Power market is for big guys

Electronics design is all about power, and few people understand this better than Bill Yeate, CEO of Power-One. Here’s what he has planned for the company’s future development:



It seems that a lot of the systems that you look to incorporate your PSUs into are still designed in the West. But are you wary that there are going to be fewer OEMs in the West?

The companies that we deal with are heavily dominated by R&D in the West. Most of our Asian business is initiated in Europe or the US. I don’t really see that changing any time soon. Getting good engineering talent in China can be just as expensive, and then of course you may get the IP bleed, which is also an issue. So I think that Europe and North America still have an important role to play. But this is why it is now vital to have a global reach, you need to be able to track a design project from its early stages right through to manufacture, and the smaller firms just can’t offer that sort of coverage.



What region is most important in terms of Power-One's total annual revenue?

We have an even balance of business in Asia, North America and Europe. We expect to generate between $530 million and $550 million this coming year. Effectively, we are the biggest pure-play power company. There are a few big conglomerates out there, but we are the largest firm focused specifically on this market. In Europe we have major clients like Nokia, Siemens and Alcatel; on the other side of the Atlantic it’s Cisco, Motorola, and Nortel; then in Asia it’s firms such as Samsung and Huawei.

Is this why we have seen so much consolidation in recent times?

Yes, there are only four real serious players now who serve our marketplace. It’s us, Emerson, Tyco, and Delta that are really carving up the market between us. Everyone else is basically fighting over the smaller customers.



I guess the days are clearly gone when OEMs would look to do a lot of f the power development in house. Would it be fair to say that they want to offload as much of this on to you as possible?

Yes, it makes absolutely zero sense for companies to take on these challenges themselves. Even for a large company, the volumes of components that it would purchase in comparison to what a power-supply firm like ours buys means that right from the start it's at a disadvantage. Then there is the lack of expertise, the limited number of engineering staff they will be able to call upon, and the time-to-market pressures. This is why the digital power solutions that we can offer have proved so popular: they allow quick and relatively simple development of the required power systems.



With regard to conversion efficiency, are we now getting close to the physical limit of what can be achieved, or can we still get a couple more percent out?

People have been saying that we would reach a ceiling for many years now, and companies in our industry have kept on proving them wrong. If you look at how much has been gained in terms of efficiency over the last decade and how innovative we have been, I am confident that we won’t reach the end of the line for some time yet. You also have to consider that power efficiency is an exponential curve, so even a small increase can have a huge effect on the overall power consumption.



The DC/DC sector is clearly a very cut-throat one, with lots of people doing “me too products” - so the IP issues must be very acute?

It’s true that a lot of companies have already been forced out. The ones that can’t differentiate themselves are seeing massive price erosion. It’s only those companies who have managed to bring something of value to the market that are continuing to prosper. This is why products like our Z-One platform have been of such importance to us, as they give the customer base what it is looking for: quick, easy to develop power systems.



Will there be more companies that go under?

Well, it is going to get more and more difficult for the little guys, as the customers they serve are consolidating, too. In telecoms, for example, you have Ericsson buying Marconi, Lucent merging with Alcatel, Nokia teaming up with Siemens, etc., so you have a smaller number of players, and each of them is guarding its preferred supplier lists. There is no way that they are going to risk letting a $20 million company supply the power for their flagship base station. There would simply be too many uncertainties. Could they ramp up to volume? Could they serve the client at different locations throughout the world? Could they guarantee high reliability? There will be a few niche guys left, but apart from that, it will just be the bigger firms that will still be around in the next few years.



EPN is a sister publication of ECN Asia.