Great article in the New York Times today about the practice known as “outboarding” where companies set-up shop in hotel meeting rooms during industry trade shows, avoiding the costs of formally exhibiting, but benefiting from the huge efforts by show managers and exhibitors who bring the crowd to the city. I’m sure no one is surprised that outboarding is common at SEMI expositions, especially SEMICON West.
What I enjoyed about the article was its insistence in bringing up the clear ethical issues involved in the practice. The article states:
The industry sees the vendors as parasites who latch onto the host convention and reap the advantages of the often-considerable resources spent on organizing the show and drawing a crowd — without paying their share of the costs.
The vendors, on the other hand, argue that they are suffering in the weak economy and that the rock-bottom rates offered by some hotels help them stretch their marketing budgets.
In the semiconductor industry, some people have been outboarding for so long they don’t even realize the ethical implications of their behavior. They think there is nothing wrong with setting up shop in the Marriott, W or Yuerba Buena for private customer meetings, drawing people away from the exhibitors who are bankrolling the customer draw. Most of these outboarders even congratulate themselves on being so wise and so clever with their marketing dollars, how they don’t have to waste time and effort on exhibiting when they can cherry pick the top buyers to come to their hotel suite or hotel exhibit site. They are often the loudest critics of trade shows, claiming how times have changed, how the industry has matured and how the need to differentiate through exhibits and live marketing has passed.
The fact is these outboarders are trying to reap of the benefits of SEMICON West without paying any of the costs. That’s not ethical in my mind, it’s not what honorable companies and marketers do. And customers know it. They might meet these outboarders and listen to their PowerPoint presentations, but they understand the context. It frames their perspective and reinforces their commodity bias. Cusomers know your freeloading on West. Start-ups may outboard, but leaders don’t. Commodity suppliers might outboard, but not companies serious about extracting the full differentiated value of unique technologies and products.
We try to limit outboarding by trying to reserve as much of the local hotel space as possible. We do this to protect our franchise—our IP if you will—but also to protect our exhibitors who are undermined by the outboarders. We are not as powerful as the CES show and do not have the tools or authority to police outboarders as much as we’d like (hotels hold the cards here).
And we try to give companies ways to participate in West other than exhibiting. We have low cost meeting rooms that can be built to in Moscone, we have had underwriting programs that enable participation with exhibiting, and we think a small booth with a sponsorship for high quality visibility could be a great compliment to a private meeting room. And, we are open to new ideas on how best to make West work for any company.
I certainly sympathize with companies who have survived the recent industry depression and can’t waste any marketing dollars on ineffective programs. At the same time, I can’t sympathize with people who claim trade shows don’t work anymore, yet spend a ton of money on boozy parties and gutless meeting rooms. Just because you can benefit from West without paying for it—just like you can benefit from SEMI without being a member—doesn’t make it the right thing to do.
Tuesday, February 16, 2010
Thursday, February 11, 2010
Thursday, February 04, 2010
Tien Wu Enjoys Life in the Jungle
One of the best speakers in the semiconductor industry is Tien Wu, COO of ASE, the assembly and test leader. His day 2 keynote at SEMICON Korea was an inspirational mix of insight and intellect. We’ve heard many of the concepts (the chip life cycle, the next big wave, etc.) but rarely packaged and delivered so articulately.
Wu began his talk with claiming that “2009 was a great year…we will always remember it,” and with that contrary perspective he began to ask why anyone would choose to remain in this crazy business. A look at the boom and bust cycles over the last 20 years—basically delivering a long term growth rate of 4-5%, about the same at the global GDP—confirms the industry is in chaos. The only growth comes at your competitor’s expense. Price is used inappropriately; sustained profit is elusive. It’s a 0-sum game; value isn’t created by innovation, it come from someone’s loss.
“It’s a jungle out there,” says Wu. Survival goes to the fittest. The laws of natural selection are more important than Moore’s Law. Not just company’s fight for survival, but countries: we fight against Japan, Japan against Taiwan, Europe against everyone, and everyone against China. Why would smart people and smart money choose to enter this primitive battlefield where long term returns are elusive and survival threatened?
