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The Ninth Circuit determined that Judge Koh's decision strayed beyond the scope of antitrust law and that whether Qualcomm's patent licensing may be considered reasonable and non-discriminatory licensing does not fall within the scope of antitrust law, but rather is a matter of contract and patent law. The court concluded that the FTC failed to meet its burden of proof and that Qualcomm's business practices were better characterized as "hypercompetitive" rather than "anticompetitive".
Qualcomm develops software, semiconductor designs, patented intellectual property, development tools and services, but does not manufacture physical products like phones or infrastructure equipment. Qualcomm divides its business into three categories: []. Qualcomm is a predominantly fabless provider of semiconductor products for wireless communications and data transfer in portable devices. Qualcomm is the largest public company in San Diego. According to The New York Times , Qualcomm's new disclosure policy was praised by transparency advocates.
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Archived from the original on October 25, Archived from the original on March 2, PC World. Some actually take on the mantle of maker, taking pride in creating rather than consuming. Others, while not producing objects themselves, become collaborators, engaging with maker culture to support and shape the products they buy, and deriving identity from that engagement.
The maker movement is aptly named. Its biggest and best-known event, MakerFaire, was launched by Maker Media in By , there were more than MakerFaires around the world, with flagship events in the San Francisco Bay Area and New York attracting more than , visitors. Even those outside maker culture are becoming more likely to seek involvement in shaping what they purchase.
This involvement can take the form of voting for favorite designs on an ideation platform, crowdfunding a hardware startup, or engaging an Etsy seller to create a custom item. More-involved individuals might customize or hack a build-it-yourself product kit, design and build pieces from scratch, or sell their creations to others within or outside the movement.
This incipient change in identity from consumer to creator is also driving a change in how brands are perceived. Many consumers want to get past the marketing to create a more authentic relationship with the products they consume.
In this environment, manufacturers fully leveraged to produce large volumes of limited numbers of products will likely be at a disadvantage, forcing them to rethink their place in the manufacturing landscape and the value they bring the consumer.
The good news is that amid the fragmentation, new roles and new sources of value can emerge for large players. In parallel with, and in response to, shifts in consumer demand, the nature of products is changing.
At the same time, how consumers view and use products is changing, redefining both the factors that determine product value and how companies can capture it. The questions raised go far beyond the technical challenges of manufacturing. As products create and transmit more data, how much value will be located in the objects themselves, and how much in the data they generate, or the insights gleaned from it?
And what of the option to rethink products as physical platforms, each the center of an ecosystem in which third-party partners build modular add-ons? Each of these questions envisions a change in the nature of products—and a much larger shift in how value is created and captured.
Quite a few led with their looks: Smart-device startup Misfit partnered with Swarovski to produce the Swarovski Shine Collection, nine crystal-studded jewelry pieces, each concealing an activity tracker.
Such items are good examples of the quantified self movement, in which participants use technology to track and analyze the data of their daily lives. As yet, most are still stand-alone tools. The emergence of technologically enabled products such as activity trackers is only one facet of a looming transition in physical goods.
The pervasive expansion of sensors, connectivity, and electronics will extend the digital infrastructure to encompass previously analog tasks, processes, and machine operations. To capture value in a world where products are as much about software as about physical objects, manufacturers should consider their business models in the light of four factors that play into generating value from smart products: integrated software, software platforms, the applications apps that run on those platforms, and data aggregation and analysis.
While integrated software handles all the performance functions needed by the hardware housing it, software platforms act as translators, managing the hardware based on new instructions delivered through easily updatable apps. This platform-plus-app model allows for a greater range of customization and personalization, and makes it easier to update products in response to shifting needs and contexts.
The drive for customization and personalization—coupled with the success of such platform-centric business models in software—is pushing some manufacturers to rethink products as physical platforms, with each platform the center of an ecosystem in which third-party partners build modular add-ons.
This change goes beyond simply adding software to physical objects, though that is an important component of platform creation. The design of physical products is changing to allow for extensive personalization and customization, and to encourage offerings from third-party partners that increase the value of the base product. These platforms use a leveraged growth model that relies on simple mathematics: The greater the reach and value of the extensions created, the greater the number of base-module sales.
However, platforms can also exist outside the digital world. A platform is any environment with set standards and governance models that facilitate third-party participation and interactions. Successful platforms increase the speed and lower the cost of innovation, as they reduce entry costs and risks through common interfaces and plug-in architectures. Aftermarket add-ons—one example of a physical platform—have a long history. Thriving aftermarkets exist to customize and personalize automobiles for both utility and aesthetics, for example.
Most aftermarket products are manufactured and installed by third parties that have no affiliation with the original equipment manufacturers. The aftermarket has become a premarket. The view of products as platforms—as starting points for customization and personalization—has been embraced by the maker movement.
