The Business Challenge Can Industry and Academia survive

The Business Challenge “Can Industry and Academia survive a VBB/BB Development? ” By Ian Standley Kinemetrics, Inc

The Industry Concerns Simplified! n n Can we as individual companies make a profit from these developments? Is this “profit motive” a concern to the research community? • I believe yes! – a robust commercial base of instrument manufacturers provide the products, support, and future instruments the research community needs n What will industry be considering?

The Industry Process n Marketing Assessment and Financial Feasibility n Product Development n Production

Marketing Assessment & Financial Feasibility n n Assess the market size Evaluate Competitors Offerings Work out the market Differentiators Produce Target Specifications

VBB/BB Market Segmentation

Industry Standardization? n n n Why not put together a committee of interested parties to develop an Industry Standard for Seismometers? Not appropriate in this industry – we can and have in the past ensured inter-operability at the interface without the constraints of a standard. Why not? • • n Standards stifle innovation Standards dictate technologies By definition they limit new and innovative features Provide no advantage to those who offer superior features/performance Why? • Cost only becomes the driver (good for the user in the short term more questionable in the long term) • Provide guaranteed interoperability

The “Served” Market n n Which area of the Market will our product serve? Why will it be successful in this market area?

The Market Size n n n What is the market size – how many units at what price per year Although we can amortize our development costs over the total sales, sales in the future generate less of “today’s dollars”. Production costs relate much more closely to sales per year than total sales over the product lifetime.

The Time Value of Money n n A dollar in the hand is worth more than a dollar in the future! The discount rate depends on what you are doing! • Investing in T-Bills • First Hotel in Orbit n VBB development may be closer to the second than the first!

Risk & Return n n Basically the more risk the higher return that is required by Investors to justify this risk. Quantified in the Capital Asset Pricing Model (CAPM) VBB/BB Development using new technologies is at a higher risk level than existing technologies Due to the time value of money returns in the future are worth less than money in your pocket!

The Manufacturer’s Target Specifications n n n Manufacturer’s Target Specifications should not be a wish list! They should be a mutually consistent set of specifications with regard to features, cost and development time This is the difficult bit – these need to address the needs of the served market!

Engineering Design 1. Negotiate on the Target Specs with regard to Trade-offs, Performance, Cost & Time to Market 2. Try to mitigate the main development risks 3. Develop a development program Entropy as related to product development (Ian’s Law of 4. Test the concepts early in the program Project Dynamics), it’ll take 5. Work the development program longer, cost more and not perform as well as you 6. Test as you go planned 7. Refine the Development Schedule 8. Final Tests and Release to Production

Risk Reduction n Development Projects have risk! Risks should be identified and evaluated Risky areas should be addressed as early as practical in the development and monitored

Risk Reduction (continued) n Try to avoid the following risk items: • Something no one has done anywhere in the world before • Something a few people have done somewhere in the world • Something no one in your company/vendors/consultants has ever done • Multiple risks in one project – consider incremental development steps

Meeting the Specifications n n n Test the prototypes to determine the performance For the VBB/BB the testing is a difficult and time consuming step. Redesign or re-evaluate the specifications and proceed with revised plan

Production n n Build what is thrown across the wall from Engineering The product will be late because even if Engineering is on time Sales will have sold the product before it’s developed (See competitive pressure – Rapid Proto-typing and Photo. Shop – Virtual Products)

Production (continued) n Meet the Standard Costs and the Production Schedule (What Learning Curve? )

Lot Efficiency n n n Any production manager would much prefer to build 100 units of the same product one year than 20 units of the same product over five years Any production manager would prefer to build 100 of the same product rather than 5 lots of 20 of different versions Versions are a real problem: • • They require accurate forecasting lead to small lots with different sizes require more documentation and support preclude building to stock

Sustaining Engineering n n n A major challenge is the sustaining engineering to maintain the ability to make the product at a reasonable yield throughout it’s lifetime. This “cost” is pretty much independent of volume shipments and can be a real driver to discontinue a product line. In smaller companies this is a real burden on the Engineering group as one tends to “own” a product “cradle to grave”

Selling the Units n The Final Test is will people buy the product at a sales price and volume that makes money!

Technology Friend or Foe? n n n As we explore new “bleeding” edge technologies we need to worry about the “dying” edge ones! EOL (End of Life) – Commodity electronics revolves round very short product cycles – this is where the money is. We work on long product cycles with incremental improvements. Complex Mechanical Mechanisms are the first target to replace in any mass market product as they have high labor costs and limited economies of scale. This means materials such as Ni. Span, and Thermelast are becoming increasingly difficult to obtain.

Technology Friend or Foe? (2) n n Arcane knowledge on heat treatment, machining, may be about to retire out of existence. Electronics continues to follow Moore’s Law. "I never said 18 months. I said one year, and then two years. . . Moore's Law has been the name given t everything that changes exponentially. I saw, if Gore invented the Internet, I invented the exponential" (Gordon Moore quoted from Yang 2000)

There's Plenty of Room at the Bottom … we’d like some at the Top Power Rails have to reduce as feature size decreases. Standard Analog Rails have decreased from +/-15 V, to +/-5 V, to single +5 V, and now +3. 3 V. This increases the difficulty of making high dynamic range circuits. Optimization of designs for the audio band leaves us buried in 1/f noise Mask shrinks, process changes, can all lead to changes is specifications especially if you use the “Typical” numbers! Older bipolar process are particularly vulnerable as older Fabs close and are moved to 200 mm lines

Academic/Industrial Collaboration (1) n n University developed Technology can be used in a commercial application Transition to Industry needs to ensure knowledge and expertise transfer Financial arrangements such as license fees need to match the time of income and expenditure Matching funds from Federal or State government can leverage both partners funding

Academic/Industrial Collaboration (2) n n Test Facilities operated by Academia or Government Labs can be very valuable to the Industrial Base for verifying performance allowance needs to be made for the private versus public phases of testing. Academia is driven to Publish or Perish, Industry by Produce or Perish. To work together we need to provide Intellectual Property Protection so the collaborative axiom should be: • PATENT – PUBLISH – PRODUCE This satisfies the needs of both parties n Push back from commercial companies to Academia for small niche markets may be a viable plan for developing specialized equipment