Success Depends On The Distributor
DISTRIBUTION OF FPGAS: >>DEMAND CREATION< AND DEDICATED SUPPORT ARE A MUST
MSC and Lattice have been working together since 1995. MSC is meanwhile the largest Lattice distributor in central Europe - not only in terms of turnover but also the number of new designs. In the unanimous opinion of Gerhard Brüningk, Lattice’s Area Sales Manager for central Europe, Thomas Klein, CEO Distribution for the MSC Group and Matthias Glattfelder, Lattice line manager at MSC, the dedicated Lattice team and the market access which MSC offers, not just as a distributor but also as a developer, form the essential backbone of the partnership.
Markt & Technik: Are logistics and programming services alone really enough to be consistently successful as a distributor of such complex products such as FPGAs these days? What demands does Lattice make of its distribution partners?
Gerhard Brüningk: Lattice covers around 95 per cent of its logistics via distribution. Our expectations of our distribution partners in this regard are therefore correspondingly high. But we regard efficient logistics as a matter of course, not as a differentiating characteristic for a distributor. The same also applies to the programming of FPGAs. Almost every large distributor has programming centre nowadays.
What do you expect from a distributor beyond classic value added services?
Gerhard Brüningk: FPGAs and CPLDs are not commodity products, as is well-known. A component only becomes a commodity after it has been in distribution for five or six years. For us that means that when choosing our distribution partners, we place great value on the fact that they can provide us, or rather our products, with appropriate dedicated technical and marketing resources tailored uniquely to our products. MSC is very well set and is without doubt our strongest technical partner in central Europe in this regard.
The partnership between MSC and Lattice has existed since 1995 – how has collaboration developed since then?
Thomas Klein: Very well. Since the start in 1995 in Germany, we have successively extended our partnership to include further regions in Europe: Turkey was added in 2000 and then Switzerland and Austria in 2002. We have also been working together in Poland, the Czech Republic, Hungary, Romania and Bulgaria since 2006. In 2007, we extended the agreement to the UK and Ireland, last year Italy and the Benelux states were also added. The remaining countries in Europe are sure to follow some time in the future, but one thing at a time. What counts for us is sustainability and not presence for the sake of it. Sustainability, on the other hand, requires first-class qualified staff on-site who first have to be found and trained. We therefore prefer to rely on a slow, successive but also especially sustained extension of the distribution network. Just how positive collaboration has been in the last 16 years can be seen from the fact that Lattice is now amongst the top five manufacturers of MSC in terms of turnover.
Mr Brüningk expects dedicated resources from the distribution partner. How do you implement that within the MSC organisation?
Matthias Glattfelder: Our pan-European Lattice team currently includes more than a dozen staff including line management, FAEs, business development managers and employees who look after administration, purchasing and product marketing. With such a focused and dedicated team as well as the long-term and close co-operation we have, of course, built up an extremely profound knowledge of Lattice products software.
In addition, we not only market Lattice products; they are also actively used by some 120 developers in our design centres in Aachen, Stutensee and Tuttlingen in their own designs. This gives us possibilities possibilities which a classical distributor without development resources definitively does not have. Our design centre in Aachen alone, for example, develops between five and ten own or customer-specific products every year in which a Lattice component is used. Because of this, we have much more intensive and profound access to Lattice products and the Lattice design flow which all participants profit from – Lattice, MSC, and above all our mutual customers.
Is this multiple market access really an advantage for Lattice?
Gerhard Brüningk: Absolutely. It is, in fact, a most decisive point. If developers are first trained on a certain FPGA software program any change takes a lot of convincing. You don’t just replace an FPGA manufacturer just like that. Since Lattice entered the market for FPGAs relatively late it was, of course, initially anything but simple for us to win projects against the top dogs of the time. Today, things look very different. But the fact that MSC also designs our components into its own systems brings us new customers who we would probably never reach via classic distribution business– a benefit which other distributors cannot offer us in this manner and variety.