Forward-thinking product manufacturers are approaching such movements, not as fringe activities, or even as threats to the brand, but as marketing opportunities—a chance to embrace a passionate, highly invested community, offering opportunities for engagement and loyalty in products designed and manufactured for hackability. They are extending the concept of the product as platform into an explicit business strategy: Introduce a product platform, then invite multiple third parties to create modular add-ons that extend the value to the customer.
A user might extend battery life with an extra battery one day, then switch out the camera for a night-vision module the next. Planned modules include chargers and connectors, screens, cameras, speakers, storage, and medical devices such as blood glucose monitors and electrocardiographs. For decades, the company led sales of PC processors; then, with the rise of mobile phones, ARM Holdings took the lead position in chip design and licensing by specializing in low-cost, low-power processor technology, while Qualcomm and Samsung dominated manufacturing.
Most recently, the division posted a billion-dollar operating loss in Q3 Determined to catch the next wave, the company has invested significantly in making chips for the Internet of Things. The chip quickly gained popularity among makers for its versatility and high performance. In , Intel followed up with the release of Curie, a button-sized module designed for easy integration into wearable technologies.
Unlike with the PC wave, when Intel locked in a few big partners, this time the chipmaker is allying with a wide range of smaller players. To inspire individuals and small teams to get started with Edison, and to make connections in the maker community, it has established an ecosystem designed to lower barriers to entry, putting out resources from hacker kits to user guidebooks and establishing a strong presence at events.
Through the Make It Wearable Challenge, Intel is helping startups transition from idea to product; in the most recent competition, teams from all over the world came up with ideas and prototypes incorporating the Edison chip, including flyable and wearable cameras, low-cost robotic hands, and sensors for use in skiing.
For Intel, the move into the IoT market is smart business. Where does the product end and the service begin? In one sense, this is an old question; business strategists have long advised companies to focus on the problem solved rather than on the product that solves it. Today, however, the expanding digital infrastructure—low-cost computing and digital storage, ubiquitous connectivity, and a multiplying number of connected devices—has created many more opportunities to fundamentally rethink the product as a service.
At the same time, in the enterprise software market, onsite IT hardware and software is being eclipsed by cloud-based software-as-a-service SaaS offerings. Opportunities to reconceptualize physical products as services are growing as well.
By moving the focus from ownership to access collaborative consumption , this model shifts the economics of usage from product to service, giving rise to billion-dollar companies including Uber crowdsourced transportation and Airbnb crowdsourced housing. Lesser-known startups have arisen to share tools, kitchen appliances, and other rarely used or underutilized products.
The value created by sharing these goods is not, for the most part, being captured by product manufacturers. There is a largely untapped opportunity for manufacturers to reconfigure their own business models, reenvisioning the nature of their products in a way that helps them take advantage of the product-as-a-service concept.
General Electric is a notable example of a company that has successfully navigated the shift from ownership to access. GE Aviation has recently taken steps to pursue a product-as-a-service business strategy for one of its major offerings.
In such a scenario, the advantages to both company and customer are many. Sensors on the new engines generate real-time usage, diagnostic, and failure data. Together with a specialist team that will fly around the globe to address issues, this setup has reduced unscheduled downtime significantly.
In the consumer market, for instance, instead of selling manufactured solar panels, providers such as Solar City offer customers fixed utility pricing while financing the initial cost of products and installation. The story with such providers is one of both large and small competitors coming into multiple markets with a service-driven model, capturing value that manufacturers once claimed as their own.
The manufacturers that respond with a new lens on products and services are those that will continue to thrive. With the change in the nature of products comes a shift in value creation. In the coming landscape, value will come from connectivity, data, collaboration, feedback loops, and learning—all of which can lay the groundwork for new and more powerful business models. Manufacturing, until recently, was a daunting space with relatively few players.
Barriers to entry were high and initial capital investments hefty; products had to navigate multiple intermediaries before reaching the consumer. Today, however, huge shifts in technology and public policy have eroded barriers that once impeded the flow of information, resources, and products. In a world where computing costs are plummeting, connectivity is becoming ubiquitous, and information flows freely, previously cost-prohibitive tasks and business models are becoming more available to more players.
Barriers to entry, commercialization, and learning are eroding, as is the value proposition for traditional intermediaries in the supply chain. Meanwhile, rapid advances and convergences in technology, including additive manufacturing, robotics, and materials science, further expand what can be manufactured and how. All of these developments are combining with changing demand patterns to increase market fragmentation, supporting a proliferation of product makers further down the value chain with more direct consumer contact.
Upstream, larger manufacturers will likely consolidate, taking advantage of scale to provide components and platforms used by smaller players.
And as more and more technologies become digitally empowered, this pattern of growth has expanded beyond microprocessors. Emerging fields with potential for exponential growth include additive manufacturing, robotics, and materials science.
The convergence of these and other technologies has the potential to generate huge improvements in capability, utility, and accessibility.
Additive manufacturing AM , better known as 3D printing, encompasses manufacturing technologies that create objects by addition rather than subtraction through milling, for example.
