Breakfast In Texas: End Customer Challenges
By Ed Sperling -- EDN, March 10, 2006
Electronic News sat down to discuss challenges in design with end customers of electronics components vendors, including Grant Beckmann, VP of product management at Wilife, which makes digital video surveillance systems; Dave Hall, CEO of Velodyne, maker of powered subwoofers; Jeremy Toeman, VP of market development at Sling Media, which makes set-top boxes for watching TV remotely; and T. Walley Williams, director of product development at Liberating Technologies, which makes medical prosthetic devices. What follows are excerpts of that discussion, done in conjunction with other Reed Business Information editors at the TI Developers Forum in Dallas.
Electronic News: Are your biggest challenges technology-related or business-related?
Beckmann: Our biggest challenges are business-related. As a startup in electronics, you can’t just be a national company. You have to be an international company. That’s hard when you’re starting out with six or seven people and you have to manage contract manufacturers in China, engineering resources in Taiwan and the U.S. in order to deliver a great product. Add to that constraints on capital. We still have a hangover from the dot-com days, so VCs are reluctant to invest in complex technology with business models scattered around the world.
Toeman: We sell a living-room TV experience anywhere in the world. So what does that mean? What does the quality of the video have to be? You have to build that into the design and still take into account certain physical limitations in the world, such as Internet connections, laptops, video sources. That was one of our design issues. How good did the video have to be at all times, and how low did the latency have to be at all times for consumers to accept it. In one of the early versions of the Sling Box, when you pushed a button on the software remote control, sometimes it took six seconds to see that on the screen. If you change the channel 10 times, a minute later you’ve thrown something out the window. Along with that, there had to be a certain level of quality and durability. Building a Sling Box for $1,000 would be easy. We had to get the price into gadget zone along with iPods.
Williams: The big challenge in my field is that it’s a small market. Very few people lose their hands, and even fewer lose their arm. If I could make a billion of what I make I could sell them for $19.95. It’s closer to $1,995, because we only sell three or four units a month. We have to spread our development costs out over a long period of time, so we have to get it right the first time. But this is not a trivial development. There’s a lot of electrical and mechanical engineering. We’ve specialized in control systems, the batteries, and we move slowly compared to many other companies. If you make a misstep and you only have a small market, you don’t have development funds to overcome your misstep.
Hall: There’s a chicken and egg problem in design these days. No one will pay any attention to you because you’re not buying anything, and you can’t get the samples because of that. So you have a problem with how you get started. The issue of how you get samples when you’re not buying anything is almost a showstopper. You need connections to make this happen. If I was starting out on my own, it would be a real problem. And it’s more difficult now because we don’t buy many parts in America. It’s all from China. I’m not sure how you’d start that up from zero. You have to go to China with a big purchase order and volume. You can’t even buy some of this stuff in the U.S. anymore, like resistors or capacitors. They’ve all gone offshore.
Toeman: We only made it work because our founding team had prior relationships. The next bunch of guys in a Palo Alto garage that want to use the latest DSPs or other components are going to have a tough time if they don’t already have connections.
Electronic News: Is it more difficult to get products out the door in a global market, particularly now that you have partners spread around the globe?
Hall: Don’t underestimate the Chinese and their ability to rise to the occasion. If you look at the quality and quantity of what the Chinese are doing, their capability is going up every year. When we started, they couldn’t get a box together and they made really lousy magnets. They now make world-standard magnets and boxes. That’s the trend. Now they’re working on just-in-time delivery. What’s going on in China is staggering.
Electronic News: But you’re still running a global supply chain with global partners. Is that more difficult?
Hall: It’s not a choice. There are no parts being made here anymore. I can’t get boxes.
Williams: You can still get a lot done here, too. I can get an injection molding done here and a prototype in five days.
Hall: But I’ve got people in China who don’t just produce a prototype in five days. They’re ready for production in that time.
Williams: It depends which market you’re in. In Boston, there are still companies that produce small quantities for the military. They’re still interested in working with us, and they’re willing to do it in much more of a hurry than they used to.
Toeman: Being efficient is key. Getting it right the first time is important. We’ve been able to move exceptionally fast from the announcement to the first demo to retail deals to being on store shelves. Part of that was because of internationalization. We have a team in Bangalore. This isn’t just outsourcing. These people are part of our company. They’re complete members of Sling Media. It’s not just the efficiency of time. They’re also very good video and networking engineers. There are three things we see as key to our product development. One is innovation. It’s not about building another LCD screen. The second thing is interface design—how the user interacts with the product. Consumers are far more aware of products that do the job well versus those that just get the job done. Finally, it’s creating a product that consumers can have an emotional bond with. You have confidence in some devices like your DVD player. You love your Tivo. You love your iPod.
Beckmann: These are the best of all days of being able to hit market windows. We have an engineering team of fewer than 10 people, and yet we have 10 products under design or development—all with delivery windows of four to six months. The complexity comes in when it comes to managing multiple partners in multiple countries. But I think companies like TI all the way to contract manufacturers are doing everything they can to make that easy. For us, it comes down to innovation. Can we innovate and identify new markets and problems quickly enough? Once we find the idea, getting it developed has been pretty simple.
Electronic News: Given all the global competition and all the convergence, how do you stand out from the pack?
Beckmann: We stood out by simply taking a different approach of how do you get a video surveillance system in the home for a few hundred dollars—without the complexity of running a cable or setting up routers or worrying about networking. It required combining different technologies from a variety of companies. That included everything from Home Plug technology, which allows us to do networking over power lines, to the latest TI chips and CMOS sensors, and then combining all of those things in a package the customer can install in 15 minutes. We choose to differentiate by being simpler. The iPod made it clear that it’s not good enough to have a product with lots of great features. It’s got to be a complete solution all the way from the services side to the hardware components, and easy to use.
Toeman: The iPod is an example of a company taking complete ownership of a technology. Apple said they were going to be responsible for everything in the iPod. They had some glitches, but they’ve taken responsibility for them. When the screen scratched on the Nano, they didn’t deny it. We decided we would be responsible for the Sling Box, from the moment you heard about it to the moment you used it. There’s a set-up guide that’s extremely visual. We didn’t farm it off to some tech-writing team. We still get tech support calls, but the average install time for setting up a network and software is 15 to 30 minutes. We’ve also created a brand that tries to stand out. Our designs are a little odd. We have a little bit of edge, even though we try not to be insulting. We also have a lot of personality. You will see our CEO posting on blogs.
Williams: Underlying some of what’s going on here is standards. The reason all of us are able to do the really slick things our companies are doing is because there are people who spend their lives writing standards so all of this stuff can talk to each other. We still have people fighting it. There are some DVD problems that haven’t been resolved yet. But with many other products, the reason we can do it is because someone has gotten it right so we can all talk to each other with our hardware.
Hall: I think the reason we can do that is the advance in the tools in the last five years and in the rise in available parts. You can show a picture of a design in an hour. Five years ago, it would have taken a draftsman a week. Once you get good at these tools, you can create a photograph-like picture. Then, you can simulate all your circuits in an afternoon, and you can do a printed circuit board in a day or two. The tools, like SolidWorks, have been a great breakthrough. You can visualize everything in 3-D before you have to cut any metal.
Williams: I agree. My productivity is about 1,000 percent higher than it used to be before these tools hit the market.
Hall: You also can rely more on electronics today. You can throw something together and be reasonably sure it will work. The real issue is what to make. That’s a lot harder. The issue has become what you should be making, not how to make it.
Beckmann: The tools and the standards have made it possible for us to move very quickly in the market.
