So, you want to build a hardware product?
Every so often, a device comes along that changes the way we live our daily lives and things are never the same again. With today’s digital technology, such devices may come more frequently than in the past – personal gadgets you cannot live without. What’s inside? What makes it tick? How do you find out?
In this sharing session, Mark will provide an introduction to hardware hacking and why it matters, going through some quick tips on getting cosy with hardware to find out what makes it tick.
8. The push into prototyping. Or Not?
What’s NEW?
What are the new product’s attributes and characteristics?
What’s Novel?
What is new in the product that others on the market doesn’t offer?
What’s it For?
What is the purpose or function of the new product? Your new offering must meet an unmet
need
Does the technology exist?
Do we need any new technology to produce the product? Are there any issues with the
product concerning government regulations, safety, and environmental issues, patent
infringements, or other possible hang-ups?
What’s gonna pay for it?
Make sure you already have customers lined up, people who say “I want it!” How much will be
the manufacturing cost, and how much will people willing to pay for the product?
9. Prototyping is a holistic context of bringing a new product to market, rather
than as a standalone process. A prototype developer should be able to
offer engineering expertise in all aspects of the process.
http://www.phillipsmedisize.com/sites/default/files/whitepaper/Prototyping%20White%20Paper.pdf
10. Technology Development Readiness levels (TDRL)
1 • Basic principles defined, technology conception and/or application formulated
2
• Experimental technological design, technological evaluation and POC design
3
• Breadboard validation in a laboratory, technological development, completion of
POC
4
• POC prototype technology demonstration in the relevant environment
5
• System/subsystem model development, pre-manufacturing considerations, system
integration
6
• Alpha and Beta trials by end-users, development iteration improvements, IP filing
and protection
7
• System robust testing, commercial design incorporation. Manufacturing, packaging
and labeling
8
• Actual system Launch, proven through successful operations, ready for full-scale
deployment
9
• Sales. Distribution standards, dealership, wholesaler, manufacturer maturity
10
• Mature Technology with commercial sales
Research
Applied R&D,
Demonstration
Pre-market
Manufacture
Commercial
Deployment
Post-market
Surveillance
11. The Path to Product – TRL1 to 4
http://www.gidcompany.com/blog/product-prototype-development-2/product-prototype-development-tips-to-get-started-with-your-
new-product-prototype-development/
http://www.phillipsmedisize.com/sites/default/files/whitepaper/Prototyping%20White%20Paper.pdf
Breadboard
prototype (TRL2)
Mock-ups and sketches
(TRL1)
Physical Proof-of-Concept (POCs) (TRL 2-4)
Digital to physical functional replicas that
meet specifications. Iterative stage.
POC to POV, robustness testing, (TRL4-5)
Transforming the Physical into the Functional.
BOM finalization.
Alpha, Beta testers in actual environment (TRL 6)
Pre-manufacturing considerations, preparation
for market entry
12. Types of Prototypes
Breadboard prototype
• Basically a working model of
your idea
• Basic function
• Demonstrate functionality
and communicate your idea
to potential model makers or
manufacturers
Presentation prototype
(Proof-of-Concept) POC
• representation of the product as it
will be manufactured.
• Used for promotional purposes
• Must should be able to demonstrate
what the product can do, but it is
not necessarily an exact copy of the
final product.
• sale price, materials, manufacturing
costs, marketing, safety factors,
• Sales and distributed, and the profit
margin. If you plan to license your
invention to a manufacturer, you
can often do so with a model."
Pre-RTM prototype
• This type of prototype is for
all practical purposes the
final version of the product.
• However, keep the physical
appearance aside for a
while and test the
functionality, because if it
functions well, then you just
have to polish the
aesthetics.
• Alpha/Beta testing in this
phase
13. The lesson is
SIMPLE
You must first
PROVEthat your technology
WORKS
consistently
before going into manufacturing
Iterate. Iterate. Iterate.
