- Eddie Sinnott, Product Manager, Freescale Semiconductor
Freescale Semiconductor, Inc. is one of the largest and most extensive privately-held companies in the world, with development, manufacturing or sales operations in more than 30 countries and 2006 worldwide sales of $6.4 billion.
By its own admission, Freescale may also be one of the least known and lower-profile major companies in the world. Although it has shipped more than 17 billion semiconductors since its founding as division within Motorola, Inc. and a 2004 spin-off as an independent company, nobody outside the industry really knows much about Freescale. An oddity, since its products can be found in a wide range of consumer products, from cell phones and audio components to washing machines and automobiles (which right now accounts for about half of the company’s business).
In fact, Freescale is the market leader in automotive semiconductors and communications processors, and among the top five in microcontrollers, digital signal processors and wireless handset radio frequency microprocessors, according to research analysts.
Recently, 2in10 had the opportunity to speak with Eddie Sinnott, Product Manager for the Consumer & Industrial Operation within Freescale’s Microcontroller Division. Topics included the company’s continued success in highly competitive worldwide markets, the importance of knowing your customers, and the dynamics of global channels.
Why don’t we begin with a little about your job responsibilities and role at Freescale?
Freescale’s business activities are broken down into three major business groups: Wireless, Networking/Computing and Transportation/Standard products. The Transportation & Standard Products Group makes up almost half the business at Freescale, and within that group there are three divisions, the largest being the Microcontroller Division (the others Analog and Sensors). I report into the Microcontroller division, which has focused business operations for specific end markets, one of which is the Consumer & Industrial Operation.
The business units then share centralized product engineering and design teams, quality control, human resources and so on because even though the end markets have very different customer profiles, different end applications and even different channels to market, everything is based on the same basic semiconductor technology.
When the Consumer & Industrial Operation was formed, we concluded that the profile of our target markets, customer base and strategic objectives married well with the latest Marketing thinking. Namely, to split Marketing into functionally focused teams: One that looks after new product development and portfolio management (Product Management) and the other focused on outbound marketing activities (Product Marketing). I am the Product Manager.
Our challenge is a marketers dream, in terms of the challenging dynamics that is! The microcontroller is a ubiquitous technology, finding it’s way into hundreds of items we use in our daily lives. From alarm clocks to lighting control, from toothbrushes to the control of industrial equipment to washing machines. New applications for our products are found every day.
We play in a market with a SAM of $9Bn* (source: Gartner Dataquest) with a potential customer base measuring close to 100,000 strong ranging from people buying a few hundred dollars of products a year to companies spending $20-30 million on products per year. Myself and my colleague who runs Product Marketing work very closely together to manage that marketing mix.
The goal this year (2007) is to put 30% more products into design than 2006, each one of which has to be better than the competition and be able to succeed profitably in a very mature market. The microcontroller market has been going on for more than 35 years and has more than 40 competitors, and it's a market where the CAGR is just about flat, although there’s a lot of churn underneath it.
Is market research a big part of your effort, especially in keeping track of your customers?
I have a team of about a dozen people whose remit is to create market research documents and develop strategy for particular businesses, manage portfolios, develop roadmaps, define new products and take build or buy decisions on IP. We rely on large and geographically diverse teams of field-based people for customer feedback: Field Application Engineers, Go-To-Market Engineers and Technical Sales amongst them.
On top of this we employ focused market research in the form of reviewing market studies, performing concentrated global customer tours with cross-functional teams, and also using advanced statistical methods. I also have the responsibility for pricing and P&L within my operation and for the long-range planning.
How will various technology changes and shifts in the sensing industry – especially wireless - impact your overall strategy and plans for outbound marketing? More important, will it alter your product development strategies?
That’s the deceiving thing about our technology. Yes, the market is mature and what we do is maximize older technology. Yes, there are occasions when the functionality that we provide can be absorbed into a larger processor. But, these processors that everyone is talking about, the wireless processors, perform specific functions requiring high performance such as handling digital signal control or voice codecs, or handling data that comes through a handheld device.
Our products really handle the peripheral things, like the keypad or the screen of the phone, perhaps the power management or control of the wired communciation. For example, on a cell phone, from a sensors perspective, there is a fantastic opportunity right now call ‘eField’ sensing; or capacitive touch sensing, where we are getting away from mechanical keypads and rely on sensing to tell when your finger goes near an area of the keypad. The powerful processors in computing and mobile solutions can consume a lot of power if they need to be cranked up each time a peripheral function is accessed. Using a small Microcontroller avoids the need for that.
