Emerging Markets: The New Drivers for the Electronics Industry

Date:   Tuesday , September 04, 2012

Bruce Anderson, General Manager - Global Electronics Industry, IBM, is responsible for IBM's Electronics Industry Worldwide, across consumer electronics, medical device, office equipment and Semiconductor companies. Through global relationships, market expertise and deep industry insights, Bruce and his team help companies across the world improve products, enhance collaboration, increase speed to market and reduce costs to sustain operational excellence and profit in today's highly competitive market place.

In its report earlier this year, Global Industry Analysts (GIA) announced that growth in the global consumer electronics industry is forecast to be driven by ongoing trends, such as, digitalization, miniaturization, mobility, and portability. Additionally, growth opportunities are also expected to stem from the widening consumer base in Asia-Pacific, Latin America, and the Middle East markets. By 2015, the electronics market will touch $1.4 trillion by 2015.

Like all emerging markets, India is one of the fastest growing markets for electronics, a fact that IBM has been betting on over the past few years. IBM serves a lot of MNCs as well as domestic companies in India both from a service and product perspective. It has a large percentage of operations in India and is focused on serving electronics companies both domestically and activities to be done out of India. In a candid chat with Bruce Anderson, General Manager - Global Electronics Industry, IBM, we explore the emerging trends that have been following the electronics industries. Anderson also talks about the various initiatives taken at IBM to stay ahead of the competition.

Current Initiatives at IBM
We serve companies in a wide array of sectors such as consumer electronics, medical device, office equipment and more. A majority of activities in these sectors are done in India as well. Our services can be categorized into three areas:
1. Product Immigration: This involves product development, process and all the intelligence that is required to this well.
2. Supply Chain, Operations and Optimization: This looks at how a product is moved, built and shipped around the world.
3. Marketing, Sales and Service differentiation: Helps clients in exploring new markets with the help of IBM's analytics. All of our services, products and research are focused across these three areas. We explore a lot of opportunities in using our advanced analytic capabilities in medical device industry and consumer electronics industry.

Trends in the Indian Industry
We survey the CEOs of the major companies every year. The last year's survey saw over 1500 CEOs and a good percentage were from the electronics industry. The CEOs of these companies are keen on how best they can understand their customer and how they use analytics to really do more data driven fact based decisions. This makes them move to a certain direction depending on the insight. This further helps them decide and build more workforces in order to operate on an ideal basis. Best results can be achieved when all the above said analytic solutions are enabled.

1. Customers and consumers, both are now better informed about the products and services and this never used to happen in the past. We do not find people who go out to make a purchase without a good amount of research. All these are done from reviews that have been published in magazine, blogs and various social media platforms and so on. There are unbelievable number of sources for this kind of marketing to happen.

2. Importance of emerging markets is that they are capable of affording more on the electronics products. We are seeing not only consumer electronics become more popular but also people are locating business operations close to where that demand is. We can observe a rise in business activities in countries like India, China and Brazil. Hence, we see these emerging economies as more important in the global operations with electronic companies.

3. The trend now is that, a higher percentage of an electronics company’s revenue is more inclined towards the service side. IBM over the last 15 years has changed from a 10 percent service and 90 percent product to a 60 percent service company today. This is a great way of staying in touch with the market and having connected products is really a key strategy to making sure that it is possible.

4. We are seeing a lot of convergence in the industry. Today, we can see pure data companies buy major brands who make devices and involving themselves in the consumer electronic business. It is very interesting to see how these companies compete against some of the power houses in the manufacturing industry.

Aligning to changing Behavior
The market today is getting smaller. One of the changes we observe in the consumer behavior is about the pervasiveness of allowing electronics into many different areas. The first thing that comes to our mind would be entertainment and convenience. This includes television, telephone, smartphones, tablets and all the other industries around it. We are now seeing people using electronics for security of their homes, healthcare, and the way energy is managed and so on. People have the same expectation when it comes to infotainment, which translates into many other categories under electronics. They can expect it to be connected, intuitive and results shown in real time basis.

The consumers are now trained to get additional value for their device. They are getting much more receptive to a system that is user friendly. Once the manufacturing companies own their customers for the relationship perspective, they are going to be in charge to see how the ecosystem operates. We can see a lot of electronics companies rushing to build the direct relationship with the end user of their product. These companies change the nature of how their products are sold in service. The companies who do not follow this are not likely to succeed as they lose touch in what their consumers actually want.

Vision set for the future We have subject matter experts working out of India. We have got an extremely well educated population who are applying tremendous skills in the other markets. There is a rapid expansion of these skills to help a lot of the Indian companies. These people are made of world class skills. They have been working on some of the most innovative projects around the world. It is an immense asset that we have got here where the engineers disrupt engineering and innovation centers. They have a thirst for that level of expertise so that they can create that excellence in operations in India.

(As told to Vishwas Nair)