But Tien Wu, like the rest of us, enjoys life in the jungle. He’s not a banker or day trader comfortable moving his money from winter wheat to pharma, from one good bet to another. He sees the bright side. “World PC penetration is only 17%.” Every wave from innovation from computers, to the internet, and now information is bigger than the next. He is excited and challenged by the “long tail.” He’s not afraid of consolidation because its part of the long tail process he’s seen unfold in PCs, communications and information. A few giants dominate those industries, but Apple and Samsung have proven that companies can move from one wave to another.
So what’s next? Life sciences, bio med, green energy, intelligent appliances? Tien Wu doesn’t know or he won’t say. He will point out, however, that with a logo like ASE’s (Sun-Moon-Light) “we are destined to do solar cells.”
The future of the industry will be characterized by the long tail and who can survive serving the increasingly hard-to-reach customers entering the market. It will go to those that can make “the hyper jump” into the new wave, such as solar, robotics, and solid state lighting. It will also go to those who leverage the new regions of China, India and other countries. Semiconductors are only 0.5% of the world’s GDP. Is this where the industry stops? Hardly, it’s where it begins.
Wu concluded his presentation with pointed criticism of the semiconductor industry. “Too nationalistic,” “too functionally limited,” “too insulated.” The industry suffers from the “curse of IT.” Successful companies must break out of the boundaries of IT and find new frameworks to understand and serve the world. The new domains will be understood through the perspectives of art, medicine, energy, culture. His populates his own staff with multiple disciplines and he has strong opinions about maintaining truly global perspectives.
For someone who saw 2009 as a “great year,” it’s no surprise that Wu sees a bright future with a long tail, an evitable hyper jump, and the emergence of immense of new markets in an ever-prospering world. At only 0.5% of GDP, semiconductors “remain the most exciting, dynamic, and yes, chaotic industry.” And out of this chaos, heroes will emerge.
Wu began his talk with claiming that “2009 was a great year…we will always remember it,” and with that contrary perspective he began to ask why anyone would choose to remain in this crazy business. A look at the boom and bust cycles over the last 20 years—basically delivering a long term growth rate of 4-5%, about the same at the global GDP—confirms the industry is in chaos. The only growth comes at your competitor’s expense. Price is used inappropriately; sustained profit is elusive. It’s a 0-sum game; value isn’t created by innovation, it come from someone’s loss.
“It’s a jungle out there,” says Wu. Survival goes to the fittest. The laws of natural selection are more important than Moore’s Law. Not just company’s fight for survival, but countries: we fight against Japan, Japan against Taiwan, Europe against everyone, and everyone against China. Why would smart people and smart money choose to enter this primitive battlefield where long term returns are elusive and survival threatened?
But Tien Wu, like the rest of us, enjoys life in the jungle. He’s not a banker or day trader comfortable moving his money from winter wheat to pharma, from one good bet to another. He sees the bright side. “World PC penetration is only 17%.” Every wave from innovation from computers, to the internet, and now information is bigger than the next. He is excited and challenged by the “long tail.” He’s not afraid of consolidation because its part of the long tail process he’s seen unfold in PCs, communications and information. A few giants dominate those industries, but Apple and Samsung have proven that companies can move from one wave to another.
So what’s next? Life sciences, bio med, green energy, intelligent appliances? Tien Wu doesn’t know or he won’t say. He will point out, however, that with a logo like ASE’s (Sun-Moon-Light) “we are destined to do solar cells.”
The future of the industry will be characterized by the long tail and who can survive serving the increasingly hard-to-reach customers entering the market. It will go to those that can make “the hyper jump” into the new wave, such as solar, robotics, and solid state lighting. It will also go to those who leverage the new regions of China, India and other countries. Semiconductors are only 0.5% of the world’s GDP. Is this where the industry stops? Hardly, it’s where it begins.
Wu concluded his presentation with pointed criticism of the semiconductor industry. “Too nationalistic,” “too functionally limited,” “too insulated.” The industry suffers from the “curse of IT.” Successful companies must break out of the boundaries of IT and find new frameworks to understand and serve the world. The new domains will be understood through the perspectives of art, medicine, energy, culture. His populates his own staff with multiple disciplines and he has strong opinions about maintaining truly global perspectives.
For someone who saw 2009 as a “great year,” it’s no surprise that Wu sees a bright future with a long tail, an evitable hyper jump, and the emergence of immense of new markets in an ever-prospering world. At only 0.5% of GDP, semiconductors “remain the most exciting, dynamic, and yes, chaotic industry.” And out of this chaos, heroes will emerge.
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