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EC to Spend Billions for Industrial R&D on Embedded

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Just before CeBIT opened, the European Commission launched a €2.5 billion Joint Technology Initiative called ARTEMIS to address embedded computer systems that – while running almost unnoticed by users – improve the performance of all kinds of machines: from cars, planes and phones, to factories, washing machines and televisions.

An enormous opportunity for systems integrators that shifts commercial attention to industrial B2B commerce, more than 4 billion embedded processors were sold last year with the global market worth €60 billion and growing annually at rates near 14%. Forecasts predict more than 16 billion embedded devices by 2010 and over 40 billion by 2020.

The share of embedded systems in the value of final products is expected to continue to rise in key industrial sectors (e.g., by 2010 over 35% of the value of your auto will be attributable to embedded electronics).

"Invisible computers embedded in all devices of industrial application can have a tremendously positive impact on Europe's economy", says Viviane Reding, EU Commissioner for Information Society and Media. "…This is why €2.5 billion of European public and private research investment into embedded system over 10 years is very worthwhile, ensuring that European technology remains at the forefront worldwide..."

To promote economies of scale, cost savings and much shorter times to market for products based on embedded computer technologies, and to keep European industry at the forefront of global developments in these fields, the EU is pioneering this entirely new way of funding research in Europe.

The Commission and the EU Member States who wish to participate will pool their public funding with universities and industry, including many innovative SMEs, by setting up a public-private partnership.

While research funding in embedded systems so far tends to be fragmented in small projects funded by individual Member States and agencies, the new "open" consortium – under the name ARTEMIS – allows Member States and the Commission to co-operate and co-finance pan-European research initiatives focused on a strategic agenda set by Industry itself. ARTEMISIA, the Artemis Industrial Association currently has more than a hundred members (50% R&D organisations, 22% SMEs and 28% corporate members).

ARTEMIS will be fully operational within the next few months as organisations based in Brussels with their own rules, own staff, premises and budgets. Their tasks will include coordinating research through calls for proposals and funding of research projects of European scale.

The European Commission also launched a second Joint Technology Initiative called ENIAC which targets nanoelectronics.

For more information on Joint Technology Initiatives, see:

http://cordis.europa.eu/fp7/jtis/ind_jti_en.html#eniac
http://cordis.europa.eu/fp7/jtis/ind_jti_en.html#artemis

Top 10 Trends for Consumer IT

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Oh, how we envy those Tier 1 companies with their big budgets and their ability to spend their way to success. Being big comes with a series of challenges that make SME’s cringe. Below are the Top Ten trends that high volume retailers and vendors will confront in 2008.

ONE
Cash & Credit Crunch
Headwinds from the macroeconomy (outside of our industry) now cloud the outlook for the business climate and the consumer spending environment for retailers. The European Bank says “a perfect economic storm” is on the horizon. Let’s not talk ourselves into a recession but acknowledge the reality of America’s mortgage and foreclosure crisis, UK’s Northern Rock fiasco, France’s Société Générale’s rogue trader scandal, Germany’s government-backed bailouts of German banks, and Spain’s new reliance on ECB finding for their banks.

A solid credit rating and healthy balance sheet will serve retailers well during 2008 as they again demonstrate why cash is king. With consumer spending constrained by economic weakness and tight credit, the marginal players in the industry are in for a tough time. Companies who struggled to grow sales last year, even when growth was robust, may have increase borrowings under their credit lines, if they haven’t already done so, to fund operations. Financial and credit managers from distributors, retailers and vendors should observe these trends at www.ecf-congress.eu

TWO
Search for Perceived Value
Retail in affluent economies is an emotion-filled business where product purchases are driven by consumers’ desires to satisfy wants, rather than simply meet needs. In an environment where consumers have a lot of reasons to feel unsettled about the economy, retailers need to demonstrate value-added on top of compelling prices and quality merchandise.

THREE
Growth for Private Brands and Branded Non-Brands
The increased penetration of private brands is not a new phenomenon, but with retailers and disties facing tough market conditions for 2008, the allure of direct sourcing will result in acceleration. The capabilities of retailers’ internal product development teams have improved, but building a brand from scratch is never easy, so the more common strategy involves entering into exclusive distribution agreements.

Interesting note: in what appears to be an oxymoron, there’s a trend to successfully brand Private Label

EC: Stop The Carousel Ride

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Critics of the EU often point to the abuse of structural funds (€703m, up 17% with 60 out of 95 audited projects showing “material errors” in last audit.)

Yet, this fraud pales when compared to VAT fraud, a crime typically associated with our industry, with our small-but-valuable (and easily portable) components and devices such as chips and phones.

Carousel

Carousel and VAT fraud is a giant that dwarves Europeans' other favorite financial fiddles, For example, carousel fraud accounted for 87% of total fraud reported in UK for the first half of 2007 and will reach £4.75bn for one year in the UK alone.

Angry MEPs now want the European Commission to overhaul its anti-fraud operation and pull together the investigatory powers of the antifraud unit OLAF under a single regulation.

Carousel fraud, also known as missing trader intra community (MTIC) fraud, has been a big headache for some years. Critics say sentencing is too lenient to deter serious criminals as the average sentence for frauds up to £50,000 would be just three years (while larger frauds over £50m inspire sentences of only six years.)
 