While 3D printing technologies were developed more than 30 years ago, this decade has seen a rapid advancement in tools, techniques, and applications in both commercial and consumer arenas. Today, while additive manufacturing is used mostly in prototyping, 28 it is expanding to other stages in the manufacturing process. Tooling—the production of molds, patterns, jigs, and fixtures—is traditionally one of the most time-consuming and costly portions of the process, far outweighing unit costs for each additional part, and leading manufacturers to spread out the up-front cost across large production runs.
In contrast, the initial capital outlay for AM is typically much lower, not only because AM obviates the need for tooling, but also because the cost of AM equipment has been decreasing rapidly. The price of additive manufacturing is dropping, making AM increasingly competitive with conventional manufacturing due to differences in fixed vs.
Even though the variable cost for AM is currently higher than that for conventional manufacturing, reduced up-front investment often makes the total cost of AM less for small production runs see figure 2. All of this can make AM a game-changing option for small-batch production. In addition, complexity is free with additive manufacturing—in fact, the material cost of printing a complex design is less than that of printing a solid block, since it requires less time and material. And manufacturers can produce stronger, more lightweight parts that require less assembly time, reducing the overall cost of production or increasing the value of the final product.
While AM technology is still developing in terms of speed, material, and precision, many industries are already using it to create high-value parts at low volume.
In coming years, we can expect the range and scale of AM deployments to extend to lower-value, high-volume items. Industrial robots have historically been used mostly for tasks requiring exceptional strength and precision—for example, moving heavy items, welding, and semiconductor fabrication. They required heavy up-front investment and programming, and were usually bolted to the ground and caged as a safety measure for humans working in the vicinity.
Use of industrial robots was therefore limited to large-scale manufacturing. Until recently, low labor costs plus the high price of industrial robots posed little incentive for low-wage countries to invest in automation, particularly for tasks that require relatively little training and lines of production that change frequently.
Now, however, rising global labor costs and a new generation of cheaper, more capable, more flexible robots are changing the equation. The minimum wage in the Shenzhen area of southern China has risen by 64 percent in the past four years. Some analysts estimate that, by , per-hour labor costs in China will be percent of those in Vietnam and percent of those in India.
While Japan still has the largest total number of active robots, China is well on pace to become the automation capital of the world. The rapidly falling cost of more capable robots is a complementary factor. It replaces programming with simple path guidance, allowing it to be retrained for another task simply by moving its arms to mirror the new path.
Though robots will not replace human labor in manufacturing in the immediate future, they are poised to take on an increasing share of the manufacturing floor. This is likely to reduce the number of low-wage, low-skill human manufacturing jobs while generating a relatively small number of specialized higher-wage jobs in programming and maintenance. The first generation of these materials—memory foam, carbon fiber, nanomaterials, optical coatings—has become ubiquitous. As new materials are created, older ones, once inaccessible to all but the most advanced, price-insensitive manufacturers, have begun to trickle down to the mainstream.
Take carbon fiber, the poster child of space-age materials. While the energy costs associated with its manufacture still prevent use in many low-end applications, recent technological improvements have allowed manufacturers to produce higher volumes of carbon fiber products at lower prices. As a result, it has found utility in a slew of premium products such as bicycles, camera tripods, and even structural automotive components such as drive shafts and A-pillars. For example, Oak Ridge Labs has realized a 35 percent reduction in carbon fiber costs, and BMW plans to bring the cost of carbon fiber production down by 90 percent.
The effects of such gains extend far beyond making it cheaper to manufacture high-tech items. Battery technology, for example, has seen dramatic performance improvements over the past decade as a result of materials science innovations.
It has been predicted that advancements in chemistry and materials science will result in an 8 to 9 percent annual increase in the energy density of batteries. Carbon nanotubes, for example, have one of the highest tensile strengths of any material while serving as one of the best conductors of both heat and electricity.
Meanwhile, materials are being developed from new sources. MycoBond offers a flame-resistant Styrofoam alternative grown from Mycelium fungus. Nanocrystalline cellulose, a renewable material abundant in wood fiber, has potential applications ranging from plastic and concrete reinforcement to conductive paper, batteries, electronics displays, and computer memory.
Other high-performance materials adapt to their environments. Dynamic materials such as electroactive polymers polymers that change shape when exposed to an electric charge and thermal bimetals metals that change shape as temperatures change have demonstrated potential for use in adaptable architecture.
When used as the outer skin of a building, these materials can expand when it is hot to cool structures, and close when it is cold to preserve heat. Dynamic materials have also demonstrated value in more personal applications. While not everyone will have immediate access to newly developed materials, the barriers to entry for advanced, customized manufacturing will be reduced as advancements in materials science progress—opening up space for new players in cutting-edge manufacturing.
No technological development exists in a vacuum. As more and more technologies reach a stage of aggressive growth, they are more likely to intersect, generating growth greater than the sum of their parts. When discussing the impact of converging exponential technologies on the manufacturing landscape, bear in mind that each technology will compound the capabilities of others, enabling previously unforeseeable innovations.
