World Computer Industry Analysis

Bishop & Associates has just released a new 10 chapter research report that examines computer hardware trends for electronic connectors and printed circuits. The report covers the period from 2000 to 2005, with longer range estimates to 2010. In addition, this analysis includes all major computer hardware and their generic connector styles and applications. It also provides a baseline for further motherboard and daughter card research by estimating PCB units in all related computer equipment.

This new report provides electronic connector and substrate suppliers a guidepost to identify customers, applications, and market trends on a global basis. Key items covered in this report are:

• Device Types - Palmtop, Notebook, Desktop/Workstation & Thin Client, Entry, Rack, Midrange and Enterprise Servers, Mainframe/Super Computers, Industrial PCs, etc.

• Device Trends - palmtop communicators, bluetooth, thin & light notebooks, desktop vs. thin client and legacy-free, serial ata, infiniband, etc.

• Regional Consumption vs. Assembly Location - estimated percentages and unit volumes by region: North America, Europe, Japan, Asia-Pacific, and Rest of World.

• Connector Usage - units & dollars by computer classification and type, including internal IC sockets, board level, chassis, IO and Level 6. Also mainboard/daughtercard usage.

The global computer hardware industry is arguably the most important market segment in the electronics industry. This is because computer technology and its applications increasingly permeate all industries including telecom, networking, communications, consumer electronics and others.

Computers also tend to be the industry trend setter because of particularly aggressive product developments, progressive manufacturing cost reductions and increasing direct-marketing practices.

However, some speculate the PC era is over. We think not - but the future holds many new and competing styles that will invade conventional PC turf. Desktop replacements are on the rise e.g.. notebooks, legacy-reduced and thin client-servers. Wireless applications from GPRS and 3G technology, through Bluetooth, 802.11 and Intel's CNR may be new killer applications. PC servers will continue to gain share and emulate desktop PCs global sourcing trends. Serial ATA and other serial bus and wireless connectivity will replace some traditional interconnects.

This report translates computers into generic connector and PCB bills-of-material, utilizing detailed chassis and motherboard photos and extensive spreadsheet calculations. It also regionalizes numbers and estimates both consumption (point-of-sale), and assembly location, (where connectors are installed). This indicates a continuing shift to Asia-Pacific point-of-purchase for board and chassis level components.

Interconnect Content

Motherboard and other photos included in the report are utilized to identify connectors, CPU and memory sockets, IO connector types and other interconnects. These illustrations provide connector manufacturers with specific examples of the types of connectors that are used. MB photos include palmtop, desktop, workstation, and server, including 1U rack server designs.

Interconnection categories included in this study:

• CPU & Memory Sockets - PGA, LGA, DIMM, RIMM PC Board Connectors - Card Edge, Board-To-Board, Mezzanine Card, Backpanel.

• Wire & Cable Connectors - Discrete Wire, Ribbon Cable, FEC and other.

• Power Connectors - All Power Distribution, Heatsinks and Coolers.

• I/O Connectors - Serial, Parallel, USB, 1394, Communication, other.

• PC Boards - Main Board, Daughtercards, Mezzanine Cards, etc.

1999 and 2000 were strong growth years for the computer industry - although sales were eroded by declining ASPs. The consumer sector, fueled by Internet access and hardware rebates was a strong component of this growth. This combined with strong growth in telecom to drive many components into shortage. Some devices, e.g.. the Compaq Pocket PC could not meet demand due to delays in production ramp-up and component shortages.

Some argue that bandwidth limitations in dial-up connections, coupled with delays in DSL and broadband cable roll-outs helped to dampen consumer enthusiasm in the second half in 2000. Certainly the 1999-2000 growth cycle caused some inventory problems that were worsened by complex global supply chains between OEMs, CEMs, ODMs and component producers.

Connector companies are currently impacted by several inter-related issues affecting their computer industry sales positions or penetration strategies:

Concentration of Research at Intel and Microsoft due to increasing commodity nature of PC segment; i.e. De-emphasized or increasingly outsourced engineering.

Rapid movement of OEM business to CEM/ODM

Assembly Operations having to move offshore to follow customers

Connector Plants best equipped for new PC business are already in Asia-Pacific - with existing design teams and customer relationships

Domestic computer OEM consolidation is a distinct possibility

Emergence of foreign computer companies, particularly in China

Price pressure has intensified, particularly on industry std. products

ROIs may be suspect due to outsourcing and "Garage-Shop" competition within months of accomplishing a new design.

Industry View Going Forward:

The computer industry will rebound from this recession - best guess is 2Q02 - with some seasonal up tick in 4Q01. The real question here is whether structural changes will have permanent effects on computer demand.

These include:

Slower growth in traditional desktops. Partial saturation will have lasting effects because most users do not need additional power. Emphasis will be more on ergonomics, productivity and mobility.

Strong competition from other devices. This includes "Desktop-Replacement" Notebooks and Thin Client-Server computing.

Abandonment of manufacturing by many COEMs. The contract manufacturing market is the fastest growing segment in the industry with a 40%/year or greater CAGR.

Movement to Asia-Pacific CEM/ODM manufacturers. There is no question that this trend will lessen traditional COEMs grip on hardware-related decisions.

Bright spots:

Server Market. Particularly Rack-Mounted Servers including 1U/Blade designs.

Notebook PCs. Ultralight through Desktop Replacement Devices.

Palmtop Devices. Particularly Wireless Communicators employing GPRS and 3G cellular technologies.

Compact Legacy-Free Desktops. All-in-one or modular LCD-based desktops and including the new Intel/MSFT Tablet PC designs.

The New Killer Applications. These will include:

Broadband Internet - streaming video/HDTV capability with new PCTV and i-Appliance hardware. Example of current connection speed test on my line:

Dial Up 26K ISDN 128K DSL 384K Cable 1854K

Wireless Networking - 802.11B and wireless home networking.

Mobility Computing - Tablets, Ultralights, Palmtops with Bluetooth and GPRS/3G and voice recognition capability.

Windows XP computing - When taking full advantage via new application software developments.

Electronic Publishing and Distribution - Seamless (save-the-trees) Interactive e-Books becoming a mainstream technology in both consumer and business markets.