What happens when the cost of technology drops? Not just the raw cost of something, but the means to produce it.
Semiconductor costs decrease over time as volume increases. This has been the magic of the industry for decades. The cellphone, flat screen monitor, tablet computer all represent incredibly low cost of technology as a result of massive volume production. All of these technologies had incredibly high investment cost. A typical wafer fab was in excess of 3 billion dollars last time I checked the price.
Lots of different chip technologies have followed the extraordinary shift in pricing as the specific technology matures. Power semiconductors continue to increase their power handling capability at decreasing costs. This has been a great advantage for the motor and control industry. Processor technology that is motor specific has undergone similar cost performance improvement. Digital signal processors used to be the primary choice for motor control. DSP’s have been replaced by a number of other technology options, dedicated microcontrollers and FPGA’s being the most cost effective.
What is really startling is that not only has the cost of the chip technology fallen, but the development tools to create new applications has fallen as well. If you can afford the price of a PC, development software like LabView, you can define a completely new application, program and download executable code in a target processor. Voila! Working application!
If your target market is 5oo units of some cool new product, and you can put the development system together for less that $5000., then a $10 amortization is all that is required in the first year to reimburse you for the investment in a development system. Combine this with $1500 3D printer that can make solid parts and the possibilities are endless. If you need metal parts, use the 3D printer to make prototypes that can be used for metal casting models. Even the metal casting industry has learned to decrease it’s volume requirements to gain access to lower volume market requirements.
Economies of scale have been a powerful agent of change in the age of electronics. But by themselves, economies of scale are not sufficient to create a major change in the dynamics of entering new markets and creating new industries. The cost to design, program and implement a technology has to be considered as part of the overall economics of new technology. The latest innovations in development of technology are dramatically addressing the cost of development.
Lower development costs mean lower cost per unit for whatever new product is being considered. The new revolution in manufacturing will be ongoing developments that change the way new products are designed and brought to market.