Project Management and Investments
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  • Project Management Case Study Part 1: Background and Assignment

    Posted on September 18th, 2009 Peter Tjernström No comments

    Background

    Back in 2000, Infineon Technologies was the world market leader in chip-sets for Cordless Phones, also known to many as DECT Phones. Infineon had reached that position thanks to fruitful combined efforts with its one time owner, Siemens, which then had the no 1 position in the market for these consumer products. At this time, the Vice Presidents at Infineon’s Business Group for wireless communication (WS) decided to stop all new product development in the Cordless segment in order to be able to invest in future technologies with higher growth and profitability prospects such as Bluetooth and Wireless LAN.
    In the beginning of 2005 the WS Business Group was in trouble. Its most important segment, that for cellular communication (GSM, UMTS, EDGE, etc), was still very dependent on one customer: Siemens. And Siemens was losing market share. Fast. In this environment, the newly appointed Head of the Business Group, Kin Wah Loh, decided to prioritize serving customers in segments where significant revenue and profits were generated and where Infineon in the short term could grow with its customers. This meant, amongst other things, a restart of product development efforts within the Cordless segment in order to send a very clear signal to the customers who by now were at the limits of their own imagination and engineering skill when it came to develop new phones based on Infineon´s old chip-sets. Why, you may ask, were these customers still using archaic Infineon products when there were plenty of others to choose from? The answer is twofold: Firstly, the Cordless Phone market (especially in the low-cost segment) is volume driven and margins are low. Since Infineon had decided to stop investment in the product segment, it could of course offer an attractive price and still be profitable. Secondly, the customers had developed software based on Infineon´s HW architecture that could not easily be ported to other platforms without significant effort. This effort comes at a price too high for a producer of low-cost phones were feature sets anyway were only slightly more advanced than they were four years ago.

    The Assignment

    Once the decision to restart the Cordless programme was made, a Programme Manager was announced to take care of the current business, strategy, etc. Shortly after that I was, as the second person in the programme, assigned to head up the development of the new platform for cordless phones.

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