Does the success of an FPGA manufacturer therefore depend on the intensity of “Demand Creation” by the distributor?
Matthias Glattfelder: I would say so, yes. Our dedicated employees don’t just wait until a customer perhaps comes to us with an enquiry. Demand Creation rather means that we develop ideas ourselves which we then present to the customer. Of course, promotions performed together with Lattice, for example our VHDL training or seminars on knowledge transfer such as our “Controller meets FPGA” event series. These make an important contribution to introducing potential users to Lattice products. However, a demand for a certain FPGA is created by presenting the customer with a more or less finished solution tailored to his specific needs.
Not least due to the sometimes precarious delivery situation, many distributors complain repeatedly about the inadequacies and unreliability of some manufacturers. Which soft skills are part of good collaboration between manufacturers and distributors in your view?
Matthias Glattfelder: Above all, reliability and mutual trust, including when dealing with sensitive issues, for example if a customer attempts to play several distributors off against each other. It is also important that manufacturers and distributors approach the customer in an open manner and keep to a consistent, common line. We maintain a very fair and open relationship with Lattice in this respect. Lattice quite consciously does not wish to be just a standard semi-conductor supplier. Our collaboration in development is accordingly also very close, for example with evaluation boards. Lattice has also proved itself to be highly dependable in matters of delivery reliability. There were no large delivery delays even during the allocation phase last year.
Gerhard Brüningk: That’s true. We confirm that our delivery dates are binding and comply with commitments to the greatest possible degree. Last year, for example, delivery times were not longer than 12 weeks on average. Of course, this only works with stringent planning. We register every design-in project world-wide up to the end customer. This means that we can already determine our requirements a year in advance. This reliability is of significance for a distributor in that he can be certain that he will receive his merchandise at the agreed time and does not need to store merchandise for an unnecessarily long period. Otherwise, he has to arrange pre-financing.
Distributor on the one hand, developer and manufacturer of own embedded boards through to complete industrial PCs on the other – does that not lead to conflicts for MSC?
Thomas Klein: I don’t see things like that, quite the opposite. The fact that FPGAs and micro- controllers are amongst our product areas with the highest turnover alongside displays is at least partly thanks to precisely this distinctive system competence, which is unusual for a distributor. Ultimately, that knowledge built up in the system business also benefits our distribution customers. Confidence in our system competence is meanwhile so high that some customers even engage us to perform their entire product development following initial consultation meetings. This brings us a lot closer to our goal of being able to supply customers with not just an individual component but, if possible, all components required for an application. Rather a typical win-win situation for all involved, I would say. And quite honestly: how can a distributor advise customers properly on ever more complex FPGAs or micro-controllers if they don’t know from their own experience which problems can possibly arise in practice? I think ultimately it is only a question of time until other FPGA and micro-controller distributors follow MSC’s example and diversify ever more in the direction of system integration. Catching up on our head start in this area will, however, be difficult for some competitors.
Due to the displacement of large production volumes to Asia many component manufacturers have greatly reduced direct business in Europe in favour of distribution. Has the ratio of direct business to distribution business at Lattice changed in recent years. In other words, has the significance of distribution in Europe increased in your opinion? How high is the distribution share compared to direct business at Lattice in Europe overall?
Gerhard Brüningk: Unlike many other semi-conductor manufacturers, Lattice has always placed an extremely high value on distribution. The distribution share in Europe is currently 75% and in central Europe 90%. There is hardly any room for further increases, not even through production displacements to the Far East.
What if a customer buys from MSC but wants to manufacture in Asia? The distribution agreement does not explicitly cover such cases …
Gerhard Brüningk: We do permit this in a few exceptional cases. Otherwise there is splitting. This means that the order goes to the local distributor in the customer’s country of production and MSC receives a commission payment.
MSC is one of three Lattice distributors in Europe. How high is MSC’S share of Lattice’s distribution business currently?