14. Product Lifecycles Affect Revenue Sensitivity to TTM
http://info.arteris.com/blog/bid/64100/Calculating-Late-TTM-Revenue-Loss-Part-2-Industry-Product-Lifecycles
16. Considerations
• increasing functionality
• Increasing complexity
of new technologies
• More product features,
certification
• increased
performance pressures
• Time to market pressure
• Can you build it
quickly?
• Does the technology
change rapidly?
• Motor vs Processor
• Can a ready-made
module do the job
specification?
http://player.vimeo.com/video/110359218
17. $
BUY BUILD
Integrated power and functionality
Quick plug-and-play
Tested operation
Parts that quickly go EOL/NRND
Faster time to market (TTM)
Custom specifications
Smaller surface area
Flexibility of component parts and
suppliers
Optimized design (power / signal)
Larger surface area, may not be power
optimized
Redundant component sections
Expensive (more manufacturer
intermediates)
Requires iterative testing
Selection
Integration
manufacture and test
Longer time to market (TTM)
• TRL 2-4
• No expertise
• Test various options quickly
• Iterative prototypes for POC
• TRL 3+
• Experienced and capable design team
• Your company can retain the technology
resources for the duration of numerous
iterations during the product life cycle
18. Accelerating Product time-to-market
Part 1 Component 2 Component 3
Product
Component 4 Component 5
Reduce the number of custom components
http://www.kodak.com/global/mul/business/solutions/files/accelerating_product_time.pdf
20. New considerations, New headaches
Bill-of-Materials (BOM)
How many parts are in your product? Open market or custom fit? Your factory partner is
unlikely to share the cost breakdown, so you’ll need to tap into every network you have to
compile this due diligence and decide if that (insert potentially-unnecessary-but-cool-part-you-
cannot-live-without here) is really worth it. Packaging, screws, manuals, everything.
Key component risk
If your invention or prototype relies on one specific unique technology, is it a single unique-selling-
point? Can it be copied or replicated easily? If not, why? If yes, why? Can you use an
alternative? Is there a cheaper alternative? E.g. Arduino vs a cheaper microprocessor
Stand-alone modules VS custom design
Using existing standards, development kits may not translate well into a final product.
NRND / Eol
Not Recommended for New Designs. End-of-Life. Do not use these parts in any part of your
BOM.
21.
22.
23.
24. New considerations, New headaches
Proof of Value
Prototype vs cost to manufacture. Pull out your cash-flow statement. The cash-flow
statement? A great prototype will tell you if you can make the product; the cash-flow
statement will tell you if you should. Before production, you must understand the numbers of
how your prototype translates into a manufactured item.
Suppliers
Specific component? Note the lead-time? Costing. Ask a trusted network for referrals. Visit
them, and ask for samples, if the component is obscure, maybe you should use an alternative.
Potential to scale
Crowdfunding projects have a wealth of case studies for learning what it takes to scale. What
will delay the prototype? Missing deadlines due to unforeseen complexities in manufacturing
costs associated with scaling from prototype to production. Do trial manufacturing runs.
Customs, export restrictions
Batteries, FCC, CE, radio-communications will hamper international couriers / freight
25. What you must do – TRL3+
If you are creating a product from your prototype ideas..
Define your specifications
Write down all your product specifications and requirements. This is the first step in
Quality control.
Make robust prototypes that can scale
Perform proper prototyping. Make Proof-of-Concept and Design Prototypes. Make
in small quantities, making 10 to 100 of them will highlight potential problems in
manufacturing. Implement design for manufacturing principles into the Design
Prototype.
Take ownership
Do not outsource a design iteration. Take ownership of your design and sign off on
all design changes, only you know what’s best and you must know everything in
your prototype.
Prototype Verification (POC to MVP)
Ensure that the design is proven and consistent in performance prior to production
kick-off. Identify your Minimum Value Product (MVP), your POC is now your pre-
MVP.
28. Congratulations,
you’ve reached
TRL5+
The Path to a
product…
Is only the beginning
Let’s talk about
economics
If you are taking your product design into production tooling…
Short break…
31. Intangibles can only be seen in person
Manufacturing fingerprints - Nobody pays for new goods that look used. This unexpected
quality problem cost us time, money, and relationship tension with the factory.
