Any suggestions on the other issues in the original posting?
ok, first things first
I was asked to convert a lab prototype for production runs, but with enhancements. The prototype was made using 89C2051 and C source is available. However, the enhancements require adc and pwm. My other constraints are

1. Space - PCB real estate is very small about 30mm dia circle.
2. Low power and low dropout - unit is portable and I will be using a li-ion battery (LIR3048)
3. Cost

I have short listed two

1. P89LPC935FHN - (Philips)
2. ATmega48V-10MU - (Atmel)
TI has some uCs that are known to be the least power hungry of the bunch. I know nothing about them, but recall something like a magnitude less power than our traditional chips.

The customer has done a market survey and committing a 10K qty for pilot run and planning for a 100K ramp-up per year. With this in mind, I ask your inputs

1. How is the vendor support? how do you rate them?
2. What is the minimum sizable qty for the vendors to be interested? (not all customers are equal).
3. What are the issues I should consider at these quantities?
4. How do guys handle the programming part?
1) the vendor support really depnd on who you know. Most support is multi-tiered, there are a bunch of people with sheets of questions and what the next question is if the answer is yes or no. This support is, I believe, a necessary evil. When I have done support myself, I have always wanted one of those to take care of the "I did not bother to read the datasheet/manual, tell me what to do" requests for support. Once you get through that layer, life is easy. As an example, I have contacts a Philips (which I do not disclose, it would be a disservice to make them "level 1 support" by doing so) and they are an enormous help when issues come up. I would interview the local FAE for any chip I chose to use. At another company, that I shall not name I copy my queries to those I know are in the know and they just don't care, or maybe that company have instructed them to never react on a direct request.
2) The quantity seems irrelevant to me, I have had excellent support at qty 10 and lousy support at qty 10k. One thing that I feed DO matter is the QUALITY, not of the support, but of the support requester. Most of my "good" contacts are acquired by sometimes supporting them when they are in doubt and think I might know.
3) Security of availability. The better companies will call you. As an example, I got a call "we are running out of 5V flash, order 1 years needs now". This, usually requires a contact at the manufacturer, often distributors do not know such.
4) I get the boards programmed from the contract manufacturer, today it does not make sense to build your own.

now for the recent
In fact I have all the tools for debugging the SILabs chips, except for the chosen chip target board and that is not a issue.
At thise volumes it would be outright silly not to buy an ICE. The toolcost "disappear" with volumes like this.

Erik