1. jfieb, 16 minutes agoEditDeleteReport

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   jfiebMember

   Sensory blog June 3
   
   RAMBLING ON… CHIP ACQUISITIONS AND SOFTWARE DIFFERENTIATION
   June 3, 2015
   
   When I started Sensory over 20 years ago,
   
   wow, they have been around a LOT longer than I would have believed, kind of like QUIK 
   
   
   I knew how difficult it would be to sell software to cost sensitive consumer electronic OEMs that would know my cost of goods. A chip based method of packaging up the technology made a lot of sense as a turnkey solution that could maintain a floor price by adding the features of a microcontroller or DSP with the added benefit of providing speech I/O. The idea was “buy Sensory’s micro or DSP and get speech I/O thrown in for free”.
   
   After about 10 years it was becoming clear that Sensory’s value add in the market was really in technology development,
   
   Look how long it took them to find their way with their ideas...
   
   
   and particularly in developing technologies that could run on low cost chips and with smaller footprints, less power, and superior accuracy than other solutions. Our strategy of using trailing IC technologies to get the best price point was becoming useless because we lacked the scale to negotiate the best pricing, and more cutting edge technologies were becoming further out of reach; even getting the supply commitments we needed was difficult in a world of continuing flux between over and under capacity.
   
   So Sensory began porting our speech technologies onto other people’s chips. Last year about 10% of our sales came from our internal IC’s! Sensory’s DSP, IP, and platform partners have turned into the most strategic of our partnerships.
   
   Today in the semiconductor industry there is a consolidation that is occurring that somewhat mirrors Sensory’s thinking over the past 10 years, albeit at a much larger scale. Avago pays $37 billion dollars for Broadcom, Intel pays $16.7B for Altera, and NXP pays $12B for Freescale, and the list goes on, dwarfing acquisitions of earlier time periods.
   
   It used to be the multi-billion dollar chip companies gobbled up the smaller fabless companies, but now even the multibillion-dollar chip companies are being gobbled up. There’s a lot of reasons for this but economies of scale is probably #1. As chips get smaller and smaller, there are increasing costs for design tools, tape outs, prototyping, and although the actual variable per chip cost drops, the fixed costs are skyrocketing, making consolidation and scale more attractive.
   
   That sort of consolidation strategy is very much a hardware centered philosophy. I think the real value will come to these chip giants through in house technology differentiation. It’s that differentiation that will add value to their chips, enabling better margins and/or more sales.
   
   I expect that over time the
   In fact, we have already seen Intel, Qualcomm and many other chip giants investing in speech recognition, biometrics, and other user experience technologies, so the change is underway!
   
   
   
   Commentary; Sensory in some ways has a lot of history in common with QUIK. Things have moved their way a HUGE amount. When you evolve into the UI of the next generation of devices you are so important. I don't thenk they are for sale at all.
   
   Why?
   
   Kind of like QUIK, they have existed for 20 yrs and now are an EOS( dawn) of their own making and from their blog they have a roadmap of adjacent possibles that are so exciting and that they will just want to experience.
   
   Would I like to invest in this company?
   
   You bet. it would be a nice focus holding for the future, but since its private, its not possible for a mere average citizen. ....but is QUIK a proxy for them?
   
   Yes, I think they are as of NOW. I am really happy as I was worried they would get the IP from who knows where and that it would NOT BE ANY GOOD.
   QUIK has top notch audio hardened into EOS. Audio is a UI. It is a key focus for any Smartphone, platform wearable.