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India needs an ODM Evolution!

Posted: 31 May 2012     Print Version  Bookmark and Share

Keywords:original design manufacturers  ODMs  digital revolution  Greenfield EMCs  electronics industry 

I was attending an event about electronics industry in India a few days back. The presenter was talking about how the current Rs.3.40 lakh crore ($65 billion )+ electronics market in India (a very large part of which is being serviced through imports) is going to explode to Rs.20.94 lakh crore ($400 billion) by 2020 and how Government of India is looking to address this demand by planning a policy, working along with trade bodies such as India Semiconductor Association (ISA) and other relevant policy makers.

This is huge and the fact is that if we don't address this issue in a proper way and if we are not 'electronically self sufficient' to address this, we are going to have an import bill on electronics that will be far higher than any other commodity that India imports leading to huge trade deficit and consume significantly large part of our foreign exchange reserves. We talk of self sustenance in energy, agriculture etc. but shouldn't we be thinking of the same for the electronics that we consume.

Sure, trade bodies and the government are thinking of the investment required, in terms of manufacturing facilities, Greenfield EMCs, support to the semiconductor industry, qualified (college grads, Masters, PhD's) so on and so forth. But as a country, how much are we thinking about the importance of local ODMs (Original Design Manufacturers). I feel that's a very vital cog to address this humdinger of an opportunity. So let us look at the dynamics here.

Strategy Analytics

If you see the above flow chart, today in India we have the presence of all major semiconductor vendors and distributors, some CM presence which definitely needs to be beefed up. The two biggest gaps that we need to address today are large scale production facilities and ODM. We also need to see global evolution of Indian OEMs who are able to compete strongly with the global brands on the lines of IT services revolution by Indian companies in the past decade; but that's a topic for another day!

If you see the ODM scene globally, typically products are conceptualized, designed and architected in US, Japan, Korea, China, Taiwan and some EU countries. Being an ODM is one of the most challenging roles both technically and creatively. So let us look at a typical product life cycle and major milestones in an electronic product development lifecycle.

1. Total Addressable Market (TAM)

2. The market requirement

3. Translating the market requirement into product specifications and product pricing

4. Breaking down the specifications further into product features and use case scenarios

5. Looking at critical performance parameters

6. Selecting an appropriate hardware and software platform; both from technical and price perspective

7. Product prototyping

8. Use case tests and extended performance testing/Field testing, compliance testing

9. Final production design

10. Production

11. Product launch / Deployment

The steps 1, 2, parts of step 3 and step 11 are addressed by the OEMs. The CMs would address step 10. That's leaves a large bulk product development activity that has to be addressed by the ODMs.

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