Wired

As a design engineer, I get several trade magazines that cover all sorts of hardware designs. They talk about chips and boards and features, etc. Pretty dry stuff if you are not into product design. But what I have noticed over the years is the changing way component manufacturers are developing new products. They are all being re-active to the market instead of making and creating new markets. They find a trend then start making components just for that market.

The iPod is very popular now, along with mobile phones. So all the chip companies are now releasing products just for those markets. Except one thing…..if the products are already out making the trend, then why do they need more components? They don’t need any new chips since the products are already being built and shipped. The chip companies then get narrowly focused on trying to fit into an existing trend and they abandon R&D work on future chips that could shape the technology sector and pull in a future profit. But that’s what most of the chip companies are currently doing…..they are abandoning long-term products and going for the quick profit, at the expense of their own future.

There are hundreds of areas that engineers are working in, and only a very very small percentage are doing ‘Popular’ products, like mp3 players. With the chip companies abandoning the remaining engineers, they are on a path to self-destruction. And taking the U.S. technology sector right along with them. What if you are not doing mp3 players or mobile phone development? What about products for the remaining 99% of engineers? “You guys take too long to make a profit.” Or, “You guys require too much support.” Yes, those quotes are real and recently made. And there is a reason……

Over the past several years, many chip manufacturers have been selling themselves to big money investment groups hoping for a quick profit. These investment groups put in new management in hopes of squeezing out a handsome profit for their shareholders, and quickly too. Now don’t get me wrong, I do appreciate profits, but when people start turning technology firms into quick cash machines, it is NOT in the best interest for the future of U.S. technology leadership.

These investment groups slash R&D budgets, discontinue all products that cannot give a large return within a year, and layoff all employees not specifically working on quick cash generating products. Sure this can make you and your shareholders a fast and tidy profit, but what about the larger picture? What happens to the U.S. technology sector when companies no longer plan and build products for 2, 5, even 10 years out? What happens to the technology ranking of the U.S.?

All this harm and all this potential gone, just for the quick profits of a few greedy investment groups. They walk away with the profits, and when the company’s few remaining products no longer bring in the big-bucks, they just close down the company and poof, another U.S. technology company is gone. Just a terrible waste of talent. I have seen it over and over again and I am not happy with this trend. If this continues, U.S. technology progress will grind to a halt, and the only products you’ll be able to buy will be crap consumer goods made overseas.

-Mark
mark (at ) wiredinc ( dot) com

This entry was posted on Monday, December 11th, 2006 at 1:24 am and is filed under Marks Corner Table. You can skip to the end and leave a response.