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Managing change in industry requires knowledge of the challenges, the forces which create these challenges and the watersheds that force the direction of change. The technological challenge is to generate innovative products, services and families which can gain market share. The management challenge is to set expectations and then guide the consequent evolutionary or disruptive changes. In the micro-electronics industry two watersheds currently dominate, namely (a) software as a key differentiator and (b) the differential velocities of development of the sub-systems that comprise a micro-electronic system.