In other legal news, Microsoft has won a seven figure sum from a distributor found guilty of selling tens of thousands of units of grey software from outside the European Economic Area (and distributing this unbundled and with recycled certificates.)

Furthermore, government agencies this year seized 360,000 counterfeit computer goods, mostly computer networking hardware and integrated circuits.

The European Commission Taxation and Customs Union Directorate General joined forces with US Customs and Border Protection agency in "Operation Infrastructure," aimed at fighting piracy and preventing the spread of counterfeit chips.

Criminal entrepreneurs re-mark chips, often replacing the label with a different brand name and different part number. The chip might work in equipment but may not have been tested for speed, and the part number might not have been checked, which can lead to equipment failure.

The U.S. and EU have established the Anti-Counterfeiting Trade Agreement to encourage countries to follow intellectual property rights established by the World Trade Organization and other global trade groups.

According to EC research, more than 130 million counterfeit items are seized each year, so it seems in this category (unlike VAT fraud) our industry can only claim participation and not leadership.

Apple in Top 10, Mobile Phones Reach 1bn

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iPhoneThe iPhone puts Apple in Gartner's Top 10 worldwide mobile phone sales. Worldwide mobile phone sales reached 1.15 billion units in 2007 with three new companies in the Top 10.


“Emerging markets, especially China and India, provided much of the growth as many people bought their first phone,” says Carolina Milanesi, Research Director for mobile devices at Gartner. “In mature markets, such as Japan and W. Europe, consumers’ appetite for feature-laden phones was met with new models packed with TV tuners, global positioning satellite (GPS) functions, touch screens and high-resolution cameras.”

“…The mature Western Europe and North America markets are driven by operator contract terms and replacement cycles and will account for just 30 per cent of the global mobile devices market in 2008.”

Table 1
Worldwide Mobile Terminal Sales to End-Users in 2007 (Thousands of Units)

Company

2007

Sales

2007

Market Share (%)

2006

Sales

2006

Market Share (%)

Nokia

435,453.1

37.8

344,915.9

34.8

Motorola

164,307.0

14.3

209,250.9

21.1

Samsung

154,540.7

13.4

116,480.1

11.8

Sony Ericsson

101,358.4

8.8

73,641.6

7.4

LG

78,576.3

6.8

61,986.0

6.3

Others

218,604.3

18.9

184,588.0

18.6

TOTAL

1,152,839.8

100.0

990,862.5

100.0

 

 

 

 

 

Note* This table includes iDEN shipments, but excludes ODM to OEM shipments
Source: Gartner (February 2008)

Table 2
Worldwide Mobile Terminal Sales to End Users in 4Q07 (000s of Units)

Company

4Q07

Sales

4Q07

Market Share (%)

4Q06

Sales

4Q06

Market Share (%)

Nokia

133,194.4

40.4

102,791.8

36.2

Samsung

44,353.1

13.4

32,011.3

11.3

Motorola

39,291.0

11.9

61,034.4

21.5

Sony Ericsson

29,848.8

9.0

25,666.9

9.0

LG

23,545.0

7.1

17,833.2

6.3

Others

59,822.4

18.2

44,886.7

15.7

TOTAL

330,054.7

100.0

284,224.3

100.0

 

 

 

 

 

Note* This table includes iDEN shipments, but excludes ODM to OEM shipments
Source: Gartner (February 2008)

“The market saw three new entrants into the Top 10 in Q4 2007. These vendors included RIM, ZTE and Apple. “On one hand, we have aggressive pricing and a focus on emerging markets (ZTE), and on the other, RIM with targeted functions and Apple with brand and design,” says Ms Milanesi.

Sales in the Eastern Europe, Middle East and Africa region remained strong in Q4 2007 and reached 61.8 million units. Mobile operators continued to add new subscribers to their networks, especially in Africa where countries such as Nigeria, Egypt, Algeria and So. Africa saw healthy net new additions.

In Q4 2007, mobile phone sales in Western Europe totaled 55 million units, up 2% from same quarter in 2006. Features such as music players, GPS and cameras proved to be significant attractions. In the same quarter, operators in Germany, UK and France introduced Apple's iPhone to the market.

Although sales have been small, this iconic device renewed consumers' interest in high-end phones, which in most Western European markets are still heavily subsidised by operators, according to Gartner.

EMEA Printer Market is Up

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The combo printer, copier and multifunctional product (MFP) shipments in EMEA in 2007 totaled 52.6-million units, up 4,3% says Gartner.

This year of growth was driven by demand for MFPs, which outsold printers. Colour-page devices grew again in EMEA (up 34%) but monochrome-page was the predominant office choice (up 18% and 85% share of the page market).

HP held Number 1 position while Lexmark lost market-share trying to pull out of the lower end of the market to focus on high-end workgroup space.

”The current period of unit growth may not continue,” cautions Gartner.

Vendor200720072006

20062007-2006

 Shipments(%)Shipments(%)Growth (%)
Hewlett-Packard23,22144.120,72341.110.8
Canon8,33715.88,12416.12.5
Epson6,66112.76,29612.55.5
Lexmark3,9867.65,0129.9-25.7
Brother3,2246.12,9025.810.0
Others7,21013.77,33414.6-1.7
Total52,637100.050,392100.04.3
      

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