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Product Development Cycles


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For the different manufactures out there, how have you decided when to stop development on one product and move your resources to developing a new one?  Sales of old unit slow down?  New technology becomes available?  Feed back from users?  You want a new revenue stream?  Competition from a competitor?  You get bored?  As soon as you get a product out do you start thinking about the next iteration, improvements, variations, or does that not happen until the current product is showing its age?

 

I suppose it varies for each company and is probably a combination of multiple factors, but I was wondering if any of you care to chime in.  Possibly with examples.  I don't think there are any right or wrong answers just looking for some insight into your internal workings/mindset.

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Thanks for your input Mike.  Having sat through some lectures from various companies to listen to their thoughts on different business decisions they have made throughout the years, I found them very educational and interesting.  While Coca Cola, Hewlett Packard, and a few others were interesting to listen to, I think hearing from some of our usual suspects would be a little more relevant if they are willing to share.

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I'm NOT a manufacturer but have spoken to many. Many factors yes. The ones that stand out that I would bet are at the top of the list: how many units they would possibly sell of the newly developed product, how to keep from making the previous model from being obsolete and diminishing resale value (in effort to not screw their customer base), and lastly especially with electronics... Parts. Parts that they can't make in-house. Parts availability from suppliers either locally or off shore I would imagine has a huge impact on decision making in product development.

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All good thoughts here. I think the guys who have it the worst are the computer manufacturers, where prices are constantly changing, users are constantly bitching, and the competition is incredibly fierce. I was just telling a (younger) acquaintance of mine who was not around in the early 1980s when Osborne was the most successful portable computer manufacturer. Suddenly, MS-DOS came out and made their proprietary OS look very dated, so they quickly announced that next year, they would have a new MS-DOS compatible model. This killed all sales of their current products, and the company tanked... and this business principle was christened The Osborne Effect, where you can never talk about new products too early, for fear of killing sales of your old products. 

 

There's a real danger in this internet age where rumors get circulated and people get overly-fired up about stuff that won't be out for another six months. I think the world of pro audio is much more conservative and people tend to stick with the tried-and-true, rather than running out and getting new stuff solely for the sake of it being new. At the same time, the manufacturers have to gauge interest, determine what new parts are available now, and how to stay one step ahead of their competition. When it's a relatively small market like the film & TV sound business, these are tough issues to balance. 

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Brian: " I think hearing from some of our usual suspects would be a little more relevant if they are willing to share."

a little more relevant to what, exactly..?

OK, I was having a chat with the folks at Video Devices yesterday at the LAX Cine-Gear Expo.  I asked them your question.  In their case it seems the recent push to come out with a number of new products so far this year has occupied their plate, and one would be led to expect stability for the next 4-6 years, thus now is the time to but any of their products you are interested in, zand they are currently encouraging sales of their current products.

is that the relevancy you mean ??

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"a little more relevant to what, exactly..?"

What do you think I mean?  I thought it was pretty obvious.  If you honestly don't understand what I was looking for PM me your phone number or skype and I will be happy to explain.    

 

OK, I was having a chat with the folks at Video Devices yesterday at the LAX Cine-Gear Expo.  I asked them your question.  In their case it seems the recent push to come out with a number of new products so far this year has occupied their plate, and one would be led to expect stability for the next 4-6 years, thus now is the time to but any of their products you are interested in, zand they are currently encouraging sales of their current products.

 

Sounds a bit like a boiler plate response, which is not surprising given the venue asked.  But thanks for asking.

 

is that the relevancy you mean ??

I realize you are trying to make a point...but even if every company related to sound replied to this thread with a similar boiler plate response, what is the problem with them doing so?  Let it play out, you might learn something.  Even if it is only trivial historical info.  

 

Thanks Marc, I know what the "Osborne Effect" is now.

 

To Devendra's point about parts availability, If a particular part was no longer produced and it forced the development of a new product to fill the gap of the old one I would like to hear about past examples of this.

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To Devendra's point about parts availability, If a particular part was no longer produced and it forced the development of a new product to fill the gap of the old one I would like to hear about past examples of this.

Back when I worked at Coffey Sound I sold a bunch of the Deva II. Remember that machine? Anyway, there were some components on one of the boards that the manufacturer of just stopped making (or something like that). Towards the end of the life of the Deva II it came to a point where if one of these components blew you were pretty much up a creek without a paddle. Now, Zaxcom didn't come out and say "hey, this is why we made the Deva IV and V", but I gotta believe it was a big motivating factor. 

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To Devendra's point about parts availability, If a particular part was no longer produced and it forced the development of a new product to fill the gap of the old one I would like to hear about past examples of this.

