Category Archives: Top Story Right

Can PC makers produce ultrathin, touch-screen PCs that are appealing to consumers—and that are priced at just $200?

The astounding answer seems to be yes—if microprocessor Intel Corp. is willing to cut the price of its semiconductor components to PC makers, according to a PC Dynamics Market Brief from information and analytics provider IHS.

Speaking at the IHS/SID 2013 Business Conference, held May 20 in Vancouver, Canada, Zane Ball, Intel vice president and general manager, Global Ecosystem Development, is presenting his company’s plan to empower the PC industry to produce low-cost notebooks incorporating touch technology. Craig Stice, senior principal analyst for compute platforms at IHS, believes Intel has a shot at success.

“A price point that low seems far-fetched considering the mobile PC prices of today, with Ultrabooks and other ultrathins going as high as $1,000 or more,” Stice said. “However, the small laptops known as netbooks saw their prices reach down into the $200 range at the height of their popularity a few years ago, and a cost analysis of netbooks shows how such a low level of pricing can be used to support a no-frills type of ultrathin PC.”

The cost estimate for a standard netbook, based on the IHS Compute Systems Cost Analyzer that calculates the major components of a netbook on a third-quarter 2013 timeline, comes out to $207.82, as shown in the table below.

standard netbook cost estimate

“Hitting this kind of price point is not impossible for the PC industry, already a cutthroat market accustomed to razor-thin margins,” Stice said. “Such a possibility was stated by outgoing Intel CEO Paul Otellini, who during Intel’s first-quarter earnings call in April made the bold prediction that touch-enabled, ultrathin Intel-based notebooks using non-core processors could be available by the end of this year.”

Intel holds the cards

The key factor that could make this happen is Intel, which can control up to 33 percent of the total bill-of-materials cost for the PC through the central processing unit (CPU) and motherboard. If Intel decides to provide a price break for just these components, PC original equipment manufacturers could see their margins improve, allowing them to drive down prices for the retail market. With PC competition so fierce, it takes only one PC manufacturer to find a price point that sells—and others are bound to follow suit shortly afterward.

Intel could also be instrumental in introducing an even more powerful ultrathin-type mobile PC than netbooks, which have now been overtaken by media tablets and are on their way out of the market altogether.

Intel’s next-generation Atom processor, called Bay Trail, has the potential to deliver a performance boost that will clearly separate the traditional netbooks of old from the new generation of mobile and ultrathin PCs.

Avoiding netbooks’ fate

While netbooks had limited computing power and were regarded more as devices for content consumption, the new and much more economical ultathins, in contrast, would possess considerably more power and be categorized as content-creation devices. Such a perceptible enhancement could increase their chances of survival in the marketplace, unlike the short-lived netbooks.

Much depends on Bay Trail, which Intel says will move from two processing cores to four to provide beefed-up performance. Along with Bay Trail, Intel’s own high-definition embedded graphics and an extended battery life for improved power will yield a processor bearing similar performance to the chipmaker’s renowned family of Core processors. All these traits could be part of the new, less expensive ultrathin being projected.

What PC manufacturers also must do

What these developments portend for the PC industry is significant. If the PC industry is able to get down to the $200 price point, and Intel’s Bay Trail processor delivers what it claims to do, then the PC market will have its much-needed shot in the arm. Such a turn of events could then spark the mobile PC market, which has been losing steam to flashier rivals like smartphones and tablets.

Besides Intel’s willingness to cut its own price point to make chips available at a lower cost to customers, a second important factor involves the PC makers themselves. For their part, PC manufacturers also need to find a way of getting to the magic price point of $200—and possibly sacrifice even more margin in exchange for the greater amount of volume that they seek.

All told, the scenario above—merely hypothetical at this point—is not entirely out of reach. A strong second half is already being forecast for PCs this year: add in the potential for lower-priced next-generation ultrathin systems, and the PC industry may finally have a valid competitor to lower-priced media tablets.

last power logoLAST POWER, the European Union-sponsored program aimed at developing a cost-effective and reliable technology for power electronics, today announced its three-year program achievements.

