Apac ODMs to expand into other commoditized markets to offset slowdown

DUBLIN, IRELAND: Research and Markets has added Frost & Sullivan's new report "Strategic Assessment of the Asia Pacific Original Design Manufacturing (ODM) Markets" to its offering.

This research provides an analysis on the Asia Pacific Original Design Manufacturing (ODM) markets. It discusses the key industry challenges, market drivers, and restraints. In addition, qualitative as well as quantitative analysis of the market trends and competitive structure are also provided.

Frost & Sullivan's report provides insights into the Asia Pacific ODM industry. The expert analyses key industry challenges, market drivers, and restraints. The market share by tier and strategic conclusion are also provided. Adept analysts thoroughly examine the following markets: data communications, telecommunications, and consumer electronics.

Market overview
The Asia Pacific ODM markets have traditionally succeeded in commoditized market segments where the electronic components used to design products such as notebooks, computers, and motherboards are easy to procure. The market's focus on the computing segment is further reinforced due to its vertically disintegrated value chain.

However, saturation levels and declining margins have begun to set in these segments. "The economic slowdown of industrialized countries and rising inflation are making the demand for notebooks, motherboards, and other consumer electronics unpredictable," notes the analyst. "Many ODMs are unable to forecast the demand for their products, fearing the risk of overcapacity and excess in inventories, which will eventually affect their revenues and operating margins."

Difficult market conditions are compelling ODMs to keep innovating in their existing saturated markets and expand in other commoditized markets such as mobile handsets and liquid crystal display (LCD) TVs.

"Adoption of a focused strategy, while continuing to make operational enhancements in IT systems and business processes, will go a long way in improving the ODMs business in the long term," says the analyst.

Since the ODM model was considered profitable, the OEMs compelled ODM vendors to lower costs. In fact, the success of the ODM model has prompted other market participants in the electronics manufacturing services (EMS) value chain to rapidly adopt it.

"ODMs must also understand the factors that enable the rapid migration of EMS providers to the ODM model," says the analyst. "The migration could be triggered by the EMS provider's ability to manufacture products at lower cost and more efficiently than ODMs, and the advantages of having global footprint as well as stronger IP protection."