Profitability in innovation
In previous posts we have been telling you about the process that a new equipment has to follow until it reaches the commercialization stage. This process can become even more complicated when it comes to new technology, such as the current case of IoT communication technologies. In this case, we not only have the complexities of technical specifications, homologation and possible problems in the field. To these, we have to add two more elements of uncertainty:
To begin with, we are often faced with several technological options to decide between. In the IoT case for example, there are several options such as LTE, Sigfox or LORA. Each of these options is optimized for specific use cases. From a technical point of view, it is not difficult to decide which one is the most suitable for our particular application. However, we cannot make this decision based on technological criteria alone.
In addition, we must take into account how the different players are positioning themselves, and I am referring in this example to the Operators. Whether our device will work will depend on whether there is coverage for the technology we have selected in the place where our customer needs to locate these devices. And these coverage deployment plans are often difficult to foresee.
And of course, the availability of chipsets operating on the selected technology. Access to these chipsets in their early stages is a key factor in helping our customers learn about the emerging technologies that are continually coming to market. In addition, these new chips also require a period of maturation and debugging.
With all of the above, it is also easy to realize that the deployment of a significant number of devices may bring even more delays than outlined in previous posts.
Once all these milestones have been passed, and the "start-up" has been completed, we enter the window of time in which we can make our investment profitable. But this window is not infinite. In fact, it is quite short. Clients tend to be more cautious because they know the risk of a bad decision. But as soon as they gain confidence that the technology is reaching maturity, the price aspect begins to take precedence in the selection criteria. And this is where other manufacturers, established in territories where it is possible to manufacture more cheaply, are able to oust experience and know-how.
"It is important to keep adding value with each new evolution of the device, and also to adjust production costs as much as possible while keeping them in the Spanish territory."