© wizzyfx Analysis | October 28, 2013

For microprocessor vendors, the enterprise is not the future

Intelligent, connected devices will create significant new opportunities while being highly disruptive for processor vendors; pitched battle to be fought as Intel tries to find its way in the post-PC era.
A world of connected devices represents an enormous growth opportunity for the world’s microprocessor vendors, but it will also be highly disruptive for them, according to new research from analyst firm VDC Research. While the embedded (i.e. non-enterprise) market for processors is forecast to grow at nearly 9% annually and reach over $61 billion by 2017, changing product requirements that favor lower-power, a smaller footprint, and other features that were less important during the PC-era will put industry heavyweights Intel and AMD at an initial disadvantage.

Meanwhile, Qualcomm and Samsung are increasingly well positioned to take advantage of the shifts in the marketplace brought about by mobile and next-generation connected devices. Changes in market share and position are likely to continue in the years to come as the leading chip vendors attempt to adjust their product portfolios in response to rapidly evolving customer requirements.

Dan Mandell, VDC's lead analyst covering the embedded processor market commented, “The days of Intel and AMD fighting for bigger slices of a rapidly growing and fairly homogeneous PC-market pie are over. The processor market of the future is going to be much more diverse in terms of applications and requirements, and product lines will need to be much more varied and adaptable. The changes that processor vendors need to make, in terms of products and market strategy, are really quite dramatic.”

As part of its research, VDC developed industry-specific forecasts to help predict where the demand for processors of the future will be. A number of markets – including digital signage, surveillance, and tablets – were identified by VDC as being critical growth drivers in the years to come, though there is considerable variance based upon processor type. One market of particular note, however, was the automotive market, which VDC expects to be a major driver of growth for the majority of processor types.

Said Mandell, “The technology being designed into cars today represents a massive increase from even what we saw three years ago. A broad spectrum of chips are being used to increase passenger safety and comfort, as well as to improve fuel efficiency, overall performance, navigation, entertainment, and next-gen features like parking assist, 360 degree cameras, and even autonomous driving.”

Lastly, VDC sees big changes ahead for how engineers select the chips that will be embedded into their products. While cost and performance will continue to be critical considerations, a growing emphasis is being placed on tools and services designed to help the customer optimize the chip for their particular application. Said Mandell, “Chip vendors are going to have to work harder for the sale going forward. And while there may be more sales to be made, each one is likely to be smaller and for a niche application that will put the chip vendor’s technology and domain expertise to the test. The growth opportunities outside of enterprise IT are definitely real, but it will be a fight for a particular vendor to win.”


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