Chip Makers Face Awareness Problem

Telecom equipment manufacturers are failing to shop around for the best deals for communications chips, judging by the results of the latest market perception survey from Heavy Reading, Light Reading's market research division.

The 2004 Communications Chips Market Perception Study indicates that most purchasers of communications chips are aware of less than half of the players in any given product category. In other words, there's a good chance that they're missing out on better products, lower prices, or better service and support. Likewise, comm chip companies are missing out on capturing new customers.

This isn't a case of Heavy Reading surveying nincompoops. The 449 folk who took the survey were screened to make sure they really worked for system vendors, original equipment manufacturers, or system integrators. Then they were given a list of 31 product categories and asked to select the ones with which they were familiar. For each of these product categories respondents were then shown a list of suppliers and asked to identify the ones they recognized (see Chips on Their Shoulders).

In all but one product category, field programmable gate arrays, respondents on average failed to recognize more than half of the players.

In some cases, the recognition ratio was much lower. On average, respondents could recognize fewer than one in four vendors among manufacturers of content processors and circuit emulation chips. And they could recognize fewer than one in three vendors among suppliers of Ethernet MAC chips, VOIP chips, modulator driver chips, pre- and post-amplifier chips, backplane transceiver chips, security processors, ATM switch fabrics, ATM SAR chips, and ATM interworking chips (see table below).

It's worth pointing out that some big names were included among players that weren't widely recognized. The most striking example of this is Intel Corp. (Nasdaq: INTC). It has products in 16 of the categories surveyed, but only made it into the top three places in terms of name recognition in eight of them (see Survey Rates Chip Suppliers).

Conversely, some startups made it into the top three spots in a handful of product categories. These include Passave Inc. (PON chips); Big Bear Networks, and Phyworks Ltd. (dispersion compensation chips); EZchip Technologies, Azanda Network Devices, and ZettaCom Inc. (standalone traffic manager chips); NetLogic Microsystems Inc. (search engines) and Cavium Networks Inc. (security processors).

Table 1: Recognition Rates

	Average Percentage of Vendors Recognized by Survey Respondents	Number of Vendors Listed in Product Category	Number of Respondents
Telephony (PDH) Chips	42%	14	77
DSL Chips	47%	13	82
PON Chips	43%	4	48
Ethernet PHY Chips	33%	17	114
Ethernet MAC Chips	32%	12	109
Ethernet Controller Chips	40%	7	93
Ethernet Switch Chips	40%	10	106
VOIP Chips	28%	19	67
Communication Processors	38%	10	109
Laser Driver Chips	35%	11	57
Modulator Driver Chips	30%	10	35
Pre- and Post-Amplifier Chips	32%	10	40
Crosspoint Switch Fabrics	35%	8	55
Sonet/SDH Data Transceivers	27%	20	84
Dispersion Compensation Chips	36%	6	28
Framer/Mapper Chips	40%	13	84
Digital Wrapper/FEC Devices	36%	6	42
Backplane Transceiver Chips	27%	21	51
Circuit Switch Fabrics	42%	7	58
Network Processors	38%	12	117
Standalone Traffic Manager Chips	34%	12	39
Search Engines	33%	10	24
Content Processors	21%	5	29
Security Processors	31%	10	40
Packet Switch Fabrics	35%	13	57
ATM Switch Fabrics	30%	9	41
ATM SAR Chips	28%	14	46
ATM Interworking Chips	29%	8	31
Circuit Emulation Chips	24%	5	23
Control-Plane Processors	35%	11	50
Field-Programmable Gate Arrays	57%	7	105
Source: Heavy Reading's 2004 Communications Chips Market Perception Study

— Peter Heywood, Founding Editor, Light Reading

---

Heavy Reading's 99-page 2004 Communications Chips Market Perception Study costs $3,750 - which includes access to a searchable online database for slicing and dicing results by demographic, geography, and organization type. For more details, click here.