thumb tacks, thumb tech

Musings and rantings about...EVERYTHING.

Wednesday, December 19, 2007

Cost Leadership vs Value Differentiation

As Gartner recently forecast, when 32-nm designs start in 2009 and move into production in 2010, the semiconductor situation will worsen. The costs of developing a 32-nm device from scratch could hit $75 million, pushing the drive to consolidation and collaboration.

Semiconductor companies need to be clear in their strategies - to have scale (cost leadership) or to add value (value differentiation), in order to stay afloat. Like what PM (Project Management) preaches, it's hard to have both. Simple Maths apply: IF Profit = Revenue - Expenses THEN Cost Leadership will cut down your expenses and bring you profits ELSE alternatively, a value-added product will bring in more revenue and increase your profits.

And similarly to what PM "teaches", there needs to be action. Aiming is not enough. You have to shoot. Currently, a lot of strategies are sitting there, simply inert. Whether they are good or bad is impossible to determine, because they do not drive action.

I would really like to follow through the strategies that companies would adopt in these few years and observe their path to success. I wish I will have the discipline and time to do that.

0 Comments:

Post a Comment

<< Home