Matthias Glattfelder : At 50 % we are currently the largest
Lattice distributor in central Thomas Klein, MSC Matthias Glattfelder, MSC
>>Just how positive collaboration has been in the last 16 years can be
seen from the fact that Lattice is now amongst the top five manufacturers of MSC
in terms of turnover.< >>It is also important that manufacturers and
distributors approach the customer in an open manner and keep to a consistent,
common line. We maintain a very fair and open relationship with Lattice in this
respect.< Europe and that is with almost no fulfilment business, meaning
purely via design-in products.
When does it make sense for the customer to have components programmed externally?
Matthias Glattfelder: Lattice is one of the few manufacturers which still offer efficient non-volatile components. The LatticeXP2 and MachXO2 components combine a look-up table- based FPGA structure with non-volatile flash cells in socalled flexiFLASH technology. Only thus does it make any sense to programme them beforehand. In principle, the compulsion to have logic components programmed externally has decreased significantly in recent years. Meanwhile, almost all logic components can also be programmed on-board and the programming times are short enough to perform this step during the end test.
Thomas Klein: Definitely. In 2010, MSC was able to achieve growth of more than 30 percent in the field of programmable components compared to the previous record year of 2008, and for 2011 we also expect growth rates to almost reach a two-figure percentage.
Which product segments offer the largest growth potential - FPGAs or CPLDs?
Gerhard Brüningk: Lattice is the leading provider of lowdensity CMOS PLDs world-wide. Such low-density products are especially in demand in central and also eastern Europe. That is a big market for us. But smaller, non-volatile FPGAs are also conquering ever more new markets, amongst other things as a substitute for obsolete ASICs.
And what are the benefits of FPGAs and CPLDs compared to ASICs and micro-processors?
Matthias Glattfelder: On the one hand, FPGAs and CPLDs offer much greater design flexibility compared to purely digital ASICs. Changes can be still performed at short notice even in manufacturing. On the other, ASICs only make sense with really big batches. For smaller quantities, FPGAs and CPLDs have always been the significantly cheaper alternative. I don’t see micro-controllers and FPGAs/CPLDs as competition but rather as an ideal extension. The FPGA takes over the fast, time-critical functions and the micro-controller the control; experience shows that such solutions prove to be mostly extremely efficient in practice.
In the spring there was a series of Controller meets FPGA workshops. – What are the technical challenges involved in implementing and distributing the functions on an FPGA and a micro-controller?
Matthias Glattfelder: The biggest challenge as a user is to first recognise that dividing the functions on micro-controllers and FPGA can bring enormous design benefits. Communication between both worlds is then very simple via already existing interfaces such as SPI and I²C from the MachXO2 family. The high number of participants at the workshops has confirmed to us that this topic has met with great interest amongst developers.
With MicroSemi, MSC already has a further manufacturer of programmable logic in the program. Are there no overlaps here?
Gerhard Brüningk: Of course it would be desirable for us if MSC only had one FPGA manufacturer on the line card. But MicroSemi is more of a niche provider and above all specialised for the military segment with its programmable logic. There are therefore no large overlaps with our products.
Matthias Glattfelder: FPGAs are complex products for which very dedicated specialist knowledge is required, as has already been said. For this reason alone it makes absolutely no sense for us to manage as many FPGA manufacturers on the linecard. The topic of FPGAs is a typical example of how less can sometimes also be more.
And finally: What are Lattice’s objectives for 2011?
Gerhard Brüningk: We definitely want to grow more strongly than the market worldwide. Thomas Klein: I agree; we do of course want to make a decisive contribution. Our target is a turnover share of more than 50 percent in the European Lattice distribution network. With the new design wins we also want to grow and extend our value share respectively to over 50 percent.
Thomas Klein: I agree; we do of course want to make a decisive contribution. Our target is a turnover share of more than 50 percent in the European Lattice distribution network. With the new design wins we also want to grow and extend our value share respectively to over 50 percent.
Karin Zühlke conducted the interview.