Businessmodel of Marvell Technology

Customer Segments

Marvell has a niche market business model, with a specialized customer segment. The company targets its offerings at original design manufacturers (ODMs) and original equipment manufacturers (OEMs) that use semiconductors in their devices. A few of its customers account for significant portions of its revenue. They are its end users Western Digital (20%) and Seagate (13%), as well as its distributor Wintech (11%).

Value Proposition

Marvell offers two primary value propositions: convenience and brand/status.

The company creates convenience by providing fully-integrated platform solutions. The solutions feature software that integrates analog, digital, and mixed-signal communication and computing technologies, designed to offer a solution that is more optimized than individual components.

The company has established a powerful brand as a result of its success. It has won many honors, including the Storage Visions Award for Enabling Consumer Storage Technology (2015), the Wi-Fi Alliance’s Outstanding Leadership and Contribution Award (2014), the Linley Group Analysts‘ Choice Award (2014), recognition as a Thomson Reuters Top 100 Global Innovator (2015), and recognition as the IEEE Outstanding Large Company of the Year (2015). It ships more than one billion integrated circuits per year. Lastly, it has continued to show strong growth, achieving a record high of $3.7 billion in revenues in 2015, a figure 9% higher than what it earned in 2014.

Channels

Marvell’s main channel is its direct sales force, through which it acquires most customers. The company also sells its products through manufacturers’ representatives for its products and distributors in the United States, Europe, and Asia. The company promotes its offerings through its website, social media pages, and attendance of summits and conferences.

Customer Relationships

Marvell’s customer relationship is primarily of a self-service, automated nature. Customers utilize its products while having limited interaction with employees. The company’s website provides driver downloads and answers to frequently asked questions. There is a personal assistance component in the form of phone and e-mail support. Individuals who require this assistance must first sign a non-disclosure agreement (NDA), a measure the firm has likely taken to protect its intellectual property.

Key Activities

Marvell’s business model entails designing and developing integrated circuits. The company outsources manufacturing of its products to independent foundries in order to save costs – specifically, it contracts the activity to Taiwan Semiconductor Manufacturing Company and United Microelectronics Corporation, with remaining manufacturing outsourced to other foundries in Asia.

Key Partners

Marvell partners with hardware and software companies that create complete solutions utilizing its components such as switches, Wi-Fi modules, embedded processors, and power management chips.  Specific partners are as follows:

• Hardware Partners – Cogent Computer Systems, Globalscale Technologies, Ionics Incorporated, Pactron, and SolidRun
• Software Partners – Aricent, Comm-IT, DENX Software Engineering, eInfochips, Free Electrons, Lauterbach, Media5 Corporation, MontaVista, Redvue Systems, Sartura, Semihalf, StreamUnlimited, SUSE, Timesys, Trend Micro Incorporated, Volansys, and Wind River ### Key Resources

Marvell’s main resource is its engineering staff, whose employees have significant experience in digital signal processing, mixed-signal circuit design, embedded microprocessors, system-level architectures, and CMOS technology. It has important physical resources in the form of international design centers in the United States, China, Hong Kong, Europe, Israel, India, Malaysia, Japan, Taiwan, and Singapore. Lastly, it places a high priority on its intellectual property, with over 5,300 U.S. and 1,400 foreign issued patents, and over 3,800 U.S. and foreign pending patent applications.

Cost Structure

Marvell has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is research and development, a fixed cost. Other major drivers are in the areas of administration and sales/marketing, both fixed costs, and cost of goods sold, a variable expense.

Revenue Streams

Marvell has one revenue stream: sales it generates from selling its selection of integrated circuits. Pricing information must be obtained from direct sales staff.