Appearance and Packaging
It’s practically its own product. Reprints, poor packaging that cannot survive shipping,
mishandled appearances will affect sales. If you need to ship goods almost any distance, you
need to protect them with inside boxes. This cost is low, but if your factory partner isn’t on top of
it, you will receive damaged goods that you own and cannot sell.
http://i.imgur.com/fCRiSkG.jpg
34. Selling price of my products?
Value $ Pricing, market share, brand awareness
Pricing
Cost-plus, Competition-driven, mROI, Cost-in-Use
Value-in-Use. Must be value-based-pricing
Minimum Order Quantity (MOQ)
Economic Production Quantity (EPQ) MOQ
PO (Purchase Order) + Volume BOM + Setup time +
Tooling + labour + profit margin + Freight + tax +
transaction costs
35. Value of my products?
Price: $1.00
~300’ length
~$0.003/inch.
Cost to hang a poster: $0.01
Price: $5.00
12 strips
$0.416 / strip
Cost to hang a poster: $1.66
166 Times the cost!
Consumers will always compare with existing products
http://www.slideshare.net/Brioneja/value-in-use-analysis-for-new-product-introductions-2176479
36. Pre-pre-kickstarter sales.
Good idea to sell initial batch prototypes to your beta customers. This will gauge
actual market need / desire and will also generate an initial source of funds for your
first production batch deposit.
http://i.imgur.com/fCRiSkG.jpg
37. MOQ / EPQ
Quantity
Total Cost
Holding cost
Ordering costs
Annual
Cost
Optimal order
Minimum
total cost
http://flylib.com/books/en/3.287.1.217/1/
http://home.ubalt.edu/ntsbarsh/business-stat/stat-data/forecast.htm
38. Optimal Selling price (single product type)
Selling Price
Time
Sales
Cost Price
Total
Volume
Category
Maximum publicity Costs
($)
Competitor
Entrant
Break-even
region
Product
maturity or
novelty decline
Assuming products can be
shipped to retailers
39. Perceived vs Actual Value – Identifying MVP
Price
Benefit
Manage your customer’s expectations
Perceived value affects purchase decisions
Perceived
Value
Brands. Image.
Accessories..
Product
Features
Neutral
Customer
expectations
Customer’s
expectations
greater than
product benefit
Product benefit
greater than
customer
expectations
MVP MVP+
Feature 1 Feature 2 Feature 3 Feature 4…
Absolute price/unit is irrelevant. We must compare cost in use and value in use.
40. Multiple run Average cost curves
Cost/Unit
long run average
total cost curve
(LRAC)
Minimum efficient scale (MES) or
MAC (minimum average cost)
Output - Units / month
1/3 MES
1/2 MES
Economies of scale, falling LRAC Diseconomies of scale, rising LRAC
http://tutor2u.net/economics/revision-notes/a2-micro-economies-diseconomies-of-scale.html
http://marketingscience.info/assets/documents/205/10743.pdf
41. Selling price of my products?
BOM @
MES_EPQ
BOM @
MOQ
4-10x
BOM
Bill of Materials @
Minimum Efficient
Scale at Economic
Production Quantity
Now you know how much it
costs per unit of your
prototype/product-to-be
Bill of Materials @
Minimum Efficient
Scale at Economic
Production Quantity
Your MOQ is usually your
biggest startup cost!
Suppliers have low profit
margins and must produce
large quantities to break-even.
Return-of-Investment
(ROI)
• SHIPPING FULFILLMENT
• Taxes
• international delivery
• transaction cuts
• TTM (Time to market)
• Iteration
A good estimate will be 4-10
times the selling price of your
BOM.
Ask your customers if that is a
fair selling price.
