Earlier this year my colleagues and I did some crystal ball analysis and identified a number of key trends that we expect to shape the embedded processor market over the next decade. One of these is that we expect embedded processor companies to be increasingly differentiated by their ownership of proprietary algorithms.
This may seem out of left field; what do processor companies have to do with proprietary algorithms? Here’s our reasoning. Processor prices are dropping, while processor performance is increasing. Every year you get a lot more bang for the buck, and it’s getting easier and cheaper to implement a wide range of embedded applications on lots of different processors. But chip vendors still need to differentiate their offerings. One way to do this is for them to offer proprietary algorithms that can only (or most efficiently) be used in conjunction with the vendor’s particular processor: if you want to use that algorithm, you’ve got to buy the processor, too.
Today, processor companies are not typically involved in the development of proprietary algorithms, such as proprietary noise cancellation algorithms or non-standards-based multimedia codecs. Such algorithms are developed by software, system, or algorithm companies, who then typically implement their algorithms on whichever processors they believe have the best chance for success in the target application. If the proprietary algorithm becomes widely used, then the chip it’s first—or best—implemented on may go along for the ride. The hardware/software combination can become a significant differentiator for the chip company.
In the future, we believe that chip companies would do well to become more active participants in this process, either by developing their own algorithms or acquiring promising algorithms. There are already several examples of chip companies that have implemented this strategy. Qualcomm (one of the rare chip companies whose business is heavily based on algorithm intellectual property) acquired SoftMax, a specialist in noise reduction algorithms; presumably these algorithms will now be used exclusively on Qualcomm chips. Silicon IP processor vendor ARC acquired Sonic Focus, a company that provides proprietary audio processing algorithms. ARC then created a custom processor to efficiently implement the Sonic Focus algorithms and offers a hardware/software IP solution.
The big challenge for chip vendors lies in identifying algorithms that are likely to be successful. One place to look is on the PC; many algorithms that were first deployed in desktop applications that will likely work their way down into embedded applications, as embedded processors become powerful enough to run them.
For this approach to be successful, chip companies will need to make a major shift in their mindsets and talent pools—but the result may be the difference between succeeding in the coming decades and being left in the (silicon) dust.
Jennifer Eyre White of BDTI contributed to this article.
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