pick up and use electronic devices every day and we probably don’t think too
much about the process that occurs before we end up with the shiny new device
sitting in our lounge room or in our hand. As electronics companies grow in
size and complexity and the devices themselves grow in complexity, this process
has evolved into a precisely tuned procedure where many parts are moving at the
same time to deliver the final product.
all starts with the concept team to imagine what consumers might want in a product.
These people are futurists as they are trying to predict what consumers will
want years in advance. It is great to imagine what we might want, but it also
has to be achievable from an engineering point of view and it has to be
achieved to a certain price point.
much as these futurists make a range of decisions on specifications and design,
a company about to invest a number with lots of zeroes in it wants to be sure –
so another team will perform extensive market research. Is there already an identical
widget on the market? How is this one going to be better? Do people really like
the idea of purple with pink polka dots? Do people want this product at all?
After the green light from the product research team, the product goes into
design development to work out the exact componentry that will make up the
product. Most products have many new components contained within and a list of
annual new patents issued is interesting reading. The list of companies with
the most patents in 2015 reads IBM; Samsung; Canon; Qualcomm; Google; Toshiba;
GE; Intel; Microsoft and Sony with 36,108 patents amongst them. To show that
innovation is definitely not slowing down, the top ten companies with patent
applications from 1984 were GE; IBM; Hitachi; Toshiba; Philips; Canon; RCA;
Siemens; Mobil Oil and Nissan Motors with a combined total of 4,975 patents.
high-end computers to aid in the final design, a perfect working model is
produced…on a computer screen. Extensive testing is undertaken on a virtual
product before even the thought of producing a prototype. Designs are tweaked
and subtle changes are made. A common-sense test is typically applied by a
separate team. Engineers sometimes miss practical concepts that are relevant in
the real world. “It might look great, but putting the power button on that side won’t work for left-handed
after all of the above, a prototype is produced. Not just one but hundreds.
They are used, tested, dropped, bounced and generally abused. There was the
famous incident when an employee of a major electronics firm was using a
prototype at a bar one night and got a little drunk and left it behind. Social
media lit up when someone found it and posted the info. Either one of two
things happened. The employee was fired for being so silly or was given a
promotion for helping build up demand for the product when it was finally
the prototype testing phase, it is time to start manufacturing. It is one thing
to produce a few hundred of a product. What about if you want to produce a few
million? You have a myriad of suppliers in your supply chain and they need to
have the ability to produce the quantities you need. Any one break in the chain
and manufacturing stops. After all the testing and research and predictions,
this is where the tough decisions are made. Do we over-manufacture and risk not
selling them all or do we under-manufacture and miss out on sales. Predicting
the sales numbers and demand is as much art as it is science. Apple recently
announced they have sold a combined total of more than one billion iPhones!
Would that have been their predicted number back in 2007 when the iPhone first
you have a few million shiny widgets sitting on the factory floor, what is the
process to get them into the hands of your consumers. Direct sales? Company
owned stores? Partners? Chain stores? How do you market your product to let the
world know that this wonderful new product is available? I couldn’t even begin
to list the options for marketing.
all of this is set in place, I am sure there are thousands of people who then
sit back and cross their fingers and hope that it all goes according to plan.
brings me to Samsung.
year Samsung was the number one mobile phone manufacturer with sales of 320.2
million mobile phones and a current market capitalisation of US$235 billion.
Friday 19 August the Flagship Samsung Note 7 went on sale in Australia. It was
eagerly anticipated and, at AU$1,440, was Samsung’s most expensive phone ever.
Phone shops around the nation sold out on the day of launch and Samsung had
expectations of sales of 19 million units during the product cycle.
didn’t take long for those estimates to be revised sharply down after numerous
reports of devices catching fire. To Samsung’s credit, a worldwide product
recall and replacement scheme was implemented. This process was entering phase
two with replacement devices being shipped when…they started catching fire.
Samsung has now recalled all Note 7 devices and is completely halting
production. The cost to Samsung financially from this model is estimated to be
in the order of US$17 billion but my concern would be for the overall loss of
reputation for the Samsung brand.
first question asked was how can the largest phone manufacturer get it so
wrong. I tend to look at the flip side. When you consider the complexity of the
modern electronics products that we use every day and what has gone into those
products, I am more amazed at how many products we use get it right every