Distributors step up embedded systems support
OEMs' cost and time to market constraints are key drivers in distributors' moves to more embedded systems support.
By Barbara Jorgensen, Contributing Editor -- EDN, March 9, 2010
If there’s ever been a period in the design chain where cost and time-to-market haven’t been major factors, it’s faded into distant memory. As engineers continue to pursue the best design solutions in the quickest way possible, distributors are stepping up their embedded systems support to help ease some of the pressure.
In mid-February, Avnet Electronics Marketing announced it has formed a sales division dedicated to embedded systems. In December, Arrow Electronics expanded its relationship with embedded products supplier Kontron GmbH. Both are aimed at extending the channel’s reach deeper into the embedded systems market.
“The cost today for proprietary system design continues to rise, while embedded solutions offer early access to key technology, and help our customers get their products to market faster -- at a lower cost,” said Jeff Ittel, Avnet senior VP and head of Avnet EM’s embedded unit.
“In the past few years, we have seen increased demand for these products from our customers across multiple industries, and, as that trend continues, we want to intensify our own focus in this area,” he said.
OEMs are turning to the channel for a number of reasons, executives say. Using off the shelf (or merchant) embedded boards helps reduce OEM development costs; accelerates time to market, and contributes toward product differentiation. “It’s a classic make versus buy decision,” said Andrew Femrite, head of Arrow Electronics Engineering Solutions Center. “There’s a strong incentive to use commercial, off the shelf boards.”
Although off the shelf (or “merchant”) embedded boards are designed to be standard, there’s a vast variety of board solutions and a lot of complexity involved. Different board characteristics lend themselves better to specific applications, explained Troy Smith, director of Intel Corp’s Embedded and Communications Alliance. The channel’s span and scope—particularly in regard to its supplier base—can reduce some of that complexity.
“We have a broad base of suppliers and a lot of experience in helping their products work together,” said Avnet’s Ittel. “Our customers come to us and say ‘help me pick the product that is the best for my application,’ and we try to take an unbiased approach.”
“The [product] variety is such that if customers see a board close to what they want, they can source it quickly and inexpensively [from a distributor] rather than designing it from scratch,” said Femrite.
The channel’s size and scope is also working to the benefit of suppliers, Smith said. “Our embedded systems business is one of the top growth opportunities in the corporation.” Distribution is part of an extended embedded “ecosystem” Intel has developed to broaden its product reach. “Distributors service a very large customer base in many different market segments,” said Smith. “There are hundreds of embedded applications.”
OEMs are also using embedded solutions to extend the life of their products and are looking to the channel for guidance. “Many components—particularly processors—are targeted at the PC market and have a shorter lifecycle than embedded designers feel comfortable with,” said Arrow’s Femrite. “Designers of embedded applications, such as kiosks or medical equipment, don’t want to switch products every couple of years,” said Ittel.
Through their supplier relationships, distributors have a lot of visibility into product development plans. Chipmakers such as Intel share their product roadmaps as part of their standard training and support. “We recognize that many market segments require longer product lifecycles, so we have our own embedded roadmap where we commit to a seven-year life span,” said Smith. “We work closely with our distributors to support those products.”
Another competitive advantage of off the shelf boards is enabling OEMs to focus on product differentiation. OEMs are distinguishing their products now through software; a highly customized part of the system or a combination of discrete components, explained Femrite. “If we can steer them toward the right development system; the right components or the right partnerships, they can focus more on how they differentiate their products,” he said. “We can provide everything around [their proprietary technology]” added Ittel. “Customers don’t have to dedicate their resources—the board is already laid out—and they don’t have to make component selection.”
Sourcing through distribution can also minimize certain risk factors, channel executives say. For instance, product designers are frequently concerned about second-sourcing. “In board design, the closer you get to the proprietary technology, the fewer sourcing options you have,” Femrite explained. ”With our line card, we can look at the best sourcing options at any stage of the design.”
Suppliers and distributors are well-positioned to take advantage of embedded market trends, according to market research firm Venture Development Corp (VDC). “Under heavy pressure—operating expense management, capacity constraints, differentiation migration—OEMs are turning to their embedded suppliers to reduce their costs by taking on increasing levels of integration for them,” according to VDC’s report “The Embedded Hardware Boards & Systems Market a Year Into the Recession.” “Suppliers are pushing to do greater levels of integration themselves, in search of higher margins.”
The merchant embedded board market is forecast to grow at an average 8 to 10% through 2012, according to VDC. Certain vertical segments projected to outgrow the pace: digital signage, infotainment, digital surveillance/security, energy, and power.
At the end of the day, suppliers and distributors hope a higher level of service and integration will shore up the customer base and help them sell more products. “In many cases, we already have fulfillment relationships with these customers,” said Ittel. “We see this as an extension of our design-chain strategy.”