Launched in April 2010 by the European Nanoelectronics Initiative Advisory Council (ENIAC) Joint Undertaking (JU), a public-private partnership in nanoelectronics, LAST POWER links private companies, universities and public research centers working in the field of wide bandgap semiconductors (SiC and GaN). The consortium members are STMicroelectronics (Italy), project coordinator, LPE/ETC (Italy), Institute for Microelectronics and Microsystems of the National Research Council -IMM-CNR (Italy), Foundation for Research & Technology-Hellas – FORTH (Greece), NOVASiC (France), Consorzio Catania Ricerche – CCR (Italy), Institute of High Pressure Physics – Unipress (Poland), Università della Calabria (Italy), SiCrystal (Germany), SEPS Technologies (Sweden), SenSiC (Sweden), Acreo (Sweden), Aristotle University of Thessaloniki – AUTH (Greece).

The main achievements in SiC-related efforts were based on the demonstration by SiCrystal of large-area 4H-SiC substrates, 150mm in diameter, with a cut-off angle of 2°-off axis. The material quality, both in crystal structure and surface roughness, is comparable with the standard 100mm 4°-off material available at the beginning of the project. At LPE/ETC, these substrates have been used for epitaxial growth of moderately doped epi-layers suitable for the fabrication of 600-1200V JBS (Junction Barrier Schottky) diodes and MOSFETs, owing to the development of a novel CVD reactor for the growth on large-area (150mm) 4H-SiC.

The quality of the epitaxial layer enabled the fabrication of JBS (Junction Barrier Schottky) diodes in the industrial production line at STMicroelectronics. The characterization of the first lots showed electrical performance comparable with the state-of-the-art 4°-off material. In this context, the fundamental technological step was the chemical mechanical polishing (CMP) process — StepSiC  reclamation and planarization — implemented at NOVASiC, which is a key issue both for the preparation of the substrates before epitaxial growth and for the sub-nanometric control of the surface roughness of the device active layers. Within the project, the same company also developed epitaxial growth capability for both MOSFET and JFET devices.

Additional research activities in SiO2/SiC interfaces have been carried out in collaboration with ST and IMM-CNR to improve the channel mobility in 4H-SiC MOSFETs.

Finally, novel technological modules for high-temperature 4H-SiC JFETs and MOSFETs have been developed in collaboration between Acreo and FORTH, with the support of CCR for the study of molding compounds and "lead-free" die-attach materials for reliable packaging solutions.

The LAST POWER project also researched the use of GaN-based devices in power-electronics applications. In particular, ST successfully obtained the development of AlGaN/GaN HEMTs epitaxial structures grown on 150mm Si substrates, reaching a target of 3mm thickness and 200V breakdown. LAST POWER worked with IMM-CNR, Unipress, and ST to develop the technological steps for normally-off AlGaN/GaN HEMTs with a "gold-free" approach. The process modules are fully compatible with the device-fabrication flow-chart set in the ST production line and are being integrated for HEMTs fabrication. The fruitful interaction between the project partners working on material growth and device technology has enabled important steps towards monolithic integration of GaN-based and SiC-based devices, as both technologies have been successfully proven on 2°-off axis 4H-SiC substrates.

Combo MEMS sensors for automotive applications are off to another exhilarating ride this year as revenue continues to climb, spurred by rapidly accelerating use in car safety systems, according to an IHS iSuppli MEMS and Sensors Report from information and analytics provider IHS.

Global revenue in 2013 for combo inertial sensors used in motor vehicles will reach a projected $163 million, up a notable 77 percent from $92 million last year. The anticipated increase continues a hot streak for the market, which saw a phenomenal 338 percent surge last year from just $10 million in 2011, as shown below.

MEMS combo sensors

Combo inertial sensors are multiple-sensor devices integrating accelerometers, gyroscopes into a single package, providing inertial inputs to the electronic stability control (ESC) system in cars to prevent or minimize skidding.

“ESC systems are mandated in North America, Europe and in other areas where the edicts are maturing, such as Australia, Japan, Canada and South Korea,” said Richard Dixon, Ph.D., principal analyst for MEMS and Sensors at IHS. “But a huge growth opportunity exists in untapped territories like China, which would significantly impact the penetration of ESC worldwide given the vast size of the Chinese market. Such gains, in turn, would provide tremendous impetus and momentum for automotive combo sensors overall.”

