Earlier this year, many of us expected the economy to mostly be back on track by mid-year. Judging from the erratic swings of the stock market and the lackluster performance of many high-tech stocks, we haven't reached that destination. The recovery still has a significant way to go before the good times roll again.
There have been a few bright spots in the market, with some component areas starting to see new orders and even a few minor part shortages causing lead times to stretch out. But for now, the recovery appears spotty as few signs indicate that the overall economy has really started to strengthen.
In the entertainment sector, namely the high-end game-box suppliers, Microsoft and Sony have recently cut the retail price of their game systems by 33% in an attempt to stimulate demand. When the rest of the economy is slow, though, reduced prices might not be enough to increase demand because some family incomes have dropped below comfort levels.
Yet, many financial experts maintain that the economy has dropped to the lowest level it will reach and we're now facing the long, arduous road to some semblance of a recovery. I say semblance because no one is sure how strong the economy will spring back. Will we reach the heyday of three years ago when we had 20%+ growth? Probably not. Many experts believe that we will experience a slow and steady recovery to a growth of 7% to 10%.
What will drive the growth? Two areas that appear ready are automotive electronics and communications, and the merging of the two into what the industry calls telematics. In the automotive sector, the industry is beginning the transition from gears and linkage systems to direct electrical control with motors and sensors. The changeover holds the promise of simpler vehicle design, improved efficiency, and better long-term reliability. Additionally, once the car can be electronically controlled, remote guidance and intelligent highways can, when called upon, take over to reduce congestion, prevent accidents, or maximize fuel economy.
The remote management of the vehicle, coupled with embedded global-positioning receivers, will allow traffic managers or police to quickly pinpoint the vehicle's location. Additionally, the co-integration of wireless communications will greatly improve the driving experience (or the passenger experience), as companies go beyond the cell phone and start to offer new Internet-based services. Passengers could then get driving directions, information about restaurants, entertainment, events, and so on, directly from the vehicle's wireless Internet connection.
This will basically turn the car into a large mobile browser. Many issues remain. Safety and "who pays" are probably the two most critical matters. Fortunately, both automotive and communication sectors are high-volume consumers of electronic components, which bodes well for the future. Tele-matics could bring back the good times.