For instance, materials science is fueling the expansion of additive manufacturing by increasing the range of printing materials. Modified PLA filaments impregnated with maple wood, bronze, iron, or ceramic are now available at the consumer level, allowing designers to create objects with characteristics of the chosen material. Christian von Koenigsegg of the Swedish supercar manufacturer Koenigsegg has discussed the utility of this technology in low-volume, high-performance applications such as supercar manufacturing.
Chinese construction firms are printing five-story cement apartment buildings in Suzhou Industrial Park. Electronics manufacturers can use 3D printers to seamlessly embed electronics in printed housings or, by combining conductive and structural materials in the same device, print intricate electronic circuitry within an object during production.
This has allowed more people to use advanced modeling capabilities to produce detailed models of any physical object, without having to physically make it.
This capability is supplemented by advancements in energy, materials science, nanotechnology, sensors, and robotics, which in turn allow for development and deployment of even more advanced technologies.
The result is an interrelated technological economy in which progress in one industry directly affects progress in another. As more technologies approach an exponential turning point, we can expect to see even more such complex and dynamic relationships, further accelerating the progress of technology as a whole. One of the strongest effects of the exponentially developing digital infrastructure is its ability to break down barriers, opening the manufacturing world to newcomers.
These benefits, first evident in the digital world, are now reaching physical manufacturing, where they are likely to spur both growth and change. What does a Millennial or at this point, anyone do to learn something new? Google it. Or, in broader terms, search online. How-to videos on pretty much any topic can be found on YouTube.
Websites such as Instructables, Hackster, and Makerzine feature thousands of step-by-step projects in text and video. Discussion forums in communities of interest deepen learning with conversations—often mixing amateurs and experts—that address specific problems.
In short, the transfer of tacit knowledge—knowledge gained by doing—has become easier with the ready availability of both online and real-world events, each of which enhances the other. The resulting influx of makers and startups drawn from these communities, and the ease of acquiring design and production skills, fuels the number of market entrants. While entrants are unequipped to challenge incumbents directly, they are both the sign and the result of rapid innovation; the areas where they innovate will be loci of change and growth in the nature of manufacturing.
Note that barriers to learning have come down not just around design and production, but throughout the manufacturing-to-sales process. From desktop tooling to freelance engineering talent, crowdfunding to business incubators, a whole ecosystem has arisen to help budding manufacturers learn the ways of designing, manufacturing, and selling a product. The digital infrastructure-based benefits that supported the rise of software startups at the turn of the century have now extended to hardware startups.
At the low end, sites such as Fiver. And support for small providers of first services, and now products, is growing rapidly. Coworking spaces such as Hub and Citizenspace provide shared office space and ancillary support, reducing the initial investment and effort needed to launch a business. Both tooling technology and tool access have also been democratized. TechShop offers members access to complex design and tooling equipment for roughly the cost of a monthly gym membership. A slew of desktop manufacturing modules, from 3D printers and CNC milling machines to printed circuit board PCB printers and pick-and-place machines, has hastened the speed of prototyping and small-scale manufacturing see figure 3.
Now it can describe a hardware startup as well. Barriers to initial funding and commercialization are also falling, making it easier than ever to enter a market, commercialize a creation, and build a business. Crowdfunding of hardware projects has become both popular and lucrative, reducing reliance on financing through bank loans and venture capital. Initial capital often covers tooling costs, requiring only enough revenue to cover production.
Crowdfunding sites such as Kickstarter and Indiegogo have also allowed startups to identify early adopters, develop a loyal customer base, and establish demand prior to producing a single item. Venture funders have taken notice, increasing their funding of hardware startups, while a slew of hardware incubators and accelerators help startups move from idea to prototype to business.
Traditional large-scale manufacturers are playing a role here as well. Launched in as a one-man sourcing operation for computer parts, PCH is now a billion-dollar firm employing more than 2, people across the globe. From design manufacturing and engineering to packaging and fulfillment to logistics and distribution, PCH offers a variety of services to the hardware industry.
In addition to manufacturing, fulfillment, and postponing facilities in Shenzhen, PCH works with a network of factories. While a growing number of accelerators help entrepreneurs and startups navigate the value chain, PCH is emerging as one of the first to do so from concept to delivery, lowering barriers to entry and increasing speed to market. For the current Goliaths of consumer electronics, it is the slingshot that could empower a thousand Davids.
Responding to the growing opportunities presented by niche markets, and drawing on technologies that make it possible to cost-effectively manufacture small batches or even single instances of many items, manufacturing is shifting from a predominantly scale-driven operation to a sector characterized by multiple production models.
Large-scale production will always dominate some segments of the value chain, but three other manufacturing models are arising to take advantage of new opportunities: distributed smaller-scale local manufacturing, loosely coupled manufacturing ecosystems like that in Shenzhen, China , and an increased focus on agile manufacturing methods at larger operations.