Why combos?

Three architectures are currently possible for ESC systems in cars: on a printed circuit board as a separate ESC engine control unit (ECU); attached to the brake modulator to save cabling; or collocated in the airbag ECU. Of these three usable locations, the current trend favors placing ESC systems in the airbag ECU to achieve a smaller footprint and greater efficiency, given that there is a space constraint for the ECU in this position near the cup holder in a vehicle, which favors an architecture of reduction.

All told, as much as a fivefold reduction in space could be achieved for the sensors in a combo-sensor ESC system made by a manufacturer like Continental, compared to the same accomplished via separate sensors.

A non-combo solution also exists in the form of the sensors separately mounted on the printed circuit board. But deploying the sensors in a combo form factor saves not only on packaging cost but also on expensive real estate for the semiconductors being used, since the two sensors in the combo package share the same application-specific integrated circuit.

Cost is a factor

A paramount issue for ESC systems is cost. Cost is especially important because ESC formerly was considered an optional feature—but since being mandated by governments—it now has attained the same required status as the seat belt.

As a result, the entire supply chain and price structure for automotive combo sensors has been experiencing huge pressure, exerted from car makers down the chain. Tier 1 companies then pass on this pressure to their suppliers, accounting for the accelerated move to provide efficient combo sensor solutions for inertial sensors in the system.

Because of such pressure, some top-tier companies have indicated that only legacy businesses will use older arrangements featuring separate sensors—not a combo solution—on a printed circuit board in the future. All new car models will use combo sensors.

Top suppliers identified

The major suppliers of automotive combo inertial sensors are Bosch of Germany and Japan’s Murata (formerly VTI). Two other potential manufacturers, Panasonic of Japan and Massachusetts-based Analog Devices, will need to develop similar solutions to have a chance in the market.

For its part, Panasonic has indicated that a product will be available by 2014. Panasonic Industrial makes the gyroscope part of the solution, while Panasonic Electric Works makes the accelerometer component.

However, the two entities do not have a good track record of working together, so it remains to be seen how soon a unified combo sensor solution from Panasonic will come to market.

Meanwhile, Analog Devices is divulging little information, but it will almost certainly develop a combo sensor solution, IHS iSuppli believes, based on an analysis of developments surrounding the competition.

Starting late in 2011, the power electronics downturn in 2012 was quite severe, exhibiting -20 percent negative growth. The market suffered from the global economic downturn combined with external factors like China controlling what happened in some selected markets (Wind turbine or Rail traction projects that have been stopped or postponed).

However, the SiC device market kept on growing with a +38 percent increase year to year.

SiC technology is now commonly accepted as a reliable and pertinent alternative to the silicon world. Most power module and power inverter manufacturers have already included it in their roadmap as an option or as a firm project. However time-to-market differs from application to application as a function of value proposals for cost, specifications, availability and so on.

Despite a quite depressed market last year, PV inverters have proven their appetite for SiC devices in 2012. They are the biggest consumer of SiC devices together with PFCs. In 2011 and 2012, SiC diode business was the most buoyancy due to micro-inverter applications; however, Yole Développement is confident that both JFET and MOSFET will quickly catch-up and become dominant in revenue by 2016. SiC device (bare-dies or packaged discretes) market reached about $75M in 2012 with a sharp domination by Infineon and CREE again; however, the competition is little by little grabbing market share with STMicroelectronics and Rohm closing the loop.

30 contenders, half-a-dozen of new entrants, 1 dead

There are now more than 30 companies worldwide which have established a dedicated SiC device manufacturing capability with related commercial and promotion activities. Virtually, all other existing silicon-based power device makers are also more or less active in the SiC market but at different stages. 2012 has seen the ramp-up of some companies, such as Rohm, MicroSemi, GeneSiC or STMicro, facing the two giants CREE and Infineon, prefiguring a new market shaping in the coming years. Four new companies – Raytheon, Ascatron, IBS and Fraunhofer IISB – have decided, almost simultaneously, to launch SiC foundry services or contract manufacturing services. This business model establishment addresses the demand of future SiC fabless and design houses that may look for specific manufacturing partners. It will also probably act as a possible second source for IDMs in cases of production overshoot.