 

TASCAM DV-RA1000HD.  Great selling studio master recorder for us. (DSD 2.8 & 192kHz audio)

The principal DSD processor chip went out of production. We had to design a replacement processing unit from scratch in FPGA.   The availability of DVD drives was also getting spotty (even our own design), so we re-designed the whole thing, releasing the DA-3000 with all upgraded capabilities...       The alternative, giving up on DSD technology and getting out of that market.

 

On the consumer side, many of the audio interfaces from the early days were based on chipsets that ran their course way before the product lost its popularity.  

It pains me to think how much potential sales lost to competitor products there have been over the years because of premature parts constraints.   When the supplier says "last order", it's a huge risk to stock up more than 6-12 months worth of parts for future production. Companies have to pay tax on sitting inventory (parts & product), so it's a double whammy. Balance sheets don't look good with large $$ figures in parts.

 

DM-3200 / DM-4800 digital mixers - the main DSP processor was designed for us by SHARP, an audio (long word) version of the DDMP processor (better known as the video core of early DIGIC in Canon cameras).    End-of-life, last parts purchased and waiting for the final lots to be manufactured, with spares for future repairs.

 

HD-P2 - one chip is discontinued in form factor only - they have the same chip in a different size...   Not worth spinning the whole board, and cheap enough that we ordered plenty to continue on (still making these, 7 years on!)

 

I could go on...

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Thank you Tom Duffy for your post --- I hope this gives people the valuable insight that is needed for those who are almost completely unaware of all the things a manufacturer has to consider. You're running a business, after all, and there is so much that goes into a product's development from concept to shipping product.

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maybe someone relates better to the basic manufacturing business savvy  presented by a friend like Tom, with some familiar model numbers included, but product development cycles, decisions, and scheduling are  major dilemmas for manufacturers in hundreds of industries and specialties.

Edited by studiomprd
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+1 Tom Duffy

+1 Jeff

These are among the challenges that manufacturers face on a regular basis. It's great to have someone add to the knowledge base of how things work rather than someone who criticizes others for not knowing how things work.

I'll say it again, we are blessed in this industry to have an above average number of manufacturers and vendors who regularly demonstrate an active commitment toward meeting our needs.

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+1 Tom Duffy

+1 Jeff

These are among the challenges that manufacturers face on a regular basis. It's great to have someone add to the knowledge base of how things work rather than someone who criticizes others for not knowing how things work.

I'll say it again, we are blessed in this industry to have an above average number of manufacturers and vendors who regularly demonstrate an active commitment toward meeting our needs.

++++++ & +

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Thank you Tom for taking to time to reply.

 

 

 which I agree applies to all manufacturers, is something we can relate to

This is why I asked my initial question, to better relate to the companies in our line of work.  Not to game manufactures into releasing new product info or starting a flame war that I have been accused of.

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 Companies have to pay tax on sitting inventory (parts & product), so it's a double whammy.

 

Not certain what tax law is in Japan, but in the US, material sits out on the balance sheet as an asset (inventory) and wouldn't be subject to tax until a sale generates realized income. 

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Not certain what tax law is in Japan, but in the US, material sits out on the balance sheet as an asset (inventory) and wouldn't be subject to tax until a sale generates realized income. 

 

and maybe depreciated yearly in the books as per applicable depreciation values? 

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These are parts sitting in the parts room at our China factory, rules different there - and there's the added complication of needing to add security and trusted officers when a small stack of high $ chips could be worth $10K or even $100K.  . We had one purchase that was $100K in one go (our whole multiyear forecast for that part) instead of delivery as needed - when the RoHS change over forced many parts into discontinuance.

 

Tom.



 

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My father owns a small electronics company that stockpiles "obsolete" semiconductors/parts when they get to the price point where people just dump their stock.  He then sits on them for X (sometimes XY) years until the price skyrockets since someone somewhere out there has a crazy expensive machine that needs repair.  Big times are when the Feds change the dollar bill because all the vending machine readers have to be changed out.  Another big one is Casinos and 32 + 64 MEGABYTE Compact Flash cards.  Apparently since those low capacity cards haven't been made in years, yet the Casinos don't necessarily want to replace an entire machine, they would rather just pay a bloated price for the older technology (last time I checked they go for about the same as a 32 GIGABYTE card these days...).  Pinball and classic video game guys also pay a ton for older electronics to repair their systems.

 

It seems electronics go from new/expensive --> mainstream/average --> obsolete/cheap --> waiting period --> expensive/rare/still needed for repairs.

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  • 2 weeks later...

I've had to order from one of those places that stock obsolet parts, nice racket.

I needed a Dolby PL decoing chip to fix a C41 box and had to buy a 3 chips at $75ish each for the 1 I needed.

It was cheaper than the rebuild of the room it would have required to replace it.

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