October 2, 1976
There is no question about Bob Norman's enthusiasm for the microprocessor. It
is a powerful new tool for the electronics systems engineer. It is
comparatively easy to program microprocessors, (a number of home hobbyists have
become quite efficient at it.)
The weakness in Howard Bobb's plan is that consumer products must have a
strong marketing organization. Contract manufacturing has typically been a low
return investment operation. Those companies that serve Montgomery Ward, Sears
Roebuck and others in contract manufacturing have had considerable difficulty in
getting an adequate return on investment. Although, as Howard Bobb has quoted,
it is difficult to become proficient in consumer products marketing. It still
seems that's where the money is.
AMI - THE ORGANIZATION
Glenn Penisten's move to cut overhead at AMI is pretty much as expected. He may
not be able to actually achieve the "lean and mean" operation of National,
considering the friendly personnel that tend to work at AMI. However, Penisten
will not miss the larger profit margin available from AMI's bank of non-
competitive sole-source programs.
It's fairly obvious that the video games addict can buy a TV set and modify it
and sell it as part of his package, so I don't think it's particularly a
hardship of distribution to go hard-wired.
The political uncertainties in Korea under the present dictatorship make it
fairly difficult to know whether it's possible to establish a long-term
effective assembly house. Most companies have decided not to expand in Korea or
much less establish new operations there.
We should see some major breakthroughs in display technology, perhaps even
combining the best of liquid crystals and LED's by providing a single display
which can be eliminated by passing the current through it or, alternately, can
in effect act as an LCD display.
There seems to be a little doubt that Timex will eventually get serious in the
digital watch business, probably by acquisition. There will be just too many
good opportunities of watch companies going bust for Timex to pass them all by.
National seems fairly serious in entering the add-on memory business for IBM
computers. Although the semiconductor content is very high, approaching some
45% of the factory cost, this is still a pretty dangerous game for the component
house to play. The subtleties of error correction, diagnostics, and customer
service are pretty difficult. The problems at National appear to be the type
that typically occur in expanding situations where the people haven't been fully
trained and/or appreciate their responsibilities. National's difficulty with
some of its military customers regarding qualified parts, their difficulty with
respect to production and high yield of electronic watches, and their field
failure problems related to too much phosphorus in the oxide all coupled
together spell something of a lack of confidence applied directly to the
production situation. Unfortunately, in a company such as National is where
money is made or lost.
ICE'S COMMENTS ON GENERAL BUSINESS CONDITIONS
We are finding a shortage of skilled personnel in design and layout. Pricing
has firmed to a substantial degree, particularly for TTL and other commodity
products. Although there is some slacking of orders as reported in August and
entering into September, most organizations are beginning to report improvements
in both bookings and backlog.
Longer term, the industry ranges from bullish; i.e., 36% growth in 1977
over 1976, to maybe a slight recession as the other extreme.
© 1976 Copyright Integrated Circuit Engineering Corporation