In Asia, Panasonic and Toshiba are now clearly identified as credible contenders, along with Mitsubishi Electric, now developing SiC power modules. Fuji Electric’s new SiC line is now running within the Japanese national program. No Chinese device maker has emerged yet; however, according to the huge investment plan in R&D, Yole Développement’s analyst suspects new IDMs will soon enter the business.

In the US, Global Power Device and USCi have now exited stealth mode and have strongly affirmed their intentions to take market share. Ultimately, the unexpected closing down of SemiSouth in October 2012 has created chatter about the quite stable-until-then SiC business. Several reasons have been disclosed that explain this decision (over-sized company, market too long to take-off); however, we can’t ignore that it discredits to some extent the Noff JFET technology. Only the future will tell.

Reshaping from discretes to modules

Yole Développement now sees the SiC industry reshaping, starting from a discrete device business and now mutating into a power module business. Originally, this was initiated by Powerex, MicroSemi, Vincotech or GeneSiC with hybrid Si/SiC products, then other players such as Mitsubishi, GPE and more recently Rohm have reached the market with full-SiC modules.

This trend will become dominant in the coming years as integrators require power modules in most of their mid and high power systems (generally starting from >3kW).

Yole Développement does forecast that SiC-based power module demand could exceed $100M by 2015 and top ~$800M in 2020 depending on whether or not the auto industry will adopt SiC.

Next critical challenges: Cost reduction, packaging & multi-sourcing

SiC equals high frequency and high temperature operation. That said, capturing these two added-values remains an issue as no existing set of technologies can fully answer that request now. The path to success for SiC large implementation will necessarily go through new packaging solutions. Numerous bottlenecks need to be unlocked: chip bonding, metallic contact technique, gel filling, encapsulant, EMI, to name a few.

Power device integrators generally rely on two, or even three sources to lower supply-chain risks. In SiC, it is now easy operating multi-sourcing for diodes, though not yet for transistors.

MOSFET, JFET or BJT must be available from at least two companies with similar specifications. This Yole Développement’s report also proposes a cost reduction roadmap for SiC device manufacturing at different levels of the process steps.

Global shipments of solid state drives (SSD) in PCs are set to rise by a factor of seven by 2017, allowing them to claim more than one-third of the market for PC storage solutions by that time, according to an IHS iSuppli Storage Market Tracker Report from information and analytics provider IHS.

SSD shipments in PCs will rise to 227 million units in 2017, up more than 600 percent from 31 million in 2012, as presented in the figure below. Meanwhile, shipments of PC hard disk drives (HDD) will decline to 410 million in 2017, down 14 percent from 475 million in 2012.

SSDs and HDDs by 2017

The divergent outlook for the two products will allow SSDs to climb and claim 36 percent of the PC storage market in 2017, up from just 6 percent in 2012. At the same time, HDDs will see their long-term dominance in PCs erode, with their share falling to 64 percent in 2017, down from a commanding 94 percent in 2012.

The SSD space includes the cache SSD segment where NAND flash is used alongside a hard disk drive, as well as a separate segment in which NAND flash is embedded on top of an HDD in an integrated, hybrid form factor.

“For SSDs, the major factors driving growth this year will be Ultrabooks and other ultrathin notebook PCs, especially as Intel’s upcoming Haswell processors bring about a robust combination of performance and efficiency for the superthin computers,” said Fang Zhang, analyst for storage systems at IHS. “In the coming years, Ultrabooks and ultrathins—combined with appealing touch-screen displays and convertible form factors—are likely to become more compelling as the machines attempt to lure consumers away from smartphones and tablets, boosting demand for SSDs used in these systems. Meanwhile, SSDs will become more attractive to PC makers and buyers alike as costs decline for the NAND flash memory at the heart of the storage devices.”

Hard times for hard drives

PC HDD shipments in 2013 are forecast to decline to 436.9 million units, down 8 percent from 475.4 million last year. In comparison, SSD shipments in PCs will jump to 68.9 million units, up a resounding 122 percent from 31.1 million. From 2012 to 2017, the compound annual growth rate for PC HDD shipments will be in negative territory at -2.9 percent, while that for PC SSDs comes out to an enviable 48.0 percent.

