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The Elusive Trillion

The MEMS industry held a couple of interesting conferences last week. A number of noteworthy things came from them, which I’ll be covering over a few posts here. But, while it wasn’t my major takeaway from the events, there was one high-level aspect that I found rather unusual in this type of environment, where group-think tends to drive people on inexorably – even if it ends up taking them over a cliff like so many buffalo.

The theme of this year’s MEPTEC conference was clearly about getting to a trillion. Dollars or units. But a trillion something. The audacity of aiming at such numbers generally comes from bottoms-up considerations, and one of the nuggets that leads to thinking this might be possible is an expectation that, in the not-too-distant future, there will be roughly a thousand sensors per person. For, oh, say 10 billion people, at 10 cents per sensor (things gotta get cheap to go big), that gives you $1T.

Think a thousand sensors is a lot? Look at your car. If you’re fortunate enough to afford a high-end one, you’re already 10% of the way there, since your car probably has around 100 sensors in it. Which is only likely to grow, no matter what kind of car you have. Add to that your phone and other sensor-enabled gadgetry, and project forwards from there to a “sensor swarm” world (more on that later), and, well, maybe 1000 sensors doesn’t seem so outrageous.

With presentation after presentation aiming at $1T, it had that “there’s nowhere to go but up and to the right from here!” feeling. Not outrageous, no one was popping champagne corks quite yet (although they might have been investing in some grape futures).

Then came the surprise. At least to me. Gregory Galvin of Kionix presented. After looking at some of the bottom-up motivations, he took a top-down global look – and the picture changed. Sort of one of those reality-check things. And it goes like this: the world GDP in 2010 was $63T. That would make a $1T MEMS market 1.6% of the entire world GDP.

Yes, the world GDP will presumably grow from the 2010 number; the exercise of projecting $63T at 2-3% per year to come up with a number 10 years from now is left to the reader. The number will be higher than $63T, but not by a ton.

Then, here comes the real kicker. If it’s assumed that the cost of the MEMS components is 2% of the overall cost of the end products they inhabit, then a $1T MEMS market means a $50M equipment market.

That’s 80% of 2010’s world GDP. Yeah, somewhat less  ten years from now, given GDP growth. But the point remains: the sanity check doesn’t quite work.

So, what’s my point? Am I gloating over some harsh put-down by some guy with a better grasp of reality than wild-eyed marketing dudes selling golden futures to VCs? Nope, not at all. Here’s the best part. When he was done, there was no grumbling, shifting, looking at feet. There was applause. Hearty applause. Presentations from Yole and IHS – guys that are supposed to be responsible for forecasting the numbers – also suggested that the $1T number was unlikely, but by then we were used to this being a two-sided discussion rather than a blind rush to the T.

So my point is that it was refreshing to see, in a venue where boosterism has a tendency to dominate, and in a time when we are prone to taking extreme sides and demonizing the “other,” that this back and forth was welcome and that each side informed the other side’s thinking. In fact, it didn’t really feel like sides.

And that’s a good thing.

(Wait, did I just violate a trademark?)

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