We have answered the first two questions on Market Growth and Market Maturation. The third question relates to Market Consolidation and its impact on the long term health of the 3rd Party IP market.
Does the fact that we have recently seen several ‘large’ IP companies acquired by other ‘larger’ IP companies mean the long anticipated consolidation in the industry has gotten underway.
In order to answer this question it might be a good idea to consider what conditions contribute to, or force, a market consolidation in the first place:
- Worsening conditions in a specific end market or in the overall economy
- A drastic change in the direction of technology and a lack of internal resources to keep up
- Poor financial performance by a company in their chosen end markets making them vulnerable to a takeover by a competitor
- No access to capital for business expansion
- Remove competition from the market
In the case of the 3rd Party IP market, do we see any of these conditions occurring across large numbers of companies or across a large number of end markets or applications which would prompt deteriorating financial conditions in any of the companies that were recently acquired – MIPS, Tensilica, Cosmic Circuits and now Evatronix?
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