42. Reorder point – production and consumption
(Avg demand x Lead time ) +
Safety Stock = Reorder point
Time
http://home.ubalt.edu/ntsbarsh/business-stat/stat-data/forecast.htm
http://flylib.com/books/en/3.287.1.224/1/
Inventory
Imperfect Quality /
Defective goods
Safety stock
Re-order point
Delivery
Lead time
43. Managing Defects
Product defect severity can be broken down into four categories:
Low
Very limited customer impact. Low severity defects should only be fixed in the early
prototyping phases and should be ignored in all later stages of the lifecycle.
Medium
Moderate customer impact. Medium severity defects should drive changes the
early stages of the product development lifecycle but should not be resolved
during production.
Serious
High customer impact. Serious defects should be fixed as soon as feasible and
rolled into prototype testing or production.
Critical
Safety or regulatory issue. Critical defects should always drive an immediate
change and the production line should be shut down if the product is in
production.
http://leardon.com/how-to-successful-product-change-3-tips-for-product-change-management
45. Shipping, customs and tax
At some point, you’ll need to get your goods from the factory to somewhere else. Whether you
use a plane, train, truck, or ship, Before that, unless your factory partner is within driving
distance, you will be doing a lot of business with FedEx to get samples back and forth. It doesn’t
sound like much, but will add up.
http://i.imgur.com/fCRiSkG.jpg
47. http://leardon.com/product-development-considerations-for-2012
Summary
If you are creating a prototype from your product idea (TRL 2-4)
• Write down all your product specifications and requirements prior to creating a
prototype .
• Perform proper prototyping. Make Proof-of-Concept and Design Prototypes.
• Select the best supplier who can take you from the beginning to end of the
product development lifecycle.
• Take ownership of your design and sign off on all design changes.
• Implement design for manufacturing principles into the Design Prototype.
If you are taking your product design into production tooling (TRL 5-6)
• Know the price at all order quantities.
• Decide on the best place to manufacture your product with the best suppliers.
• Properly qualify the product using Production Prototypes.
If you are starting to produce inventory of your product (TRL 8-10)
• Sign off on all manufacturing and design changes.
• Buy only the quantity of products that is necessary for immediate sales.
• Don’t Pay until quality is confirmed.
48. The Pebble Case study
• Production tooling
• Large component order
• Global Bluetooth
certification
• Late deliveries
• Failed Quality Control
$10.26M on Kickstarter
February 2012
Customers
Received their
products
inPulse
$375,000
Y-combinator
2009 2012 2013
49. The GoPro Case study
2008 - Digital HERO 5
2002 2007-’08 2010
2011 2012 2013 2014
Founded
Competitor
Entrants
50. How can we help you?
• Consultation advice
• Prototyping services
• Dev boards to custom
electronics
• Custom projects
• Custom enclosures
• TRL 3 to 6
• IdeaBins
51. How do we keep costs low?
Hi Volume, Low Mix
Hi Mix, Low Volume
52. Seriously
l o n g j o u r n e y
Before you will see
a return of your
investment
But the rewards and returns
Worth it are well
If not now
Then when?
Almost every day, a new product hits the store shelves with the aim to earn name, fame, and of course dollars in the commercial market. However, have you ever wondered what went into getting the greatest and the latest slotted into the market place. Every product, before you rest your eyes on them, undergoes a lengthy and vigorous evolution process. There are some quality checkpoints that a product to be developed has to clear on its way to hitting the market, and they are the product design phase, the product prototyping phase, and the final, bulk manufacturing phase. For entrepreneurs¸ after you have an innovative idea for a new product, you need to determine all the details. Here we would like to share some practical questions, which you should ask yourself before you make any move:
Get Started - Drafting software, such as CAD and its variations. First of all, generate a digital mock-up of your product that can be viewed on a 3D plane. Check, whether the connections, balance and angles are mathematically sound.
