NanoMarkets TOP Blog - Robert Nolan

Another Thought On Start-Ups

Wed, 04 Mar 2009 10:25:00 -0700

An interesting blog entry caught my eye this morning on the impact of start-ups on jobs and by default, industry. (see here) The author points out that start-ups are not the panecea for economic growth (or by default, recovery) given their inefficient use of capital and other resources and how government involvement will spur a rush of companies into a segment that simply cannot support them.

That's not to say that start-ups are not a viable concept by any means but when we consider all of the money that has been thrown at printed, organic and thin-film electronics markets by government agencies, just how far have we collectively come?

As an aside, last month we were approached by a company who would be classified as a start-up that was looking for assistance in advancing their manufacturing operations. They were going to be relying upon an EU grant in order to become the next "(name deleted)". The market doesn't need another company to offer the technology but regardless, the firm was in line for several million Euros so why not take the chance? After all, it isn't as if the business has to succeed......

Especially when the bids are shall we say, rigged?

Who Will Lead?

Tue, 24 Feb 2009 13:17:00 -0700

Interesting article in today's Wall Street Journal about the role of entrepreneurs in getting the economy back on sound footing. You can debate the merits of the proposals but one thing that sticks out is the need for technology, investment and leadership to come to the forefront.

We believe that materials, manufacturing and product innovation will be crucial elements of the story.

Activism, Economics and Technology

Tue, 24 Feb 2009 12:28:00 -0700

An article in Investors' Business Daily yesterday (see here) brings to light the trade-offs between environmental activism (and really, government interference in the market) and economic reality. Everyone thinks that going green is a good thing but what happens when pursuing those policies mean that people lose their jobs, prices increase and/or competition is stifled? How about when politicians see these initiatives as a way to generate cash flow instead of sound economic and fiscal policy making? Can anyone really expect to have a sustainable business or develop new technologies that rely on inefficient uses of capital as the justification for a company's existence? Or how about taxes and fees that make the "next big thing" a non starter? Sure, government mandates (i.e. interference) can provide a spark for innovation but how can anyone raise capital for speculative technologies when concepts like risk, ROI and market driven capitalism have been distorted by non market forces? How does the consumer gain access to the solutions that best meet their needs from a cost or utility basis when policy makers want to appease special interest groups?

Green Energy Bubbles and Troubles

Thu, 05 Feb 2009 10:01:00 -0700

The NY Times has an article on how credit and banking issues are impacting the green tech market. (See here). While access to credit facilities is an issue for most businesses any industry that reliant on tax credits (i.e. subsidy) and borrowing has to be seen as suspect. Solar will still be a favored technology for years to come but companies scrambling for new markets to address have to consider that solar is yet another government and social policy influenced sector that someday will have to make it on its own.

When elected officials are forced to make hard choices on spending and resource allocation in an era of declining tax revenues it will also be interesting to see what happens with renewables. A few years from now when the pendulum swings back to more fiscally conservative thinking either by choice or necessity these businesses have to make money or they are done.

CES and New Realities for Consumer Electronics

Mon, 12 Jan 2009 14:32:00 -0700

Caught the news release about the 2009 CES show taking place in Vegas this week. The release is what you might expect for an event that is trying to put on a happy face when most of the news points to something rather dour.

A few random thoughts...

The trade show is where companies announce and demo new products, they are used as a venue to blitz the media and meet with customers and suppliers. Do it right and you can generate a lot of buzz for the products. They are also a good gauge of what's going on in an industry.

When I see a lead off of 20,000 new products helping lead the way to economic recovery I have to laugh. More so when I see "Innovation will restart the world's economic engine". Unless the innovations are going to significantly reduce costs or offer up a productivity proposition that warrants someone ponying up scarce money then take this one with a grain of salt too. (The only caveat for that I would offer is if you work for a PR firm or in the Marcom department then said innovations will likely keep you employed for a while) Supply is not our collective problem. It's all about demand and that is becoming harder and harder to find. See Mish Shedlock's blog.

I don't consider CEOs attending a trade show worthy of mention in a press release. Of course CEOs should be at major shows. In addition to meeting with press and analysts these people should be out walking the floor, visiting other booths and yes, talking to your average consumer.

However, if you are a CEO (or anyone in electronics) you should be gravely concerned about what is coming down the pike. Consumer electronics are in for a really rough stretch, business spending is falling rapidly and deflation is the current condition. The frantic discounting and panic selling of Q4 has not only destroyed margins but promoted buying of stuff today that manufacturers and retailers would have been able to count on a few quarters down the road. Karl Denninger of the Market Ticker Blog nails it in this entry where he touches upon what happens when we borrow against future demand. The writing style is a tad bit dramatic but the point is rather clear; how many more TVs, displays, iPod/MP3s, smart phones or other gadgets do people want and need right now?

