Top 10 trends for embedded hardware and systems market in 2011

NATICK, USA: VDC Research Group analysts have announced their predictions for the key trends anticipated to shape the 2011 embedded hardware market.

In order to maximize near term market share and revenue growth potential, VDC Analysts recommend suppliers consider the following trends as they plan for 2011.

COMs gain traction as time-to-market accelerators for OEMs
By combining COM express modules with off-the-shelf COMs, suppliers are able to offer several different configurations of CPU boards and leverage COMs’ interchangeable characteristics. CPU vendors can thus offer a fairly wide range of boards without incurring high design and inventory carrying costs.

PC/104 module family under pressure
Although VDC data projects the PC/104 family will experience a single-digit rebound from the low points of the recent recession, vendors will have to commit resources to developing newer strategies in order for this technology to remain viable. Otherwise, the recovery of these architectures is likely to stall or decline in 2011.

Asia continues to rise in development of embedded technology
2011 will see further strengthening of the Asian embedded supplier community as supply chain synergies, R&D capabilities and fabrication automation increases between upstream and downstream ecosystem partners.

China’s growth will power MCU market
Continued economic growth in China will drive the country’s automotive market and expand the need for MCU technology. Despite reduction in government subsidies, VDC expects the Chinese automotive market to expand substantially through 2015, driving adoption of MCU solutions.

Suppliers will invest in services value chain
While embedded hardware margins show signs of stability in 2011, it’s clear to VDC that leading embedded suppliers also recognize the value their clients place on a range of services capabilities. As a result, many leading suppliers will try to differentiate by investing in critical aspects of the services value chain, from consulting capabilities to enhanced warranty and end-of-life policies.

FPGA and GPU will expand into a number of market segments
The medical, industrial automation and military segments provide an attractive opportunity for FPGA devices. From imaging equipment to diagnostic devices, there is a need for adaptable health care, factory control and military C4 solutions. The programmability, flexibility and reduced non-recurring engineering (NRE) costs associated with FPGAs will lend themselves to broader adoption in these markets.

Tier 2/tier 3 OEMs and ISVs will become more important
Investment in solutions requiring embedded platforms continues to rebound, however the market will still be driven by small- to mid-sized projects. This is related to the slow return of larger, blanket purchase orders let by Tier 1 accounts and to the user community preferences for projects with smaller footprints that fit within narrower application definitions and require short, sharply defined systems integration support. These projects are tailor-made for local, expert ISVs and ISIs, as well as Tier 2/Tier 3 OEMs.

The market explores HaaS (Hardware as a Service) bundles
Broad market expansion and deep application penetration of remote monitoring and control capabilities will advance across a number of market segments, foretelling a broader migration to managed services solution development and deployment models in supervisory monitoring and control applications.

These embedded application clouds will require local points of presence (POPs) or on-site infrastructure and hardware rolled into service level agreements (SLAs) supporting the software and service delivery portions of contracts.

Cross-platform processor suppliers learn to play nice
From broader, bigger, more aggressive, public licensing agreements to M&A, the market will force suppliers of CPU, FPGA and GP GPU technologies to collaborate more in 2011. VDC Research’s surveys of hundreds of OEMS across a number of embedded markets reveal significant growth in OEM plans to develop solutions on hybrid platforms incorporating two or more of these technologies.

Competition will intensify and growth will accelerate
Even if the market does not return to pre-recession levels, growth will accelerate during 2011. VDC sees virtually every vertical market growing more than 5 percent, and most technology categories achieving the same 5 percent CAGR. However, profitability results may not be so positive.

Demand for stable technologies, brutal price concessions and expanded services requirements will provide opportunities for differentiation and revenues, but not necessarily margin.