What do these things have in common?
It’s all evidence that engineers need to be removed from corporate management in the semiconductors space... that includes electronic design automation (EDA) and test.
The nation is either coming out of the recession or is on the cusp of a second recessionary dip. Revenues in semi are up, Revenues in capital equipment are up, revenues in design automation are up. everyone should be breathing a sigh of relief, but there are ominous clouds on the horizon.
There was all the hoopla at CES about tablets and 4G wireless but the real undercurrent was there was no real innovation. Not only was there little innovation on display but there were few product that anyone would actually want. A widely reported study from Accenture showed that 95 percent of the products that were announced at CES would be returned with no defects “because the product either didn't meet customer expectations (not useful) or consumers thought it was broken because it didn't work the way they expected (not usable).” The products fail because the companies that make them have no idea what the market really wants.
The reason AMD booted their CEO is because he not only missed the window on netbooks and smart phones, but he’s also booted the tablet opportunity (which takes us back to CES and the fact that most of the tablets shown aren’t going to be available yet because they don’t have the chips to run them.
And then there are all of these wonderful statements about how engineers thing social media is useless for them because they don’t care about what someone had for breakfast.
All of these examples -- and I can give a dozen more that have come to light in the past three weeks -- demonstrate that the semiconductor industry, et al, has not got a clue what is going on in the world. The reason? The industry is run by engineers... who talk to each other... but not to the rest of the world.
Facebook is closing in on 200 million users in the US alone. More than half the country is on it to some degree. That means we have gone past the point of general adoption. If you add in all the other platforms, pretty much the only people not fully adopting social media as a means of communications and information gathering are the luddites at the far right of the bell curve ... which would be engineers who think Twitter is stupid. And those are the guys directing the companies that make the technology that social media runs on.
Marketing people are pretty much all on board. the only ones who have not adopted a social media strategy are those who are still getting their budgets cut by management (engineers) who think Twitter is stupid. That’s why really competent marketing people have got their resumes out to companies outside of the semi world, desperate to find a place that thinks marketing is a good idea and that social media is an important part of it.
There are some companies trying to break out of the mold, like Cadence Design. Cadence has launched the EDA360 program which is, in essence, the first real new marketing effort by an EDA company in the past 20 years. It is bold and not without detractors (mostly engineers who think Twitter is stupid). But internally it is receiving significant resistance by the R&D teams, made of of engineers who think Twitter is stupid, and the morale in marketing is plummeting. Market leader Synopsys has put both feet squarely on social media as a marketing tool... but they have cut all other forms of marketing to practically nothing. They have no means to measure whether their efforts are having an effect. As one marketing exec told me at the Design Automation Conference last year, “We know we have to do social media, we just aren’t sure why.”
NOTE: Social media is a great tool for marketing. It is not a replacement for real marketing.
AMD is a big EDA customer which makes sense because AMD builds a lot of complex chips. They decide what chips to build based on their marketing data. Their marketing is driven by engineers who talk to other engineers who haven’t purchased, much less read a marketing report that wasn’t 20 years old. Yes, I’m sure you can pull an example out of your hat that contradicts this statement, but if it wasn’t true, how has AMD missed the window every time.
Intel, the market leader, isn’t much better, even though the do invest in some good marketing. One of the big stories at CES was how ARM is starting to breathe down Intel’s neck... and how Intel still can’t seem to come up with a product that works well in portable products. Let’s not mention the fact they were forced to fund Nvidia to the tune of $1.5 Billion.
Switch back to the support industries for semi: EDA and Test. These guys base their marketing data on the input they get from the engineers at companies like AMD. How do they get their numbers? Years ago I worked for a large Japanese semiconductor company. I was fairly new to the PR game. I got a call from a large analyst firm for some confidential sales number so they could do a forecast. I went to the head of the division for the product line in question and asked him what to tell the analyst. He asked me,
“What did we say last year?” I looked it up and told him.
“Add 10 percent to it.”
“We increased sales by 10 percent?”
“I have no clue, but we’re not going to tell him the real number.”
This guy was an engineer. If he is still in the business I bet he thinks Twitter is stupid.
To be continued.