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It’s two years to Christmas 19 March, 2007

Posted by varoom in Business Plans.

For products and technologies which are aimed at end consumers, or go into end consumer products, careful consideration must be given to the intersection of your product roadmap and the normal market cycles. Let’s take the example of a semiconductor technology which targets a digital consumer end product like a DVD player or mobile communications product.

If this consumer end product needs to be in shops for the Christmas boom then unless your component product is ready more than a year before, it’s unlikely to make next Christmas sales. It’s often shocking to young businesses to learn that Christmas can take longer than a year to come round.

So how come, you may ask, surely Christmas comes every year at the same time…..

If we work backwards from Christmas 2008 for your product to be in shops ready for the shopping boom. In order to do that the warehouses need to have volume stocks of your product on the shelves in October and November.

For low cost manufacturing, off shore, we need to ship from those factories by the lowest cost route to save money. That means shipment by sea which can take up to 3 months. So we have to load the ships, taking our product to market, at the end of June to arrive by end of September.

For our volume manufacturers they may need some 3 months to ramp up and produce the volumes we need, to satisfy the pent up demand we hope to capture, for Christmas. So manufacturing needs to start production by end of March.

Let’s look at the component side now. If our end product uses silicon products, as it’s highly likely it will, then we need to take account of typical silicon manufacturing cycles. The normal lead time for silicon can range from 12-18 weeks depending on a lot of different factors, this is not just your own silicon component but must include a lot of other technologies like memories, power controllers, communications devices etc. So in order to ensure our offshore factory can manufacture the volumes we need, we must ensure the silicon for the end product is ordered by December 2007!

If your technology is new then you need to have undergone a range of trials, prototype runs, verification, validation of your semiconductor product prior to being able to ship in volume, to an off shore manufacturer of the end digital consumer product.

Generally it can take up to another year prior to volume manufacturing in order to qualify your product for volume.

It can take up to two years to get your product into Christmas sales. Taking my example target of Christmas 2008 into account, in March 2007, it may already be too late to hit 2008 sales!

Now before you discount the Christmas factor because it only is a factor in the western world you should not forget that the ramp up in volumes, the consequent reduction in costs, can drive increased sales in other parts of the world purely because of the Christmas effect.

The key point in my commentary is that you must analyse the whole time to market chain in order to really understand how your business can ramp it’s sales.

Greville Commins



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