Indian embedded superstars
Customers today are expecting strong domain expertise from the service providers to partner with them. Hence, we see a strong trend from companies slowly moving from "Service Only" model to "Service + Product/IP" model, so that product/IPs act as a proof point for the domain knowledge and also help them to build a strong market understanding.

The Indian product market would be $2.1 billion by 2010 from the present $0.15 billion, and product development as a percentage of total market will increase from a meagre 3.2 percent in 2006 to 15 percent in 2010. Companies position their services around the IP/products they have created and thereby offer more value add to their customers.

Wipro – which is India's largest embedded service company, also has a strong IP/product portfolio. Gartner rates Wipro Technologies as the number one worldwide supplier of WLAN based on design IP revenue commanding 61 percent market share in 2006.

MindTree – another large service company – has its research group, which develops and licenses IPs. MindTree has over 25+ Bluetooth IP licensed to customers worldwide. Likewise, KPIT has built strong product/IP capability in the automotive space. Companies such as Aricent and Sasken offer services and products in the mobile space.

There is also emergence of niche, boutique – product only companies with strong domain expertise, who are building end-to-end designs. Ittiam Systems, a Bangalore based DSP company, develops and licenses software, which finds application from MP3 players to in-flight entertainment systems. Ittiam was rated as the No.1 IP company in the DSP space in a worldwide survey conducted by Forward Concepts for three years in a row.

Suresoft Systems from Pondicherry offers complete middleware and applications in the consumer space for digital TV and set-top box (STB) market. Epigon Media in Bangalore has built and licensed products in the digital satellite radios and portable media players (PMP) areas.

Indian companies are also acquiring companies globally to strengthen their product capabilities, to complete missing links in their portfolio offering, as well as to establish themselves in other geographical destinations. For example, Wipro acquired New Logic and Oki, while Sasken acquired Botnia.

The future biggest growth factor for embedded is likely to be the localization of product design and manufacturing from India, which will drive significant investments from product and service companies. However, the industry will also have to continuously fight the challenges from growing talent demand, attrition and increasing costs.

The author is Director, Software Alliances & Partnerships APAC, NXP Semiconductors