“The HDD industry is suffering the multilayered effects of a depressed market, resulting from a weak global economy, upgrades not being made for desktop and notebook PCs alike as replacement cycles get extended, and cannibalization by flashier devices like mobile handsets and tablets,” Zhang observed.

PC HDD revenue is expected to decline to $26.4 billion in 2013, down from last year’s record of $30.6 billion that resulted mainly from higher average selling prices after the devastating floods in Thailand.

State of euphoria for solid-state drives

Meanwhile the SSD space has been extremely competitive, closing out last year on record-high revenue and with the vigorous enterprise SSD segment enjoying dramatic expansion. The fourth quarter last year was a particularly strong period for computer-related SSDs with shipments of 12 million units, boosting year-end revenue to $6.8 billion. By 2017, PC SSD industry revenue of $22.6 billion will come close to PC HDD revenue of $23.5 billion.

Silver linings

Despite the rapid adoption of SSDs, hard disk drives will continue to lead the overall storage market because of their cost advantage on higher densities and dollars-per-gigabyte pricing. HDD shipments also will gradually pick up in the second half this year as Windows 8 and Ultrabooks gain traction among consumers, after failing to perform as expected upon launch last year.

In the enterprise HDD segment, competition is set to heat up as archrivals Western Digital and Seagate Technology contend for leadership, and Western Digital is expected to launch a 5-terabyte HDD sporting the new helium technology for higher disk capacity and lower power consumption. Other new HDD technologies are on the horizon as well, including nearline and hybrid hard disk drives.

HDDs also will continue to play a major role in cloud storage, remaining the final destination for the majority of digital content.

ODDs are DOA

While HDDs retain dominance despite declining shipments and SSDs maintain impressive growth momentum, a third segment of the storage industry is mired in poor results and deteriorating prospects.

Optical disk drives (ODD), used for playing CDs and DVDs in PCs, continue to worsen on both shipment and revenue terms. ODD shipments this year will amount to 262.6 million units, down from 287.4 million in 2012; while revenue will slip to $7.4 billion from $8.6 billion. By 2017, ODD shipments will shrink a further 100,000 units compared to 2012 levels, and revenue will reduce by half.

Intel Corporation announced that the board of directors has unanimously elected Brian Krzanich as its next chief executive officer (CEO), succeeding Paul Otellini. Krzanich will assume his new role at the company’s annual stockholders’ meeting on May 16. The board of directors also elected Renée James, 48, to be president of Intel. She will also assume her new role on May 16, joining Krzanich in Intel’s executive office.

Krzanich, Intel’s chief operating officer since January 2012, will become the sixth CEO in Intel’s history. As previously announced, Otellini will step down as CEO and from the board of directors on May 16.

“After a thorough and deliberate selection process, the board of directors is delighted that Krzanich will lead Intel as we define and invent the next generation of technology that will shape the future of computing,” said Andy Bryant, chairman of Intel.

“Brian is a strong leader with a passion for technology and deep understanding of the business,” Bryant added. “His track record of execution and strategic leadership, combined with his open-minded approach to problem solving has earned him the respect of employees, customers and partners worldwide. He has the right combination of knowledge, depth and experience to lead the company during this period of rapid technology and industry change.”

Krzanich, 52, has progressed through a series of technical and leadership roles since joining Intel in 1982.

As chief operating officer, Krzanich led an organization of more than 50,000 employees spanning Intel’s Technology and Manufacturing Group, Intel Custom Foundry, NAND Solutions group, Human Resources, Information Technology and Intel’s China strategy.

James, 48, has broad knowledge of the computing industry, spanning hardware, security, software and services, which she developed through leadership positions at Intel and as chairman of Intel’s software subsidiaries — Havok, McAfee and Wind River. She also currently serves on the board of directors of Vodafone Group Plc and VMware Inc. and was chief of staff for former Intel CEO Andy Grove.

What would happen if half of all global production for dynamic random access memory (DRAM), two-thirds of NAND flash manufacturing and 70 percent of the world’s tablet display supply suddenly disappeared from the market?

