In today’s economic environment, budgets are tighter, and customers struggle to do more with less money. This has forced many companies to develop lower-cost products to gain new customers and keep existing customers from considering lower-priced competition.
Producing low-cost products is nothing new for Measurement Computing Corp. (MCC). For the past 20 years, we have offered data acquisition (DAQ) devices that sell for less than the competitors’ products. Over this time, we made our share of mistakes but also learned some valuable lessons.
One of the biggest lessons we learned is that serving the low-cost market requires a keen focus on what customers value—and on what they don’t. Customers in this market aren’t looking for the most product features at a low price but rather the required product features at a low price.
This mindset often challenges engineering and marketing departments that traditionally have added features to products to gain exposure in a crowded market. But simply adding new features isn’t going to drive success in the low-cost arena. Inevitably, these new features increase costs in either engineering investment or goods sold.
MCC developed a line of low-cost DAQ devices that was released in March. When designing this product line, we followed three rules:
1. Design to price
2. Use leverage
3. Keep it simple, stupid (KISS)
These rules, although seemingly straightforward, are crucial when trying to move a product line into the low-cost segment.
Rule 1. Design to Price
The design process for low-cost products should be similar to the process for higher price products: The engineering and marketing departments submit a concept proposal based on new technology or market needs. This concept then is developed into a project plan where the engineering approach, feature set, and design methodologies are agreed upon.
When discussing low-cost development, it is helpful to shift the terminology from high-price and low-price products to feature-centric and cost-centric products. In the development of feature-centric products, features take priority, and the engineers attempt to provide the agreed upon features with the lowest product cost possible. In the development of cost-centric products, product cost is most important, and engineers try to provide a product at the agreed upon price while implementing as many features as possible.
While these two design processes are similar, the engineering and marketing departments must approach each process differently. In the cost-centric framework, the must-have or green features are defined by the target customers’ minimum requirements. All other features are considered nice-to-have or yellow features. Remember, it is not the added features that the company will be marketing; it is the product cost.
By starting a project plan with a target cost and development schedule, a company prevents feature creep. Green features are clearly defined ahead of time, and yellow features are added during the design process only if the additional cost and development time stay within the bounds for the project.
As an example of designing to price, we recently developed a family of loggers. By working with our customers, we were able to define a limited must-have feature set that included high-speed acquisition, correlated analog and digital data, and a large storage capacity. During the concept review, we determined that most competitors offered LCD displays on their loggers. Because this was not a customer requirement and it would have added considerable cost to the product, we decided to proceed without this feature.
Rule 2. Use Leverage
Customers may believe that developing lower-cost products doesn’t require the same level of engineering skill needed in higher-price products. This is not the case. Good engineers are as important in designing lower-cost products as they are in designing higher-cost products. Whether features trump price or price trumps features, the best designs still win out in the marketplace.
To gain leverage, engineers need to look for new technologies that can reduce costs while shortening the design cycle. Luckily, with the explosion of sensor-based consumer products, the market offers a variety of technologies that can be used to cut costs.
One of the biggest advances is system-on-a-chip (SOC) technology, which integrates multiple functional elements of board design into one IC. An example of this is the TI ADS7870 DAQ system on a chip. This single package contains a 12-bit ADC, eight-channel multiplexer; a programmable gain amplifier; and an internal reference. The reduction in discrete parts gained by using the ADS7870 decreases the overall parts expense along with the cost to assemble and test and improves mean time between failure.
In addition to this SOC, we have leveraged the following technologies to drive down the cost of DAQ device production while increasing performance and quality:
- Switching to lower-cost 3.3-V components
- Using microcontrollers with an integrated physical layer
- Using field-programmable gate arrays (FPGAs) with hard IP interfaces for lower-cost PCI and PCI Express implementation
- Using open-source FPGA code to speed development and guard against end-of-life component issues
These technologies not only have helped us develop new products quickly and with fewer engineering resources, but also allowed us to quickly modify products for OEM applications.
Rule 3. KISS – Keep It Simple, Stupid
Many companies focus on system frameworks to add value to their feature-centric products. This system approach benefits these companies because it raises the barriers of entry and protects their customer bases and engineering investments. But does it serve the customer?
The answer to this depends on the customer. System frameworks do add value to customers who have or are planning to make big investments in one company’s product line. However, in the low-cost arena, many customers don’t want to be encumbered with the complexities of frameworks.
For low-cost products, the frameworks that add value in the higher-end segment actually can be a detriment in the eye of the consumer. Does any engineer want to take two days or longer to figure out how to use a low-cost DAQ product?
Frameworks also have a downside for the companies that try to develop low-cost products. Products that fit into system frameworks often have a required minimum number of feature sets that add to the product cost. In addition, frameworks can tie products to rigid release cycles, which reduce a company’s capability to develop low-cost products quickly.
We try to produce simple products that can be used together but usually are used alone. This simple product approach benefits the low-cost-purchase customer by providing a product that is easier to use. It also helps the engineering department by reducing design complexities, and it serves the sales and marketing departments by decreasing the burden of selling and supporting the product.
An example of this is DAQFlex, a new software driver developed for our low-cost DAQ products. Instead of adding features, DAQFlex reduces the driver’s size and complexity. This new driver, which can be ported to any operating system, allows end users and OEMs to get up and running and learn the command set quickly.
This simplicity of design provides more coverage with fewer resources. In an era where companies are increasingly charging for support or moving support overseas, our use of KISS has enabled us to continue to provide free support.
Summary
Developing low-cost products goes far beyond removing functionality from existing products. It requires a different engineering mindset that emphasizes cost over features, embraces simplicity, and relies on commercially available technologies to provide design engineers with greater leverage.
About the Author
Peter Anderson is general manager of Measurement Computing and has more than 20 years of experience in the test and measurement industry. Previously, he worked at Agilent Technologies and National Instruments. Mr. Anderson received a B.S.E.E. from the University of Wisconsin and an M.B.A. from the University of Minnesota Carlson School of Business. Measurement Computing, 10 Commerce Way, Norton, MA 02766, 508-946-5100, e-mail: [email protected]