Change is Coming.....

To borrow an overplayed cliché, change is coming, and by that I mean to the thin-film, organic and printable electronics sectors.

Disruption is a central element of emerging technologies. These technologies turn the market upside down, replace the tried and true or at least alter what has existed before in a way that creates pricing declines, rapid advances in functionality and leaps in technological progress.

Emerging technologies are the domain of the bold and the brave as well as those who are easily swayed by the latest and greatest. You'll find this promise of disruption and all that it provides across the entire spectrum of thin-film, organic and printed electronics.

All that being said however, we find ourselves in somewhat challenging times.

Recessionary pressures loom, credit markets are tight, investors are under pressure and the economic outlook for the next few quarters is sketchy to say the least. Consumer spending on new gadgets is expected to slow, and business spending is tanking due to lack of credit, the need to hoard cash and reduced expectations. We fully expect to see a different form of disruption take place in the market that will involve consolidation, refocusing and some closures and disappointments. To think otherwise would be folly.

It will be interesting to observe what the marketplace looks like 5-6 quarters from now and what happens along the way. We don't need as many companies to produce thin-film solar modules as there are currently chasing the market. Same for e-paper displays or silver inks. And, we probably won't need all of the capacity being installed if the broader economy goes into recession. With fewer players and overcapacity, the supply-demand models will need to be retooled.

So what happens?

TOP electronics isn't going to qualify for any bailouts/handouts (save for solar subsidies) so let's consider what is likely to happen.

Smart companies with vision and resources will get busy acquiring smaller firms that while starved for capital, offer technologies, processes and people too good to pass up (especially at a discounted price). The industry will not support shoddy and "me too" solutions. Dumb money will leave the market (along with those too willing to provide it) and the context for businesses will have to evolve. While one can hope that investors and senior management will see long-term value in TOP electronics, that four-letter word isn't a viable strategy.

The focus for companies needs to shift from how much better a firm can build a prototype to how fast they get to market, how well they communicate their value proposition and how and where they sell their goods. Market assumptions will need to be constantly reevaluated and challenged.

It's cold, hard and impersonal but that's the game. Expect lots of disruption over the next 18 months, new alliances to be formed, more innovation, unmet expectations and new thought paradigms to emerge. Some of the names will likely change, the operating models will evolve and creative destruction will hold sway.

Let's see how well the TOP business responds.