The answer would be chaos, with the worldwide electronics supply chain grinding to a halt and stopping major market product segments in their tracks, including smartphones, media tablets and PCs.

For high-tech companies, this could be the outcome if current tensions escalate to the point of war on the Korean peninsula, resulting in the disruption of South Korea’s technology manufacturing base. While IHS regards such a major conflagration and disruption as unlikely, forward-thinking technology firms are planning for such a contingency, just as they are preparing for other natural and man-made disasters that could impact their businesses in the future.

“However, South Korea now plays a more important role than ever in the global electronics business. And with the supply chain having become more entwined and connected, a significant disruption in any region will impact the entire world. Because of this, it is important for companies to understand the magnitude of South Korea’s role in the global electronics market—and to prepare for any contingencies,” said Mike Howard, senior principal analyst for DRAM and memory at IHS.

Leading technology firms Samsung and SK Hynix are headquartered close to Seoul, the capital of South Korea, which lies only about 30 miles from the border with North Korea. Both companies have major manufacturing operations in the area as well.

“Any type of manufacturing disruption of six months would prevent the shipment of hundreds of millions of mobile phones and tens of millions of PCs and media tablets,” Howard warned.

Memory loss

Fully 66 percent of industry revenue for the dynamic random access memory (DRAM) market, as well as 48 percent of total NAND flash revenue, belonged in 2012 to the two South Korean memory titans Samsung and SK Hynix. While their combined share of both in the NAND market has remained fairly level for the last three years, the collective portion in DRAM of the two entities has been steadily rising.

Such a high proportion of global production could not be easily or quickly replaced by manufacturers in other regions.

The Icheon facility of SK Hynix is located approximately 30 miles southwest of Seoul, while Samsung’s massive manufacturing complex at Hwaseong is within 24 miles of the capital.

DRAM plays an essential role in products including PCs, media tablets and smartphones.

While some gadgets could have their amount of memory reduced—a smartphone with 32 gigabytes (GB) of NAND could be downsized to 8GB, or an 8GB laptop reduced to 4GB—other devices must have the memory for which they were originally designed, especially where DRAM is involved.

“A server with only half its intended DRAM is essentially half a server—and a smartphone cannot have its DRAM quantity changed, as it needs the original amount for which it was designed,” Howard noted.

Display disaster

An equally bad situation could occur in the large-sized display market, which is heavily dependent on South Korean suppliers, especially in the media tablet market.

LG Display and Samsung Display of South Korea together held a 49.6 percent share of unit shipments of large-sized liquid crystal display (LCD) panels in the fourth quarter of 2012. Large-sized panels are defined as those that are 10-inches or larger in the diagonal dimension and are used in products including televisions, notebook PCs and desktop monitors. Also included in the category are and 7-inch and larger displays used in media tablets.

South Korea accounts for 70 percent of global supply of tablet display unit shipments, as presented in the figure attached.

“Inventory and production capacity for media tablet displays currently are at a high level,” said Sweta Dash, senior director, display research & strategy, for IHS. “Because of this, a short-term disruption of South Korean production would have a minimal impact. However, a long-term stoppage or reduction of production would have a major effect and dramatically reduce global tablet supply.”

Media Tablet Display Production by Country in Q4 2012

(Share of Global Unit Shipments

global tablet display makers

Phone hangup

Samsung at present is the global leader in smartphones as well as in total handsets, while fellow South Korean manufacturer LG Electronics ranks No. 6 in both categories. Together, the two companies account for more than a 30 percent market share for cellphones and smartphones.

TSMC


April 26, 2013

TSMC

Demand for 4-inch or larger AMOLED panels has continued to increase in the fourth quarter of 2012 thanks to strong growth in the market for high-end smartphones with large screens, such as the Galaxy S and Note series by Samsung Electronics, according to a recent report released by Displaybank. The larger size group made up 88 percent of total AMOLED panel shipments, which amounted to 41 million units in the fourth quarter of 2012: In detail, 4.x-inch panels accounted for 65.1 percent and 5.x-inch ones 22.8 percent.

