InvenSense Inc (INVN) has reported slimmer margins in recent quarters, causing concern among some investors. But, CEO Behrooz Abdi says management has plans in place to improve margins.
“So one of those issues is obviously our concentration in mobile. The way we try to address that is obviously not just differentiate on the hardware but also to focus on the software,” Abdi says. “We are currently working on the software side to create some compelling features and use cases for sensors. When we do that, and we take that to market around the software and features like imaging and navigation, it allows us to not only improve our margins but also improve our content in a cellphone.”
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Abdi says margins are also challenged because of the company’s concentration in consumer mobile, which results in increased competition and lower prices and margins. He says InvenSense is starting to diversify into other markets.
“We started this effort last year by growing into adjacent markets like wearables, and we see that, long term, the markets for sensors really plays nicely into this Internet of Things — IoT — which is everything from wearables to motion, remote controls for TVs, smartphone control, automotive, drones, industrial and so on,” Abdi says. “We see a lot of opportunity here, but it will take some time to build those channels. Their volume starting out is not as large as consumer mobile, but over time, it creates a nice diversification in terms of both revenue and margins.”
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