Phone manufacturers are looking for an edge above the base functionality of the phone, so there’s an opportunity for us. For example, as more multimedia moves into the phone, the types of displays being used are changing, going away from traditional LCD type displays to ones more like TVs that are being powered by high-brightness LEDs and light-emitting diodes. All of this needs digital control to optimize power consumption and brightness control. So, that brings a new opportunity into the phone for our product that wasn’t there before.
Do these new opportunities affect the CAGR of the business, which you previously said was expected to be flat?
Well, I guess I shouldn’t say the CAGR is completely flat. The outlook for our types of products over the next couple of years is actually pretty favorable in terms of modest growth. Freescale is the Number Two supplier of microcontrollers in the world, but that’s very dominated by our automotive business. In my space, the consumer industrial space, we’ve got about an 10% market share. So, even if the market went down 10% a year, we’re somewhat independent of what happens on a macro-level, with a lot of exciting things to do and opportunities to grow.
This of course depends on what your company strategy is. As there are good margins to be made, and we think we’ve got a good base technology we’re actually investing in my portion of the business to grow.
Right, and as you’ve pointed out, Freescale is involved in multiple industries, including some – like the automotive industry – with very long development and production cycles.
The auto market is a good one because there we have over a 30% market share, and that’s a good position to be in because these guys want consistency. They want a supplier they know and have worked with before. The interesting thing in the automotive market is the shift in global power of the auto manufacturers. We need to replicate the success we’ve had in extremely important long term relationships with the powerhouses of the U.S. auto industry with companies like Toyota and Honda as they become more globally successful. So, the challenge for us is to take our technology that has proved so successful in the U.S. and Europe and promote that to Asia and Japan.
You said that Freescale has a target customer base of around 100,000 customers worldwide, 40 different competitors, and 20 new product launches planned in 2007. What kind of challenges does this present for product marketing? How do you approach current and potential customers and keep them motivated?
Great question. The ecosystem and services surrounding silicon have become as important as the product itself. So, we spend a lot of effort and time providing our customers with ease of use experience that includes development tools, collateral and reference designs. These reference designs are created to aide a customer time to money by providing, ready made, some of the hardware and software design elements that our products would perform in their design.
For example, a very interesting application right now is the use of high-brightness LEDs and LCD backlighting. There is a company in Scotland called Design LEDs that has a really cool product and they are targeting the same applications that we are targeting with silicon. So, we’re working to hook up our silicon with their products because we can jointly approach customers who are looking at this kind of technology, offering a new type of system solution. This includes set top box manufactures and remote control manufacturers, peripheral manufacturers and even the appliance guys.
How much do you rely on Web-based services and techniques as part of your marketing strategy?
Our usage of the web has increased massively over the last few years, for all areas of the marketing cycle. Be it conveying our value proposition, capturing customer preferences, easing their adoption of our technology through to ‘after-sale’ support. When you’ve got a target customer base of anywhere between 50,000 and 100,000, you have to use a consumer-like support structure and make use of things like live Web chats and forums. The Internet is a big conduit for us to get our message out and also to get feedback.
In my area we are really trying to use, I guess what you would call ‘cutting edge’ marketing techniques, but they are really more cutting edge for this industry. We are using focus groups, the Web, statistical analysis techniques, and a couple of things I can’t even talk about! That demonstrates how businesses relay on marketing to provide an edge in a crowded market.
We try to satisfy as much of the market as we can with standard products, but at the same time we are trying to answer as many of the needs of our customer base. So, we are aggregating a lot of the requirements and we’re finding IP and other ideas that help us slightly customize our products for different customers. It’s all about accurately capturing the customer needs.
Isn’t understanding and knowing customer needs just a marketing cliché?
Yes, but it also involves using the right people within our company and not just the marketers. We are relying on the design engineers and the systems engineers to talk to the right people and the customers to understand their needs. I think we‘re trying to target a couple of levels.
You mentioned Design LED, which is based in Scotland. What about other companies there as well? There seems to be no lack of creativity in Scotland, but more than a few problems when it comes to product and channel marketing. Would you agree?
One of the frustrations for me as a young professional, or at least when I was a young professional (!), was that there was not a lot of focus, that was apparent to me anyway, on growing indigenous Scottish technology companies. In fact, I didn’t really know until I got involved with 2in10 that this was the root problem because I’ve been involved in an environment – with Motorola and now Freescale – where some of the thought leaders in our company and certainly the management have come from Scotland.
So, I knew the capability is there, along with a business awareness and astuteness. But, in many cases these individuals and companies just need the training and just need to be pointed in the right direction. I was a little naïve about the skills deficit we have in Scotland because I worked in companies where marketing was more of a professional function.
