PRZOOM - /newswire/ -
Singapore, Singapore, 2008/12/12 - Original design manufacturers (ODM) have always been successful in their conventional commoditized market segments where components used to design products such as notebooks, computers, and motherboards, are easy to procure.
These segments are, however, facing declining margins due to the economic slowdown of the industrialized countries, rising inflation and costs, and saturation of the traditional commoditized market segments. Other dampening factors include high raw material prices due to rising crude oil prices coupled with increasing competition from electronics manufacturing services (EMS) providers as well as from within the ODM industry.
New analysis from Frost & Sullivan (smt.frost.com), Strategic Assessment of the Asia Pacific Original Design Manufacturing (ODM) Markets, finds that market earned revenues of $126.06 billion in 2007, an increase of 30 percent over the previous year.
"The economic slowdown of industrialized countries and rising inflation are making the demand for notebooks, motherboards, and other consumer electronics unpredictable," says Frost & Sullivan Research Analyst, CP Liew. "Many ODMs are unable to forecast the demand for their products, fearing the risk of overcapacity and excess inventories, which will eventually affect their revenues and operating margins."
Tough market conditions are compelling ODMs to keep innovating in their existing saturated markets and expand in other commoditized markets such as mobile handsets and liquid crystal display (LCD) TVs.
"A focused strategy with an astute approach should improve the ODMs business profitably by leaps and bounds in the long run," notes Liew. "This will result in an increase in their share of the total available market for design manufacturing and enable them to participate in other market segments."
Since the ODM model was considered profitable, OEMs pressured ODM vendors to lower costs. In fact, the success of the ODM model has prompted other market participants in the EMS value chain to rapidly adopt it.
"ODMs must also understand the factors that enable the rapid migration of EMS providers to the ODM model," observes Liew. "The migration could be triggered by EMS providers' ability to manufacture products at lower cost and more efficiently than ODMs, and the advantages of having global footprints as well as stronger IP protection."
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the Asia Pacific ODM markets, then send an email to Donna Jeremiah, Corporate Communications, at djeremiah[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.
Strategic Assessment of the Asia Pacific Original Design Manufacturing (ODM) Markets is part of the Surface Mount Technologies Growth Partnership Service program, which also includes research in the following markets: North American solar cell manufacturing equipment markets, world SMT screen printer markets, and growth opportunities for SMT equipment manufacturers in the North American medical device industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.
Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting and Growth Team Membership™ empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents.
Strategic Assessment of the Asia Pacific Original Design Manufacturing (ODM) Markets
Corporate Communications – Southeast Asia
P: +603 6204 5910
F: +603 6201 7402