Vicor's Comment on Competitors and Industry Peers
Despite significant consolidation, the growth of large-scale, low-cost competitors,
and increased application overlap with vendors of solutions based on semiconductors
and discrete components, the global merchant market for AC-DC and DC-DC power
conversion solutions remains fragmented, with over 1,000 merchant vendors. The
market is made up of many large, diversified manufacturers, as well as many
smaller manufacturers focused on specialized products or narrowly defined market
segments or geographies. The overall market, including those segments in which
we compete, is characterized by rapid commoditization and intense price competition.
Although numerous third party industry studies estimate the total global merchant
market for AC-DC and DC-DC switching power supplies to exceed $20 billion of
annual revenue, representing approximately two-thirds of the total annual consumption
of switching power supplies (i.e., the sum of merchant and captive volumes consumed),
the Company competes in smaller, well-defined industrial and military market
segments. We believe AC-DC power supplies represent more than 85% of the total
merchant market, reflecting a wide range of battery charging applications, primarily
in the consumer, mobile device, and office computing segments (commodity segments
in which we do not compete, together representing more than 50% of the total
merchant market). Based on our own assessment of the segments in which we do
compete, we estimate our aggregate addressable market opportunity within the
AC-DC portion of the merchant market approaches $1 billion annually, while we
estimate our aggregate addressable market opportunity within the DC-DC portion
of the merchant market exceeds $3 billion annually.
Despite our relative position in the overall merchant market, our small historical
presence in the AC-DC portion of the merchant market, and the competitive presence
of numerous, far larger vendors in the market segments we serve, we believe
we are consistently among the largest volume vendors of solutions for the conversion,
regulation, and control of DC-DC current, particularly in the market segments
we serve. However, numerous competitors in these market segments have significantly
greater financial and marketing resources and longer operating histories than
we do.
The competitive characteristics of market segments we serve with our transitional
go-to-market strategy may vary. Generally, competition is based on product price,
product performance, design flexibility (i.e., ease of use), and product availability.
We seek to position ourselves with customers across all market segments served
in
a manner that reduces our vulnerability to commoditization. As we shift our
strategy to focus more on higher volume OEM opportunities, we are emphasizing
what we believe are our sustainable competitive advantages: the differentiation
of our products’ superior performance and power densities; a compelling
value proposition based on lower total cost of ownership enabled by superior
power conversion efficiencies; and the advantageous design flexibility enabled
by our products and tools. The BBU, given its history, continues to compete
on the basis of differentiated responsiveness to individual customer requirements
enabled by our mass customization capabilities, largely with brick DC-DC converters.
However, the BBU is pursuing opportunities for which our new products are appropriate,
particularly with VIA packaged ChiPs. Our VI Chip and Picor subsidiaries, given
our focus on higher-volume OEM opportunities with our new, innovative products,
seek to build customer awareness and acceptance of our products and value propositions
through the high levels of customer engagement and support described above.
VI Chip and Picor are pursuing applications with these OEMs and their contract
manufacturers in market segments for which the advantages of our new products
are most compelling. In particular, we are marketing FPA, enabled by our new
products, as an alternative to IBA and other distributed architectures, primarily
in enterprise computing (notably large-scale datacenters). A complement to this
customer-specific effort is the ongoing development of collaborative relationships
with influential suppliers to our OEM customers.
*Market share is calculated based on total revenue.
Who are Vicor Corporation's Competitors?
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