Identifying Drivers of Growth
Our client, an innovative software and hardware company, had built its business on host processing technology that allowed key peripheral communications functions in personal computers to be executed with less silicon and less cost than competing solutions. However, the core applications that had driven the business were facing increased competition, eroding margins, and declining prospects for future growth.
In response, the company had been developing new applications for its host processing technology in personal computers. These programs were facing development challenges; the first of them had come to market but was not achieving sales goals.
Analysis Group was asked to help the company define a new strategy in response to these challenges. Our team evaluated the company's technology and customer base, considering potential applications in new markets as well as with existing customers.
The strongest near-term opportunity proved to be in bringing the existing technology to new customers outside the personal computer market. Game console, set-top box and PDA markets had not been a focus for the client, yet represented the best mechanism for maintaining revenue in the immediate near term.
In the longer term, the Analysis Group team concluded that the new applications the client had been pursuing were not going to be drivers of growth, but that adjacent networking markets presented an opportunity to exploit existing capabilities and customer relationships.
The company has successfully shifted its focus into the recommended market, completing two acquisitions and dedicating resources there, while reducing investment in the earlier core business.