2007, Radiocrafts: Make Or Buy, Life cycle cost of ZigBee® solution

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2007, Radiocrafts: Make Or Buy, Life cycle cost of ZigBee® solution

  1. 1. Make or buy Life cycle cost of ZigBee® solution Ørjan Nottveit, Radiocrafts AS Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  2. 2. Agenda Different HW solution True cost of a ZigBee HW solution LCC (Life cycle cost) RISK Business solution Key factors for choice Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  3. 3. Different HW platforms Single chip solution (SoC) Dual chip solution (MCU + transceiver) Module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  4. 4. Myth Price USD Single Dual Module chip chip Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  5. 5. What is the true cost Total solution = LCC cost Chip(s) Supporting components Crystal(s), Balun, Shielding Can,++ Design cost Test cost/Yield loss cost Supply chain cost Design support cost Financial cost/risk Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  6. 6. What is the true component cost Chip (single or two) Two crystals Antenna Balun Shield can PCB, Passive components Might need EEPROM, Flash, PA, RF switches, filter, logic… Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  7. 7. Design cost The design from an external design house of a ZigBee HW solution might be $150k* *1 RF engineer: design, schematic, layout, test, qualification, documentation. 7 months=1100 hours @ $120 = $132k + prototyping. If you will produce 50k this will add $3 per end product Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  8. 8. Test cost You need to test to check for failure and monitor critical parameters Test jig with RF instrumentation Automatic test program to reduce test time Total investment estimated to $100k Test time That equals $2 per end product for a 50k volume Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  9. 9. ETSI/FCC qualification ETSI certification for CE marking R&TTE directive 1999/5/EC. ETSI EN 300 440, EN 300 328 ERC RECOMMENDATION 70-03 FCC require formal certification Tests must be done at FCC approved lab Time-consuming and costly Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  10. 10. Good yield is crucial for low cost Example 99% yield 1 out of 100 must be analyzed and repaired= $50 Increased cost by 50 cent Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  11. 11. Supply chain cost Compare prices and negotiate prices with many vendors Purchasing and logistics for 1 vs. >30 components 125h @ $120 = $15k= 30 cents per product Shipping, insurance and payment fee Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  12. 12. Design support Component change notification New suppliers Yield changes Support cost 15hours*11 months=165 hours 165 hours*$120= 40 cents per end-product Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  13. 13. How about that myth again.. Price USD Test Design Test Design Design BOM BOM Single Dual Module chip chip Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  14. 14. Cost @ 1k Chip Module BOM ~$ 10 (1k)* ~$ 21 (1k)* Supply chain $ 0.3 $ 0.1 Yield loss $ 0.5 0 Life support cost $ 20 000 $ 1000 HW Development cost $ 150 000 $10 000 Test development $ 100 000 0 Incl. RF instrument Total per device(1k) $ 283.3 $ 32.2 Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  15. 15. Cost vs. volume $100 Chip based $10 Module $1 1k 10k 100k 1M 10M Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  16. 16. Making your own module ZigBee functionality to more than ONE product Ending up making a company module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  17. 17. RISK RISK of not selecting the “best” chip RISK of being too late in the market The RISK of upfront investment The RISK of poor RF performance Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  18. 18. Future proof A new and cheaper chip is available before your project ended Your chosen chip supplier is no longer competitive Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  19. 19. Cost of upfront investments $250k upfront for design, sourcing, test development, prototype series This gives a monthly cost of $1000 Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  20. 20. Time to market Making a chip solution will take 6-9 months longer than buying a module. If you are 6 months behind your competition, will that matter? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  21. 21. Time to profit Profit Module Time Chip solution Loss Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  22. 22. A good RF solution A design that works might not be good enough Compliance to standard Range Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  23. 23. Other business options Start with module for low and medium volumes and optimize cost for high volume Customized modules Licensing of IP Making a chip based solution Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  24. 24. Licensing IP Proven design Small adjustment needed to adapt to new PCB No SW change when going from medium volume to large volume No large investment in development Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  25. 25. Licensing IP 100 Module 10 Single chip solution Licensing 1 100 1k 10k 100k 1M 10M Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  26. 26. Key factors in choice Do you have the competence? Do you have the instrumentation? What is your time schedule? What is your volume? Do you have the money to take financial RISK? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  27. 27. Competence RF resources are hard to find Hiring RF consultants is expensive Utilizing unused internal resources is a good option, if they exist Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  28. 28. Instrumentation RF instruments are expensive RF signal generator RF spectrum analyzer RF network analyzer Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  29. 29. Time schedule If you need to release your product within one year, you should go with module If you shall enter the market in 18 months you could evaluate a chip solution Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  30. 30. What is your volume <50k – Buy module >500k – Chip design or licensing 50k-500k – Depends on other factors Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  31. 31. Summary Life cycle cost vs. chip RISK Business model Factor that influence choice Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  32. 32. Using ZigBee has never been easier than it is today! Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
  33. 33. Questions? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved

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