Consolidation seems inevitable in 2011

It may be a bold prediction, but the writing is on the wall—2011 is likely to be a year that sees the beginning of the end of several technology companies. 
 
Despite the rebound this year from the depths of recession in 2009, economic and industry growth is likely to be subdued in 2011. While the wallets of consumers and businesses alike are open once again, there are fewer new ones opening. 
 
In addition, the pent-up demand caused by the recession has been satisfied and what is left is demand driven by market growth. While this is not a doom-and-gloom prediction, it will spell the end for some in the industry as the world deals with more moderate and sustainable growth. 
 
Those that do survive will go on to be the key players through the next few market and economic cycles.
 
The segments of the high-tech industry that are likely to see the greatest impact are those that have experienced the greatest change and/or the highest number of new entrants. Some key examples include communications, handsets/smartphones, and mobile OS. 
 
The push toward 4G, or more appropriately named IP-based WWAN communications like LTE and Wimax, has generated a plethora of new entrants ranging from baseband chipsets to network architectures to wireless service providers/carriers. 
 
In the chipset segment, we have already seen Intel gobble up the wireless group from Infineon and Broadcom acquire Beceem. Several carriers are eying expansion, acquisitions, and strategic mergers. Clearwire is on the ropes, and high flying Russian carrier Yota has indicated future support for LTE. Neither news is good for the future of Wimax.
 
While it is clear that smartphones and tablets are the direction mobile devices are heading, handset makers and operators will be in for stiff competition due to the sheer number of new and upcoming devices. Differentiation ultimately comes down to price, services, applications, and features. 
 
Microsoft and pre-merger Palm already stumbled in 2010 and more are likely to follow. 
 
The prospects for failure in mobile OSs is even higher given the increasing field of competitors – 2010 alone saw the launch of Samsung’s bada, Microsoft’s Windows Phone 7, and Palm’s WebOS, just to name a few. 
 
If history is any indication, only a few OSs are likely to survive. This applies to many segments of the high-tech industry. 
 
Jim McGregor is chief technology strategist at In-Stat
 
 
 
 
 

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