New Products: Fly-Away Success Or Flops?

Jan 7, 2008 10:29 AM
by Alan Elbanhawy, Power Semiconductor Industry Veteran.

One of the great characteristics of the electronics industry, especially the sector devoted to power conversion and power delivery, is its ability to innovate. Every time you think that “this is it” for a while and the technology has reached a plateau, someone introduces some incremental improvement over the current state of the art. In turn, that improvement inspires others to do more and keep the wheels of advancement spinning.

Once in a long while — which may be measured in months in this exciting electronics field — a new product takes the market (and sometimes the world) by storm, changing the very way we lead our lives. At the same time, dozens of new products with varying degrees of innovation in basic science and engineering go unrecognized by the public and/or the industry.

Why is that? Is there a criterion that would allow us to judge the success of a new product before millions are invested in its development? To the best of my knowledge, there is no such criterion, otherwise all released products would be total successes. Instead, there are only tools that allow us read the market we are targeting. Depending on how clever we are in utilizing these tools and interpreting the data generated by them, we can have either a successful product or not.

These tools that help to define new products come in different forms. First, there’s the market research conducted by market-specific research teams. Then, within companies, you have the knowledge that’s accrued by experienced staff engineers and scientists who are fully cognizant of market needs and direction.

There are also the technology tools that influence how a product is developed and whether it is successful. For example, in power electronics, in-house technology has been developed to improve the state of the art in MOSFETs, controllers, etc. In addition, there are the business tools that influence the success or failure of a product. The business model applied in pricing a new product will be critical to the product’s success.

In my opinion, the best market research is that done by marketing engineers working directly with the customers. These engineers are in a position to observe the design needs of the industry and recognize what product improvements or new products can fulfill these needs. The same engineers can convey this information to the marketing and design teams in their organizations. To that end, it’s particularly helpful if the marketing engineers are equipped with a good background in design.

Market data generated by professional organizations that specialize in the power field can also be an invaluable tool. But bear in mind that this data is of a general nature, while the product-producing company’s needs are of a very specific nature, depending on its product mix and market footprint. The task of defining the improvements and/or new products rests with the company’s scientists and engineers whose in-depth knowledge and extensive experience allow them to translate the perceived needs of the market — as determined by the research data — into new products.

I deliberately use the word “perceived” because those market needs can only be proven true or otherwise by releasing new products to the market. With electronic components, the perceived market needs can only be verified by releasing new products to the design communities. Companies with an eye on the future will continuously invest in new technology because it presents their product developers with a better tool for creating cheaper and higher-performance products. Naturally, this investment provides companies with a greater ability to maintain and improve their competitive market status.

Ultimately, the most critical of all the product development decisions is where to set product pricing. The ability of a product to truly meet the market need, while also offering the right price will determine whether the new product is an overwhelming success with large sales volumes, a niche market success with limited volume or just another good idea that nobody can afford. Since all new products have a very limited window of opportunity to generate the highest revenue for the company, the pricing decision will be the final arbiter of the level of success that the company achieves.

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