer
Digital Consumer Market Economics
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Market Segments defined by Product or Service, Technology, Sales Channels, Customers
Large Companies “Goliaths” have Franchises but cannot react rapidly to Market Changes
Start-ups have to offer “Disruptive Products” that are Aligned with Emerging Market Requirements
Start-ups can only be Successful by Product and Sales Execution in Target Segments
Start-ups Grow by expanding to Adjacent Segments
Market Segments defined by Product or Service, Technology, Sales Channels, Customers
Large Companies “Goliaths” have Franchises but cannot react rapidly to Market Changes
Start-ups have to offer “Disruptive Products” that are Aligned with Emerging Market Requirements
Start-ups can only be Successful by Product and Sales Execution in Target Segments
Start-ups Grow by expanding to Adjacent Segments
Start-up Opportunities and Market Segments
Goliaths with Franchises
NewProduct
Emerging Market Directions
AdjacentSegment
AdjacentSegment
22
David and Goliath
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Nasdaq Tsunami was Followed by UndertowNasdaq Tsunami was Followed by UndertowJanuary 1983 - Present
Doubles in 8 yearsDoubles in 4 years
Doubles in 2 years
Doubles in 1 year
24
Venture Investments
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Waves and Riptide Co-Exist
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Where VCs are Investing
Forbes• Nanotechnology• PC-TV-Web Convergence• Open Source Software• Medical Devices• Software-Hardware Integrated
KPCB Focus• Personalized Medicine• Consumer Devices and Services• Wireless Devices and Services• Clean Power, Water and Transportation• The “New Enterprise”
Sequoia• Components• Systems• Software• Services
Benchmark• Enterprise Software and Services• Communications and Security• Semiconductors• Mobile Computing• Consumer Services• Financial Services
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Innovation + Rapid Execution = Success
Improvements Breakthroughs
Goliaths
Start-ups
Rapid Execution
Innova
tion
Focus
Creativity
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Sources of Technology Innovation
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Cost-Effective Innovation on a Global ScaleManagement
InnovationEducationResearch
InfrastructureDiscipline
Organization
Integration
ManagementInnovationEducationResearch
InfrastructureDiscipline
Organization
ManagementInnovationEducationResearch
InfrastructureDiscipline
Organization
ManagementInnovationEducationResearch
InfrastructureDiscipline
Organization
30
Recipe for Success• Identify Emerging Opportunities
– WiMax, UWB, HDTV, Enhanced Media over WiFi, etc.
• Develop Jaw-dropping Value Proposition through Innovation
• Develop a Strategic Base of Support for Product– Large Customers, Major Technology Partners
• Place emphasis on low Cost-of-Goods
• Cost-effective Product Development
• Global Markets
• Flawless Execution to intercept Emerging Opportunity
• Price the Products to enable Rapid Growth
• Surf the Huge Digital Consumer Wave
31
Technology Waves – Successful Surfer