Signal conditioning, Power management
Tolerances, Physical collisions
There are three major types or stages of prototype creation, each of which can be used by the enterprising entrepreneur in securing financing and/or a licensee.
http://www.referenceforbusiness.com/small/Op-Qu/Prototype.html#ixzz3HQc0yfxh
Semiconductors are the Most Sensitive to TTM Pressures
The critical semiconductor components within these products, such as applications processors and mobile phone modems, have a LONGER development time than the actual end product and a correspondingly SHORTER useful product life span. For example, from personal experience and anecdotal evidence, we have about a 1.5 year development time for applications processors with a 2 year product life span. But a mobile phone only takes one year to design and build and lasts on the market for less than two years!
Because it takes tens of millions of dollars of fixed expense to develop one of these chips, being late to market by only a month or two can mean little or no profit from the chip. Late TTM for a semiconductor vendor is a profit killer.
Select the best supplier who can from start to end of the product development lifecycle. Test your suppliers in the supply chain before production. Deal with a single supplier that is capable of providing not only all of the technologies and engineering expertise necessary for producing a finished product, but can also manage all of the elements in the process. The more experienced and widely capable the supplier you select, the greater the likelihood of success.
Define your specifications - Know the price at all order quantities.
Know your vendor
Properly qualify the product using Production Prototypes in the production trial batches. If you are starting to produce inventory of your product, you must sign off on all manufacturing and design changes. Reject all defects. Correct at this stage. Buy only the quantity of products that is necessary for immediate sales. Quality. Know your factory partner as intimately as possible, especially if you are small. If you take your production offshore, this relationship will be much harder to manage without outside help, and even then it will still be hard. Use your imagination and work with your prototyper and factory partner to understand the steps required to translate handmade or low-volume production into large quantities. My company made a thousand mistakes by not understanding how factories work.
volume price breaks that factor in time to set up and take down your project plus required labour and material resources with some profit margin for the factory. Sometimes MOQs are negotiable. Made in China? Probably in the thousands and unless you are a big company.
volume price breaks that factor in time to set up and take down your project plus required labour and material resources with some profit margin for the factory. Sometimes MOQs are negotiable. Made in China? Probably in the thousands and unless you are a big company.
Know your vendor
EPQ is the amount of inventory to be ordered at one time for purposes of minimizing annual inventory costs.
The actual value of an item is a measure that is related to the cost that it takes to produce it and sell it for a profit. For example, when a product is manufactured and sold without any brand names or promises, the actual value is the amount that it would go for in the open market. The actual value is what the product is actually worth without any expectations from the customer or the seller.
The perceived value is very different from the actual value of a product. The perceived value is what a customer believes the product is worth. This perception is formed by the opinions of the market and by the benefits that the customer expects to receive if he makes a purchase. The product may be sold for much more than what it cost to manufacture because of the perception of the customer. In some cases, the perception of the value may be less than what the actual value of the product is.
Brand Names
One factor that plays a vital role in the perceived value of a product is the brand name. Brand names that are well-known often add perceived value to a product. For example, clothing typically does not cost much to manufacture as it only involves some material and labor. Certain brands of clothing sell for much more than others simply because they have a logo or a brand name on them. The right brand name can make a big difference for some customers.
Purchase Decisions
The perceived value of a product also impacts purchasing decisions. If the perceived value of the product is greater than the actual price, the customer is more willing to buy. For example, if the customer believes that a particular shirt should cost $50, and he sees it for sale for $20, he is more likely to purchase it. If the perceived value and the price are closer, the urgency for the purchase disappears.
A minimum viable product is “that product which has just those features and no more that allows you to ship a product that early adopters see and, at least some of whom resonate with, pay you money for, and start to give you feedback on”.
value must be shared between seller and customer, customer will not switch from alternative technology unless new offering carries enough value to make the switch worthwhile.
Customers do not buy products, they hire products to do a job.
MES is the minimum level of output required to fully exploit economies of scale in the long run
It is essentially a single formula for determining the optimal order size that minimizes the sum of carrying costs and ordering costs. The model formula is derived under a set of simplifying and restrictive assumptions, as follows :
Demand is known with certainty and is relatively constant over time.
No shortages are allowed.
Lead time for the receipt of orders is constant.
The order quantity is received all at once.