Other issues:

There is talk of large scale reductions in the amount of retail outlets in 2009 and 2010. Clearly we have too many places to shop for goods and while it won't help unemployment numbers the contraction simply has to happen. For newer technologies though that means shelf space is going to be much harder to come by. Best Buy and Circuit City (in Chapter 11 right now) are places where people go to look at what's new then search on-line for the best price. If you get lucky you might actually find someone who can answer some product specific questions. If they go who is there to educate the consumer on why the next generation of tech is worth paying for? Companies cannot underestimate the effectiveness of retail outlets in the success of consumer technology. As retail stores dies off and competition for shelf space increases companies are going to have to come up with new means of promoting and selling products. That's why I found the mention of attempts at about trying to restrict attendance and making sure the "right" people come to the show the most outrageous of all.

What Next?

Wed, 12 Nov 2008 14:47:00 -0700

What will be interesting to sort out over the next several quarters will be where companies and investors are going to place their bets. What markets to enter or remain or exit; technologies to promote or hold onto or destroy; apps to develop or support or shun; people to follow, hire or fire, ideas to embrace or run away from?

Lots of decisions to be made with no real clear answers right now. One thing to be sure of is that the assumptions have all changed and many a smart thinker finds his or herself up against the biggest set of decisions they will likely make in recent and likely future times.

Our (not so) esteemed political figures, policy people and other "impartial participants" in the US seem hell bent on papering over inefficiency by promising help for bad decisions, poor assessments of risk/return, and unrealistic growth projections to go along with the inevitable success and failure that commerce creates. These actions deny all of us the means to do our jobs be that in analytical, strategic, financial or marketing functions. Businesses exist to create returns for their shareholders and investors through providing products and services that customers find useful in some capacity. Some of us agree with that thought. Others believe that businesses and industries can and should operate to provide employment, benefits, tax revenue and political support in the form of donations and votes.

As we look ahead to the coming months we can expect to see an increasing debate on who deserves subsidy, a hand out or a hand up. Clearly our thinking here is that a free market will solve its own problems and allow the best and brightest (or perhaps the boldest) to succeed or fail on their own merits. That philosophy does not appear to extend to various government and policy people who think centralized planning and government leadership is the way forward as is redistribution of wealth while enforcing selective risk arbitrage.

For anyone involved with emerging technology be that solar, consumer electronics, conductive inks, or OLED lighting your life is now far more complicated due not only to financial risk but also the almost certain negative impact of interference in the market. Some firms are favored simply due to politics while others are forced to endure having the markets you were supposed to one day dominate either delayed or even destroyed due to interference. Some firms who rode cheap and easy credit spending to the front of the line are going to find far less demand for their product than they expected. Others are going to discover that the risk factors for their business make them unattractive for investors through no fault of their own.

What matters now is what companies decide to do next. Clearly the monetary and fiscal policies of the past several years (and likely going forward) mean that commerce, innovation, risk and demand are going to be seriously out of whack. That's not to say that businesses cannot grow in recessionary times or at least position themselves for when times improve because they can. In addition to acquisition opportunities there are markets worth playing for.

From our side NanoMarkets will be directing some of its attention from research and analysis of longer term trends and opportunities to more near term issues facing the markets we cover. We will be introducing new service offerings that offer quarterly market updates as well as providing revised versions of our reports as needed. The focus of our research will move to encompass more business, economic and financial issues to go along with our technology and market analysis. Expect to see more scenario planning in our reports as well since uncertain times make for less certain outcomes.

I still consider this an exciting time even if important elements of the stories have now changed. Whatever consensus existed even six months ago is gone replaced by a lot of uncertainty, fear, gloom and to some extent, outrage.

Anyone working in emerging tech now has to arrive at new assumptions and strategies to move forward. Rather obvious on the face of it but what the answers are remain to be seen.

Change is Coming.....

Mon, 06 Oct 2008 12:19:00 -0700

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. [More]

Prognosticating On Emerging Markets....

Thu, 08 Mar 2007 08:31:00 -0700

I recently had a chance to partake in a discussion of sorts about the value of market analysis and forecasting in the TOP electronics sector. Certainly illuminating to say the least. (I thought we did a pretty good job of not promoting hype but I guess some people think otherwise). Nevertheless, it did prompt some discussion internally about what we do as industry analysts here at NanoMarkets besides pretend that we are smarter than everyone else and put out content with the intent of impressing people.

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