In this new environment, product design has become the single and most important determinant of customer satisfaction and financial success in an increasing number of industries.

Jim Jones III, a managing director at BA Venture Partners where he heads the semiconductor and components group, says product design has always been understood as key in the consumer packaged goods industry, where packaging and product design were the only areas differentiating a blockbuster product from a laggard for lines like cereal or razor blades. Makers of personal technology (mobile phones, MP3 players, televisions) or information technology (PCs, laptops, PDAs) have been slower to learn the lesson.

"The fundamental change has been the rapid growth of semiconductor and manufacturing capabilities that make it increasingly hard for any company to differentiate for long on technology or features," Jones says. "Any technology advancement that is popular can be quickly copied by 10 other suppliers. So how does a manufacturer or marketer differentiate their product? Product design."

Jones points out that Apple has approximately 50 percent of the hard disk-based MP3 player market, not because they have silicon or manufacturing technology that no one else can match, but because their products are the easiest and most intuitive to use - at least so far. Samsung is not gaining market share by leaps and bounds in the mobile phone market because they have differentiated technology, but because they introduce an estimated 100 different mobile phone models per year worldwide, greatly increasing their chances of hitting on a design that appeals to the market.

The increased pace of product delivery, enabled by a mature semiconductor and outsourced manufacturing support system, has made rapid product design and product testing crucial to the success of a new product. More and more, the underlying semiconductor manufacturing is done by silicon "foundries" such as TSMC or UMC in Taiwan or SMIC in China, Jones points out. Increasingly, the product manufacturing - and on occasion design - is done by large outsourced manufacturing companies such as Flextronics or Foxconn (also known as Hon Tai in Taiwan, now the number two contract manufacturing company in the world).

"What is left for an industry innovator is to design the right ergonomics, user interface and software to appeal to the target market, and fast," Jones says.

All companies must generate innovative new products and services in order to stay healthy and grow. Increased competition, new technology and changing customer demands have created a marketplace that is tougher than ever. A single innovative product can transform a company's future, lead to entirely new families of products and even usher in an entire new industry.

Relentless if relatively recent forces now add to the pressure; not least, the raging consumer thirst for innovation and the plunging cost of change affecting a growing range of industries. But at the same time it is hard to overstate the impact of collections of ageing host-based and newly developed or acquired client/server "stovepipe" systems focused on individual programs and functional organizations that make data access and interoperability difficult.

Kaufman Global's Herdan says as the economic environment continues its rapid change, such "legacy architectures" will have an increasingly, perhaps exponential, negative impact on an organization's competitive position in the market. He points out that legacy architectures are characterized by a myriad of poorly documented interfaces, some of which are automated but many of which require costly and schedule-consuming human intervention.

"Many systems in use today are the products of lengthy, in-house development and modification projects performed with varying styles and tools. The result is a highly heterogeneous IT environment that is both costly and difficult to maintain and highly resistant to change," he says.