While each of these models reduces costs, they also reimagine and restructure how products are made, with a deep long-term effect on value creation. The emergence of business models centered on niche markets and smaller-scale production makes it easier for new entrants to establish themselves, attract customers—and potentially eat into the mass markets traditionally served by large-scale manufacturers, on whose platforms they may very well rely.
In the twentieth century, an intense focus on cost reduction and efficiency led manufacturers to decamp to countries with low labor costs and to maximize efficiencies gained through mass production. In the United States and Europe, what little domestic manufacturing remained served premium or craft markets. But a recent rise in local manufacturing is bucking that trend, relying on technology and community to keep costs down.
In , to help reverse this trend, Bland founded Manufacture New York, a sprawling ,square-foot fashion design and production center in Sunset Park, Brooklyn.
Her aim: to enable more small manufacturers to subsist locally and be more responsive to local needs. The digitization of manufacturing, along with the exponential growth of subtractive and additive digital fabrication technologies and robotics, has made manufacturing more repeatable and portable. Individual designers and small businesses now have the ability to produce high-quality goods locally at low cost. Increased digitization is likely to further lower the cost of customization, giving more advantage to distributed small-scale local manufacturing that captures consumer needs.
The Local Motors Strati, based on a contest-winning design by Michele Anoe, took 44 hours to print, another day to CNC mill the body to its final shape, and two more days to assemble additional components. The Strati combines new community-driven, micro manufacturing business models with new 3D printing technology to reimagine the nature and process of auto manufacturing. In summer , Local Motors will put the results into practice, opening a combination micro manufacturing facility and retail outlet dedicated to designing, printing, and selling the Strati.
In doing so, it will embody a workable example of distributed local micro manufacturing—and stand as a harbinger of change for manufacturing of even large, complex, and heavily regulated products. In just eight years, Local Motors has upended conventional thinking about what can be manufactured and how. Founded in by Jay Rogers, the company has created a set of tightly integrated physical and virtual platforms where a community of designers, makers, and engineers come together to design, build, and sell vehicles.
This led to a much less capital-intensive process that enabled small-scale distributed manufacturing. The Rally Fighter is sold as a kit car to overcome US regulatory hurdles. Their operators—many former factory workers who have branched out into ownership—have mastered the ability to build high-quality products at low volumes and low cost, at extreme speed, using an ecosystem of loosely coupled small to medium-sized factories and individual experts.
The result is a system that can take on the larger Shenzhen factories—and one that is extremely well suited to emerging modes of supply.
The beneficiaries are any designers or brands, large or small, established or new, that want to jump in, iterate quickly and cheaply, and scale as needed to meet demand. New demands led to new tools and techniques, with network members working together to push the boundaries of capability and cost. One highly visible result is the plethora of inexpensive, high-quality mobile phones dominating the Chinese market. As newer trends such as IoT, wearables, and robotics gain momentum, the Shanzhai are likely to respond with equal alacrity and range.
The geographic density of Shenzhen, and its ability to encompass the entire value chain from raw material suppliers and industrial equipment manufacturers to designers, product manufacturers, and assemblers, is unlikely to be replicated exactly.
However, similar hubs have appeared elsewhere in China, with footwear manufacturing in the Fujian region and motorcycle manufacturing around Chongqing. Inventor Shane Chen emigrated from China to the United States in the s, attracted by the American culture of entrepreneurship.
Most were produced by factories in Shenzhen. There were Solowheel-like products with two wheels, ones with seats, others with holders for tablets to aid in navigation. The factory owner had come across the Solowheel on a trip to the United States, and was intrigued by its potential as a last-mile transportation device for the Chinese market.
One factory did the battery system, another the motor; STEC handled the plastic molding and electronics. Within a month, the factory network had a product ready for market. Six months later, it was selling the third-generation product. Beyond the impressive speed of iteration was the even more striking ability to improve performance while continuing to cut costs with each cycle. A fourth generation is in the design phase now—the embodiment of a system honed at every point to take advantage of the emerging value chain.
For larger manufacturers, renewed interest in agile manufacturing is helping them remain competitive while staying responsive to increasingly fickle and unpredictable market signals. The key to this increased agility: a digital infrastructure that provides access to near-real-time point of sale POS data, rather than lagging monthly or quarterly sales reports. The more accurate such forecasts are, the more sense it can make to choose highly efficient large production runs.
Overseas production and freight shipping will force minimum manufacturing quantities to compensate for long lead times from production to customer. For smaller items, the cost of air freight and short fulfillment cycles may trump the cost of holding inventory, cost of capital, and obsolescence. Taking all these factors into account, contract manufacturer PCH International demonstrates the benefits of agile manufacturing. Beyond using technology to support agility, the company has reengineered its manufacturing lines to be modular—and so easy to update that the minimum viable batch quantity equals the number of products produced on one manufacturing line during a single shift.
In this case, the ingenuity lay in replacing expensive bendable sensors with a combination of cheap, easily acquired or manufactured parts. Seeed is among a growing number of companies that have extended the web of manufacturers and sourcing companies from Shenzhen to the broader world.
