My colleagues and I at BDTI recently completed a project to help a chip company select a licensable processor core to perform computer vision functions in a new SoC design. In the process, we learned many things about these processors. But, more interesting to me, we also learned something about human nature.
A typical general-purpose embedded processor chip is used by hundreds or thousands of customers, so suppliers find it necessary to make detailed information about these chips readily available to the public. In contrast, licensable processor cores are "designed in" only by chip companies, so a licensable processor core might be used—at best—by dozens of customers. This means that processor core suppliers can choose to keep the details of their products confidential, disclosing them only to prospective customers under non-disclosure agreements. And core suppliers often prefer this approach, since it allows them to keep competitors in the dark about their products.
Over time, of course, information tends to diffuse, and competitors learn about each other's products. But this takes time, and in new markets competitors may remain ignorant about each other's products for quite some time. Licensable processor cores for computer vision applications are a new market—most of these cores have been introduced in the past year or two. Suppliers in this niche know very little about each other's products.
Given the lack of available information about competitors' products, I was surprised to find that nearly all of the suppliers are very confident that their product is the leader—and that it has a significant lead over competitors' offerings.
Then I was reminded of David McRaney’s outstanding book, You Are Not So Smart. In a series of concise chapters, McRaney sheds much-needed light on the many and varied ways in which we humans delude ourselves. In chapter 15, titled "The Argument from Ignorance," McRaney writes:
Most of what gets filed under the realm of the paranormal is the result of people committing the argument-from-ignorance fallacy… Put simply, this is when you decide something is true or false because you can't find evidence to the contrary.
When I first readYou Are Not So Smart, McRaney's explanation of "argument from ignorance" helped me understand how people can believe in UFOs and the like. Later the realization dawned on me: In a market where product information is hidden, the argument from ignorance is what enables five competing companies to each believe that their product is vastly superior to the competition. Another factor is that people like to understand things and, in the absence of information, it's human nature to make things up (usually without realizing that we're doing so). And when making things up, we tend to come up with explanations that conform to our established view of the world.
Another potential explanation for this "we're all leaders" phenomenon is that perhaps each of these vendors' products is superior in some respect. After all, processor cores have many important attributes: performance, energy efficiency, silicon area efficiency, quality of development tools, availability of software and so on. So there can be multiple leaders. But being the leader in one of several criteria isn't the same is being the leader overall. And I would argue that it's critical to understand your product's competitive weaknesses.
While belief in UFOs may be harmless, misunderstanding how your product stacks up in the marketplace can be dangerous. Absent a clear-eyed understanding of your product's competitive strengths and weaknesses, it's impossible to intelligently prioritize your product improvement ideas, and also impossible to know which markets present the best opportunities.
Have you observed competitors being overconfident in their products in the absence of good information? I'd love to hear about it. Post a comment here or send me your feedback at http://www.BDTI.com/Contact.