Through Scottish Development and my role as a GlobalScot I went to visit a lot companies in Scotland, and there were many of those companies that did not have a sales and marketing department. They still managed to get a certain level of success, but the danger is they start to think they do not need it and you begin to see where they are going to top out.
Is this a common problem within every company in Scotland?
You can really see the evolution in many of the start-up companies. Essentially, these companies start with a great idea and find a user for it, and then begin to build a business based on that one user. They then go out and find two or three more users, but have to customize the product for those users, build big iterations of these products, and then rely on those few customers. The jump is then how to you go from that to start building a portfolio of standard devices or new devices that don’t yet have customers but can be offered in the marketplace and attract new customers?
That gets more risky. Then you’ve got to have someone in the company who can do market research and craft a strategy that is grounded in financial common sense and does not overstretch the capabilities of the company. You also have do everything at the right time, growing your capacity and manufacturing capability at the same time as you’re growing your customer base. I could see the need for that in a couple of the companies I walked into.
Are organizations like SDI and GlobalScots an asset in terms of helping increase the visibility and sales and marketing sense of these companies, or is there a need for much more help and mentoring?
The concept of GlobalScots is fantastic and I was immediately drawn to it, because I thought it is a positive outward-reaching effort. We need help from them and from Scottish people who are experts and are already out there, and who are interested in growing indigenous Scottish businesses.
But, Freescale is a global corporation. It’s a dynamic global company that’s going to utilize the global economy, and the value proposition is all that the global economy offers. We’re in China and India and Mexico because they have certain economic advantages, and we’re going to continue to do that in order to stay on our toes. It’s all about making good investments.
On the other hand, Freescale is also a technology company and we are really very hungry for cutting edge technology. We also want to be the first company to adopt a new technology where it makes sense. With the rich depth of technology talent and IP in Scotland, I see GlobalScot and 2in10 really introducing Freescale to all these companies. From that perspective it’s a great idea and a fantastic network.
You have a degree in physics and made the jump to product marketing when you joined Motorola Semiconductor in 1992. So, tell me, is it difficult for a technical person or an engineer to become a product marketer?
It’s tough to do and tough to become good at it. Marketing is a profession, and to be a professional marketer you have to know the skills of the profession. I think in the technology industry there I are a lot of engineers who look down on sales and marketing as somehow being an inferior type of profession as compared to engineering because you are not “making stuff”.
This is somewhat justifiable if in the past there have been so many poor sales and marketing people. But, as the requirements for this have gone up, the natural skill levels have gone up and it has become a more respected and recognized profession.
It’s probably easier to jump from engineering into marketing than it is from marketing to engineering because of the fundamental knowledge and experience in engineering. But, there is also fundamental knowledge and experience that you need in marketing.
So, marketing should be considered more of a science in terms of knowing your product and knowing your customers, correct?
I’ve been in marketing for 13 years now and I have an Executive MBA I earned studying weekends and at night. I ended up doing my thesis on channel marketing, although a lot of this was self-taught by reading books and learning on the job. During this time I was introduced to a lot of the skills and the tools that are required to be a good marketer. and this was like a light switch flipping on. Recently, I also had pragmatic marketing training, which again was like a revelation that helped me as a marketing manager and to structure my organization.
In terms of marketing, however, new product execution and getting mindshare from customers are two of the greatest challenges in this industry. This is especially important when you are trying to get the attention of engineers. You have to find the right balance between print advertising, Web advertising, seminars and all these kind of promotional activities. Can I get enough looks and can I make the experience good enough so that they are going to look again, and then execute my products on time?
What do you see as the biggest challenge for Freescale over the next year or so, especially in terms of what you are trying to accomplish in channel activities?
My whole job is about defining the right product, so that is my core concern. I’ve been worrying about it for the last six months to a year and we’re now starting to get it right. I’ll never stop worrying about that, or execution and time to market - landing your products fast enough before my competition.
Are customers a little more savvy and perhaps a bit more skeptical of marketing campaigns?
It depends on the level of engagement you have with them. I think customers have an infinite desire to have a influence on your products and still want us to bring out the right products. If we’re successful, then we make them successful. They are fed up with either not being listened to or not having their particular needs taken into consideration.
There are different ways to talk to customers and different tools you can use in engaging with them. If you talk to them on a practical level and have the discussion they want to have and then quickly show them that you’ve listened to them, there is absolute infinite time for you. But, if they think they’ve been ‘sold’ to, or they think that you’re not listening or patronizing them they won’t meet with you again.
We have to be humble in dealing with these guys and never become like some of the big brand corporations that can pick and choose who they deal with. I’m a big fan of “knowledge sharing, of transporting the collective knowledge pool within Freescale and our partners to 100,000 users. We have to show that we’re open and willing to help customers no matter what their size.
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