In addition to in-house manufacturing facilities, it has developed relationships with a range of specialized manufacturers and component providers. This allows even novice makers to reduce costs and error rates by specifying mass-produced, highly compatible components. The OPL and connecting to the Shanzhai ecosystem are two of many ways that Seeed Studios has embraced agile manufacturing. The result: increased connection, lower barriers to prototyping, and an overall increase in the pace of product innovation.
As technology advances exponentially and barriers to learning, entry, and commercialization continue to decrease, product development and commercialization will further fragment. New entities may find it increasingly easier to enter the landscape and to create products addressing specific consumer niches.
In this manufacturing environment—with the downstream fragmenting as scale moves upstream—businesses seeking growth will need to rethink the ways they participate in the manufacturing landscape. The lines between manufacturers which make things and retailers which sell things are blurring. This softening of roles has significance not just for the companies undergoing a transformation, but also for any intermediaries holding inventory along the way. In a world where information travels ever more freely, and where cycle times are collapsing, traditional players can struggle to communicate with consumers and to receive—and act on—timely, meaningful feedback.
Consumers feel this disconnect as well, and many are opting to connect more directly with the makers of the products they consume.
These disconnects can have multiple implications for how value is created and captured. As the distance between manufacturer and consumer narrows, intermediaries whose sole value is to hold inventory are likely to be squeezed out.
The most likely survivors will be those that create more value for consumers, perhaps by providing useful information, helping people make choices, or allowing buyers to experience products in new ways. For the same reasons, successful manufacturers will be those that can engage directly with consumers, narrow the gap between prototype and product, and move their business models from build-to-stock to build-to-order.
While no single small company can have a major impact on large incumbents, a slew of agile startups taking market share from the incumbents can create significant change. Entrants are using three approaches to gaining a toehold in the new manufacturing landscape, each at a distinct point in the value chain: engaging the consumer directly, increasing speed from idea to market, and favoring build-to-order over build-to-stock.
Eyewear startup Warby Parker was founded in by four entrepreneurs who saw a problem with the industry—the high cost of glasses. The company hit a nerve. All told, Luxottica controls 80 percent of all major eyewear brands.
As often happens in industries dominated by a single player, market prices have stayed high, with an average 20x markup on each pair of glasses sold. At the same time, it distributes another pair of glasses to a wearer in the developing world. As of this writing, Warby Parker has sold more than a million pairs of glasses and distributed nearly a million more.
Customers can select up to five frames and try them out for five days for free. This program appeals to and maintains full control of the distribution network while bypassing the existing brick-and-mortar infrastructure.
Recently, Warby Parker has expanded its business model to include brick-and-mortar stores; as of , the company had retail stores in seven cities with showrooms in an additional six, further extending its vertical depth.
In a traditional value chain, the manufactured product goes through a series of wholesalers, distributors, and retailers before reaching the consumer. Inventory is held at each of these intermediary stops to buffer for variable demand. Capital is held hostage for a few months, tied up in shipping and inventory until products are sold. But as the digital infrastructure continues to cut the distance between manufacturer and consumer, this model, and its conception of value, will most likely be questioned and restructured.
When search cost was high, a retail outlet providing multiple side-by-side options had value. Convenience also dictated having as many items as possible available in one location. But then online sales brought consumers not just a near-infinite number of options, but reviews and feedback that helped buyers choose among them. Meanwhile, quick even overnight or same-day shipping has become cost-effective when substituted for the cost of multiple intermediaries.
In this environment, many hardware startups are forgoing traditional brick-and-mortar retail channels, going directly to consumers via online platforms, such as Amazon, eBay, and Etsy, that offer advantages to both buyers and sellers.
As the value captured by controlling access to physical space and consumer access erodes, retailers that want to stay relevant as value chain players will have to reevaluate and reconfigure their business models. Eyeglass manufacturer Warby Parker, for example, has been growing at a rapid pace in an industry historically closed to outsiders, largely due to its ability to bypass traditional distribution and retail channels. As a result, the company is able to offer high-quality frames at lower prices, unlocking value otherwise taken up by intermediaries.
Traditionally, the consumer has been a few steps removed from the product manufacturer. As technology evolution accelerates, they focus on brand affinity rather than traditional intellectual property IP patent filings and protection.
While consumer engagement is not usually seen as part of the supply chain, it is testament to the power of direct engagement that it can be redefined as a very early point in that chain—which may today be more aptly called the value chain. Many of these startups are using crowdfunding platforms not only to raise initial capital, but to build a community of fans and supporters around their products—engaging demand in a way that ties it inextricably to supply.
In shifting the power balance for market entrants, this stance strikes at the heart of the question of how to capture value, and which entities new entrants or incumbents, small businesses or large will do so.
In crowdfunding campaigns, consumer engagement does not end with the campaign; rather, businesses continue to connect and communicate with supporters throughout the manufacturing process, offering detailed updates on both successes and challenges.
