Manufacturing Industry

When the big guys see a burgeoning market

Electronic News, Feb 23, 1998 by Chad Fasca

'Minor market leader seeks an industry juggernaut to enter niche market and increase visibility for niche market's major player.'

It is the personals ad for every fledgling company in an emerging market, until, of course, it happens that an $800 million industry gorilla decides to take up the company's offer. Then, the romance and allure of widespread market acceptance give way to the reality of hard work defending one's turf against a seemingly endless sales army that must have come from the Death Star, or so it seems.

Chrysalis, a small supplier of formal verification tools, greeted the famous Bell Labs' entry into the model checking market segment two years ago happily because the small EDA company felt Bell Labs as a player brought legitimacy to the business. It felt the same way when Synopsys joined the equivalence checking segment earlier this month.

NVidia, a small maker of 3-D graphics chips, voiced similar sentiments when Intel and NEC entered its market this month. It envisions the marketing efforts of the two giants enlarging the pie and boasted that its technology will enable it to grow its market share.

A Gnat On A Gold Nugget

But be careful what you wish for; you just might get it. And then what? Big players get involved because they see big dollar signs. What they see in the little company is a gnat on a gold nugget. They will swat.

From a business standpoint, the idea is sound--raise the profile of a new market by encouraging the entry of bigger players. However, no established entrant into a market slips by inconspicuously. The dust kicks up. The market becomes a tempest tossed with questions about the viability of market leaders competing with industry juggernauts. At this point in time a minor market leader is a few design wins away from windfall and a few design losses away from oblivion.

All is not lost. Some analysts suggest that smaller companies, working closer to the cuff can outmaneuver the giants. They are agile and focused. These nimble companies do not have to meet the same material goals and expectations of their larger counterparts. And, they know the market. In fact, many of today's juggernauts took root from more humble beginnings. Through marketing savvy, a remarkable acquisition strategy, a stranglehold on certain technology or just plain luck, they managed to flourish in the face of competition.

Not in this day and age, say some executives. The days of Davids slaying Goliaths may have gone the way of the pre-Global Village. On this side of the argument, industry participants believe bigger not only means better, it means business. In their estimates, $20-$50 million companies better make friends fast, acquire or get acquired. Some consider $500 million the bare minimum in the post-globalization era.

Following the "to be is to acquire" strategy, ATMI Inc., formerly Advanced Technology Materials Inc., made acquisitions of $92 million, $78 million and last Friday disclosed an agreement with NOW Technologies Inc. worth $44 million. Their objective, first revealed at SEMI Invest '97, was growth by strategic acquisition. ATMI, a semiconductor materials supplier, is strapping these companies to its formerly $46 million back. The company has also made big friends with the likes of Texas Instruments and Varian Associates.

Tech Not Enough

Clearly the paradigm in the electronics industry has changed. Technology, once the only thing an upstart company needed, is not enough anymore. Today a company needs a good strategy, a good business plan, good marketing and strong finances to succeed.

The kicker is no matter what anyone says, the technology business is a gamble. Roll the dice. Take your chances. Trust your technology. However, when placing that corporate personals ad for competitors, avoid getting a tattoo with your company name. Otherwise your next personals ad could be 'High-tech exec seeks company named ---, or good tattoo remover.'

COPYRIGHT 1998 Reed Business Information, Inc. (US)
COPYRIGHT 2008 Gale, Cengage Learning
 

BNET TalkbackShare your ideas and expertise on this topic

Please add your comment:

  1. You are currently: a Guest |
  2.  

Basic HTML tags that work in comments are: bold (<b></b>), italic (<i></i>), underline (<u></u>), and hyperlink (<a href></a)

advertisement
advertisement
  • Click Here
  • Click Here
  • Click Here
advertisement

Content provided in partnership with Thompson Gale