Summary
There are many companies selling electronic components that are losing market share quietly and persistently. This will be evident after the rebound. And they are heavily concentrated in the analog IC area. There are several ways to sell your ICs into the OEM market: a direct sales force, through distribution, and through manufacturer's reps. Intel has a fine, dominant direct force with a fairly small, identified account base. The analog/mixed signal and discrete IC companies need to win designs at a broad base of accounts necessitating a large sales force. In a declining market the rep force earns less but keeps their number of sales people intact- a variable cost of sales. Companies such as Analog Devices, National, and Fairchild among others are decreasing their sales people because they don't have a variable cost of sales model. This will result in fewer deign wins now, resulting in a slower emergence from the downturn and a significant loss of market share.
Analysis
During difficult times sometimes changes are made in a sales force just to make changes and buy time for the executives in charge. When it is especially important to increase sales some companies are cutting incentive programs and killing morale. Analog Devices recently cut its rep force, National has a sales force that can barely answer field questions and Maxim's sales force was once highly motivated by stock options. Those companies like IR, ST Micro, and Xilinks should do a lot better coming out of the recession because of their highly motivated, hungry rep force. These companies have kept their trained sales personnel in the field as the cost per sales person has declined. They will be ready for the upturn with new design wins!