The Pebble E-Paper Smartwatch, an early entrant into the smartwatch market in , was one of the earliest crowdfunded hardware successes. Though product delivery was delayed by several months, Migicovsky kept the crowdfunding community in the loop, offering detailed reports including play-by-plays on manufacturing fumbles.
Community members were extremely supportive, even suggesting potential solutions and recommending specification upgrades, several of which were incorporated into the product. In the end, a highly engaged, loyal community and customer base helped the Pebble gain market traction where other, larger firms had failed.
While small manufacturers such as Pebble embrace a measured pace of development informed by community engagement, larger players are more likely to distinguish themselves through speed. And with ever more rapid shifts in consumer demand, speed to market is increasingly important. With the success of such models, manufacturers have inevitably followed suit, working to compress time from idea to market. Today, such rapid speed to commercialization is poised to become the rule rather than the exception.
In many respects, crowdfunding for new products is a kind of preorder. While build-to-order manufacturers may still use forecasting to optimize manufacturing efficiency, preorders are even better at gauging consumer demand. San Francisco clothing startup BetaBrand, for example, designs and releases a few limited-edition designs every week for preorder.
This structure reduces the risk of excess inventory and gives the company constant demand data. Threadless, another clothing startup, hosts a platform on which designers can submit designs for users to vote on. Users can preorder T-shirts, hoodies, posters, or card packs printed with the winners. Threadless then produces the items, paying designers a royalty. As consumer preferences shift toward personalization, customization, and creation, direct access to consumers will become critical. Intermediaries reduce speed to market and require capital to build up inventory; they can also make it more difficult for manufacturers to access valuable consumer insights.
However, many large manufacturers today rely heavily on intermediaries, weakening their connection to the consumer. This puts them at a disadvantage when compared to smaller players with direct consumer relationships that make them more responsive to changing consumer needs.
Large manufacturers should consider how they might use their scale to enable these smaller players instead of competing with them directly.
Xiaomi launched in , starting with software—the Android-based operating system MIUI—long before it entered the hardware market. The company prides itself on its ongoing weekly operating system updates; at the time of writing, MIUI had been updated every Friday for more than four years.
Now the game is an Ironman triathlon. To compete, a company must offer great hardware, software, and Internet services. With hardware manufacturing, Xiaomi has put significant energy into both community engagement and fast iterations. Product managers spend approximately half their time in user forums, and the company can incorporate user suggestions in a matter of weeks.
Instead, it spends on online and off-line events, including an annual Mi fan festival. Rather than pursuing traditional distribution and retail, Xiaomi generates 70 percent of its sales online, driving demand from fans, who often preorder or participate in flash sales to get their hands on new products.
The world of manufacturing is shifting exponentially. Not only is it becoming more difficult to create value, but those who do so are not necessarily those best positioned to capture it. Value resides not just in manufactured products, but also in the information and experiences that those projects facilitate. Rather than delivering value in their own right, televisions have become a vehicle for the locus of value—the content that viewers watch on them.
With this fundamental shift in value from object to experience—or more specifically, from device to the experience facilitated by that device—comes the need for manufacturers to redefine their roles, and hence their business models. The same trends that have pushed manufacturing in the direction of delivering more value for lower cost—and that have made it about far more than producing physical products—will become more and more pronounced over the next few decades. To succeed, products will have to be smarter, more personalized, more responsive, more connected, and less expensive.
Manufacturers will face increasingly complex and costly decisions about where and how to invest in order to add value. When assessing the future manufacturing landscape, there is neither a single playbook for incumbents nor a single path for new entrants.
Instead, companies should consider these recommendations when navigating the path to enhanced value creation and value capture:.
As consumer demands shift, the nature of products and production changes, and intermediaries disappear, we will see increasing fragmentation in the manufacturing landscape. As lowered barriers to forming a business intersect with increasing consumer demand for personalization, the manufacturing landscape will begin to fragment in ways that touch the consumer.
Collectively, these businesses can address a broad spectrum of consumer and market needs, with no single player having enough market share to influence the long-term direction of its domain. Fragmentation will occur mostly around specialized product and service markets, with a wide range of small players either designing and assembling niche products or serving as supporting domain experts or contractors.
We see this pattern now in the growth of small hardware startups associated with the maker movement, as well as with sellers on websites such as Etsy. However, accelerated technological change is likely to have a markedly different effect on this era of manufacturing than it has had in the past.
Where before, new industry segments consolidated into a few dominant players as their industries matured, the future manufacturing landscape is poised to experience rapid, ongoing disruption leading to continuous fragmentation. Fragmentation will occur at varying rates and to varying degrees across regions, manufacturing subsectors, and product categories. Barriers to entry in the form of factors such as regulation, design complexity, size of product, and digitization will affect which subsectors first experience disruptive shifts.
However, the speed of the shift will vary greatly even within industry segments—for example, electronic toy manufacturers will have very different experiences from makers of board games, stuffed animals, or building toys. Understanding the timing and speed of change in their industries and subsectors will help businesses assess when and where to play in these changing times.
