iPad set to shake up electronics design process, says iSuppli

The analyst says the user interface (UI) focused design will also have a impact on the electronics supply chain. Derek Lidow, president and chief executive officer at iSuppli, said: "Electronic products have always been designed the same way, with a motherboard-oriented approach starting with the circuits and semiconductors on a central pcb and then wrapping UI-focused elements like the keyboard and display around it. The iPad is not designed that way. It doesn't have a traditional motherboard. Rather, it is designed with the UI as the starting point: Apple started by designing the screen, the touch pad and the battery, and lastly focused on the semiconductors and where to put them. This design is what gives the product a unique feel and functionality." According to Lidow, anyone who wants to compete with Apple is going to have to consider the design of the iPad, as well as its implications on the electronics design and value chain. "This unleashes an extremely dynamic," Lidow observed. "The question of which companies in the supply chain will capture profits from this UI-based approach will be of major importance in the coming years." Shipments of the iPad are set to rise to 20.1million in 2012 and competitive products from companies such as Google, Hewlett Packard and Microsoft, will increase the public demand. iSuppli believes that prime beneficiaries of the UI-centric design philosophy will be suppliers of display, touch screen assembly and related electronics. The display module in the iPad, supplied by LG Display, is the single most expensive component in the product. The display employs advanced, wide-viewing-angle lcd technology. Three separate ICs are used to support the touch screen display, which Lidow says suggests that future integration into a single device is possible and desirable. "Future versions of the iPad are likely to use a single chip solution for supporting the touch screen functionality, creating opportunities for suppliers that can offer such products," he noted. "The iPad brings a new competitive dynamic that focuses on which companies will supply and control the value of the UI—and which firms will become commoditised in the relentless push to drive down prices," Lidow said. "Display companies could shift their R&D priorities to develop touch and UI intelligence into their products, grabbing value from other UI components and protecting them from being commoditised. IP savvy semiconductor suppliers could do the same. During the next five years this will become one of the most important battlegrounds in the electronics value chain."