In particular, shipments of 5.x-inch AMOLED panels hiked in the fourth quarter of 2012, expanding its market share for the third consecutive quarter, to 22.8 percent of the total. It is a rather rapid growth, considering that 5.3-inch AMOLED panel was first released in the third quarter of 2011, thanks to the popularity of larger-screen smartphones. This is in stark contrast to 3.x-inch AMOLED panels whose market share plunged to 11.6 percent in total shipments in the last quarter of 2012 from more than 60 percent in the first quarter of 2011. Along with the 4.x-inch sector, which takes the majority of total AMOLED shipments, 5.x-inch panels are expected to become the main display size group in the market.

By application, demand of AMOLED panels for mobile phones accounted of 96 percent of the total AMOLED panel shipments in the last quarter of 2012, up from 86 percent in the first quarter of the year. Mobile phones have contributed to the rapid growth of the market for AMOLED panels, but this caused concerns about the market’s too much dependence on one application. The trend also indicates how difficult for the AMOLED technology to enter the mid-to-large-sized panel market.

Initiated by the arrival of Google Glass and magnified by Google’s efforts to promote application development for the product, the global market for smart glasses could amount to almost 10 million units from 2012 through 2016.

Shipments of smart glasses may rise to as high 6.6 million units in 2016, up from just 50,000 in 2012, for a total of 9.4 million units for the five-year period, according to an upside forecast from IMS Research, now part of IHS Inc. Growth this year will climb 150 percent to 124,000 shipments, mostly driven by sales to developers, as shown in the figure below. Expansion will really begin to accelerate in 2014 with the initial public availability of Google Glass, as shipment growth powers up to 250 percent, based on the optimistic forecast.

Google Glass this month began shipping to application developers who registered as early backers and paid the $1,500 price tag. This is expected to spur innovations in applications that should take Glass from early adopters to the mass market. As the developers get to work and Google encourages venture capitalists to back them, shipments will begin to surge to high volumes, according to the forecast.

However, the success of Google Glass will depend primarily on the applications developed for it. If developers fail to produce compelling software and uses for the devices, shipments could be significantly lower during the next several years.

“The applications are far more critical than the hardware when it comes to the success of Google Glass,” said Theo Ahadome, senior analyst at IHS. “In fact, the hardware is much less relevant to the growth of Google Glass than for any other personal communications device in recent history. This is because the utility of Google Glass is not readily apparent, so everything will depend on the appeal of the apps. This is why the smart glass market makes sense for a software-oriented organization like Google, despite the company’s limited previous success in developing hardware. Google is betting the house that developers will produce some compelling applications for Glass.”

The glass is half full

According to the optimistic scenario, developers will succeed in producing augmented reality applications for smart glasses that provide the user with information that can be safely and conveniently be integrated into casual use. Such applications typically are known as augmented reality, which involves adding a layer of computer-generated data to real-world people, places and things.

“The true success of Glass will be when it can provide some information to users not apparent when viewing people, places or things,” Ahadome said. “This information may include live updates for travel, location reviews and recommendations, nutritional information and matching personal preferences, and previous encounters to aid decision making. The upside for smart glasses will arise when they become a powerful information platform. In many ways, this is exactly what Google already does via other mediums, and also is why the upside scenario seems more likely.”

Broken glass

Under a more pessimistic scenario, IHS forecasts that only about 1 million smart glasses will be shipped through 2016.

According to this outlook, applications for smart glasses will be limited to some of those already displayed by Google in its Glass marketing. These include scenarios where smart glasses become more of a wearable camera device than a true augmented reality system. In this case, smart glasses will be mainly used for recording sports and other non-casual events, like jumping out of a plane, as demonstrated at the Google I/O developer conference in 2012. 

However, Glass will face competition from alternative wearable camera devices already in the market, such as GoPro Hero or Recon MOD Live.

While the wearable camera market was worth more than $200 million in 2012, it is not the multibillion-dollar market that smart glasses can achieve with wider applicability.

“The less frequently consumers interact with any personal communications device, the less valuable it becomes,” Ahadome observed. “If smart glasses become devices that are used only occasionally, rather than all the time, they become less attractive and desirable to consumers.”