The regulatory environment is constantly evolving in response to market needs. Product complexity, size, and digitization are all affected by exponentially evolving technologies. When considering these factors, it is important to evaluate not just the current placement of your product category, but also potential shifts that could accelerate fragmentation in parts of the business landscape. Public policy and regulation play a profound role in the current and future structure of the manufacturing ecosystem.
Trade agreements, labor relations, consumer safety and environmental regulations, and privacy and security restrictions all have the power to shape and shift its dynamics and economics. In a survey of CEOs in all major industries, respondents listed the regulatory environment as their top concern, with more than 34 percent reporting spending an increasing amount of time with regulators and government officials.
Governments can speed the transition to a more fragmented manufacturing ecosystem by relaxing regulation and encouraging new entrants and innovation. The more complex the product—measured by the number of components, the intricacy of component interactions, and the extent of product novelty—the more the parties designing parts of the final product must interact.
In general, this factor matters most during design and prototyping. However, this is not always the case, as exemplified by the first Apple iPod. Faced with an incredibly tight timeline, the designer, Portal Player, tightly defined boundary conditions for each product component, then invited multiple players to compete for the best design in each category. This approach allowed for greater innovation in the final product—as specialists worked on each part of the player—but led to more work for the engineers designing and testing how all the parts came together.
Product complexity is also changing as a result of exponential technologies such as 3D printing.
System requirements for Autodesk Inventor products | Inventor | Autodesk Knowledge Network
Autodesk Inventor autodesk inventor 2015 has stopped working free relationships that conflict with others or that cannot be solved. A relationship error does not harm or destroy geometry; it means that the two components cannot be connected in autodesk inventor 2015 has stopped working free way you have attempted. Autodesk inventor 2015 has stopped working free Inventor notifies you when errors occur. When a relationship has inconsistencies or cannot be solved, an error message explains the error, and the affected geometry highlights in the graphics window.
You can edit relationships to resolve the workijg, accept the error, or use diagnostic tools to resolve the conflict. Relationships with errors are marked with symbols in the browser, where you can edit them later. The following error symbols can display:. Use the glyph context menu to autodeak, unsuppress, or delete a relationship. This dialog box has four options for handling the error:. Inventor displays the Relationships Management dialog box when a conflict occurs when using Grip Snap or Assemble.
This dialog box displays a frree of the conflicting relationships. The following error symbols can display: Recovery help is available Click to use Design Doctor to take you through steps to resolve the error.
Lists tips for using recovery options Click Help in the message window to read information about the Command Message dialog autodesk inventor 2015 has stopped working free. Error condition If you decide to accept a relationship error, the relationship is flagged with this symbol in the browser.
Information about the attempted relationship is available If multiple problems are found, you can autodesk inventor 2015 has stopped working free and collapse the message hierarchy while you evaluate the required actions. Note: These same symbols frde modeling errors as well as relationship errors. If an error prevents a model from solving, you cannot accept the error. Instead, you can follow the steps outlined by the Design Doctor to resolve the error.
Display and edit relationship errors in the graphics window Use Free Move, Show, or Show Sick to workiny errors on the components in the graphics window. Use Free Move to separate the components. An elastic band shows the component joints.
The relationship and error glyphs are visible on the component body. Use Show relationships to display the relationship and error glyphs on a component. If you want to show нажмите для деталей on multiple components, select the components before you select the command. Use Show Sick to display error glyphs on components that have a relationship error. If there are no relationship errors in the model, the Show Sick command is not available. Tip: Use Hide All to remove all relationship and error glyphs from the display.
This dialog box has four options for handling the error: Edit the relationship The dialog box displays so you can change the relationship. Cancel the operation The command is canceled.
If you are creating a relationship, the relationship is deleted. If you are editing a relationship, the relationship is restored to its previous state. Accept the relationship The relationship mos manual in the browser with an error symbol. The relationship does not affect component position or behavior. It retains the selections so you can edit it later. Diagnose the relationship The Relationship Conflict Analysis dialog box displays.
This dialog box lists a minimal set of the components that contribute to the conflict. A conflict, which can be viewed as a minimal set of relationships that cannot coexist with each other, can then be identified within the dialog box. You can temporarily break relationships or wofking grounded status of components to test solutions and solve the conflict.
You can then delete or suppress the broken relationships. Assemble and Grip Snap relationship conflicts Inventor displays the Relationships Management dialog box when a conflict occurs when using Grip Snap or Assemble. Click a relationship to highlight it in the graphics window. Select Suppress Relationships or Delete Relationships.
Click OK to suppress or delete the relationships or Cancel to exit without creating the relationship. Parent topic: Define component location autodes relationships. Related Information Show and Hide relationships. Use Relationship Conflict Analysis dialog box to resolve relationship errors. Use Relationships Management dialog box to repair relationship errors. Use Design Doctor to repair relationship errors. Isolate assembly components.
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