Future beckons the thinking machines - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Future beckons the thinking machines

May 12, 2001

For quite sometime now the mantra for success has been "out of the box " thinking. However, as the new millennium dawned, heralding the unprecedented use of technology by mankind, the old paradigm changed to thinking "inside the box" or rather thinking "by the box". In retrospection the evolution and successful acceptance of technology has always been directly proportional to the ability of the technology to improve the quality of human life. On one hand computers made calculations undemanding while on the other networking made communications across the globe effortless and cheap. The question is how can technology make life even more uncomplicated? The answer is by making the boxes (machines) think and therein lies the new mantra of success (at least for the technology companies).

Just imagine how many machines does a person use in his or her daily routine? The list includes, TV, microwave, phone, computer and a car just a name a few. How easy would life be if all the machines could think and communicate with each other? This would mean a lot more convenience and of course the luxury of hands free operations.

Product categories
Segments Products Comments
Web Devices WebTV Products designed to access the Internet.
Many devices will also do other tasks--especially
as technology advances.
Web Pad
Web Companion
Web Terminal
Communication Devices Email Station Products designed for all types of communications.
Nearly all devices will access the Internet and may
do entertainment and computing tasks.
Web Cellular
WebPhone
Web Video Phone
Entertainment Devices Web Set-top Box Products designed to deliver, store and manage
entertainment--TV, video, music and games.
Nearly all devices will access the Internet and will
make the products interactive.
Web Digital TV
Web Game Console
Web/Personal DVR
Digital Jukebox
Computing Devices Web PDA Products designed to provide PC functionality for mobile,
low-cost and simplified applications. Most devices will
also access the Internet and may do entertainment
and other tasks.
Palm Computer
Data collection IA
Internet PC (IPC)
Thin Client
Other Devices Electronic Book Products designed for new functions as standalone
products or as built-in functions in existing products
Car IA
Learning IA
Kitchen IA
Medical IA
Other IAs
*IA=Information Appliances

Technology companies are spending millions is trying to make the boxes think and communicate. This is possible as a small microprocessor is embedded into the system. Therefore, products that have a microprocessor in built like washing machines, air-conditioners are commonly referred to as embedded devices. At the heart of the microprocessor, like any other, is an operating software known as the embedded software.

Till now the demand for information that has been driving the Internet economy has been dominated by the corporates. The man on the street has not been able to do much with information other than communicate. Yes, a person can buy shares on line but can the same person turn on his/her microwave using the Internet? The "tangible" extension that embedded systems add to information technology has opened a whole new world of opportunities. The value proposition has changed.

The next wave of demand in the technology industry will continue to be driven by the need for information access and the most important product category will be appliances. Client appliances will include smart cards, game consoles, intelligent cell phones, set top boxes, hand held computers and home appliances. Server appliances include storage, web, intranet, device control, and home network servers. Another development that has boosted the usage of embedded systems and will continue to do so is wireless access to the Internet. This effectively means that these appliances, using technologies like Bluetooth, can be communicated with from anywhere.

According to IDC, the market for information appliances will grow from a mere US$ 915 million in 1997 to US$ 14 billion in 2001, a compounded annual growth rate of 93 percent. Technologically, advances in embedded software and systems, real time operating systems and microprocessors will drive this the demand.

Segment 2000 2005 CAGR 2000 2005
Web IA 0.8 14.6 80.7% $228 $225
Communication IA 2.7 26.0 56.9% $208 $186
Entertainment IA 1.1 15.4 71.3% $462 $313
Computing IA 3.9 13.2 27.5% $386 $351
Other IA 0.1 4.1 129% $443 $390
Total IA 8.5 73.3 53.8% $293 $243

Traditionally devices have been controlled by hardware but increasingly with technological developments software is being used as it offers more flexibility and better response times. This has caused the fast burgeoning demand for embedded software from verticals as diverse as automotive, consumer electronics, industrial automation, medical devices, military & aerospace, retail automation and telecom/datacom.

The world market for embedded operating systems, services and solutions is estimated at US$ 46 billion in 2000-2001 and US$ 65 billion by 2002-2003 accor

(Rs m) DQFY01 MQFY01 Change
Wipro 816 1,034 26.7%
Infosys 607 424 43.0%
HCL Technologies 1,515 1,721 13.6%
Revenues from embedded systems

All the major Indian software companies seized the opportunity. The major players in embedded software segment are Infosys, Wipro, HCL Technologies and Hughes Software to name a few. For the fourth quarter of fiscal 2001 all these companies have shown a strong growth in this segment despite a down turn in the US economy.

The embedded software is a quite different from enterprise applications software business and is very difficult to implement, as it requires fairly high technology know-how. This translates into the simple fact that the entry barrier is very high in the area. The Indian software majors have the first mover advantage. Therefore, they seem the likely contenders to dominate this area for quite some time to come.


Equitymaster requests your view! Post a comment on "Future beckons the thinking machines". Click here!

  

More Views on News

COFORGE at All Time High; BSE IT Index Up 3.3% (Market Updates)

Sep 25, 2020 | Updated on Sep 25, 2020

COFORGE share price has hit an all time high at Rs 2,287 (up 7.7%). The BSE IT Index is up by 3.3%. Among the top gainers in the BSE IT Index today are COFORGE (up 7.7%) and ORACLE FINANCIAL (up 0.6%). The top losers include L&T TECHONOLOGY (down 0.5%) and ZENSAR TECHNOLOGIES (down 3.5%).

COFORGE Share Price Up by 5%; BSE IT Index Up 2.5% (Market Updates)

Sep 25, 2020 | Updated on Sep 25, 2020

COFORGE share price is trading up by 5% and its current market price is Rs 2,226. The BSE IT is up by 2.5%. The top gainers in the BSE IT Index are COFORGE (up 5.3%) and TATA ELXSI (up 5.3%). The top losers is MPHASIS .

TATA ELXSI Share Price Up by 5%; BSE IT Index Up 2.2% (Market Updates)

Sep 25, 2020 | Updated on Sep 25, 2020

TATA ELXSI share price is trading up by 5% and its current market price is Rs 1,246. The BSE IT is up by 2.2%. The top gainers in the BSE IT Index is TATA ELXSI (up 5.2%).

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE IT


Sep 25, 2020 03:36 PM

COMPARE COMPANY

MARKET STATS