How does a small company start making LED streetlight drivers?

[ocset]

Hello,
The Phillips  “Xitanium  Xi FP 165W” LED driver and the Harvard Eng “CLH_150W” LED driver  are both intended for the streetlighting market at 150W. They are competitor products (datasheets below) .

Phillips is a Dutch company, and has a close association with NXP semiconductors, -as such Phillips can reap the benefits of massive component cost reduction
Harvard Technology is a British company. There are no British Semiconductor fabrication plants in existence. As such, Harvard Technology cannot reap the benefit of component cost reductions like Philips can.     

Other  non-UK companies who make streetlight drivers also have close associations with semiconductor fabrication plants…for example, Tridonic have a close association with Infineon. Samsung have a close association with their own semiconductor fabrication plant. So too do many others……

As such,  why do Harvard compete in the 150W streetlight driver market? They surely will be out-priced at every level?           
  They surely  will have to pay more for their electronics components? They have no association with any semiconductor fabrication plant. How do they manage to compete and  sell their products which are pretty much the same spec as their more fortunate competitors?….(or do they not manage to sell their  “like for like” products?)
Do Harvard Technology get a UK government grant to produce  LED streetlight drivers? 

Are LED streetlight drivers generally so over-priced that any small company can jump in and start making decent sales and money? 

Phillips  “Xitanium  Xi FP 165W” LED driver Datasheet
http://www.docs.lighting.philips.com/en_gb/oem/download/xitanium-led-drivers-outdoor/Xi_FP_165W_0.2-0.7A_SNLDAE_230V_C170_sXt_929000976206.pdf

Harvard Eng “CLH_150W” LED driver Datasheet:
http://www.harvardtechnology.com/files/1815/0358/4141/CLH__150W.pdf

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My company is constantly carrying out costings of Switch Mode LED driver designs for streetlighting. Every time, we simply cannot compete with the multinational corporations who can call in massive component cost reductions.

Not only that, but the huge multinational electronics corporations have huge financial backing which enables them to make their own custom Ferrite cores and formers. We simply cannot compete with this, since we cannot afford to do that. We have to use off-the-shelf cores and formers which are inevitably larger than the custom ones that the huge corporations get custom made. This makes our product not only more expensive, but also unfavourably larger in size.

The arena of lighting, in particular, has been absolutely saturated with products. When small companys try to get in, the huge corporations simply carry out tactical price-cutting until the smaller competitor goes out of business. When we place a tender for an order for led streetlight drivers, the large corporations simply tell all the buyers that they will charge 10 Euros less than what we charge.

Would you say that it is now impossible for a small company to enter the  SMPS based LED streetlghting market?       
 

[nctnico]

As a small company you should focus on innovative products and not compete on price. The first step is to get a sales person on board who knows where the market oportunities are and what kind of features customers are willing to spend extra money on.

[dmills]

Yep, undifferentiated low end commodity product is not somewhere any small company can afford to play, economies of scale matter down there.

You are fighting two things, firstly the don't give a shit guys, "Generic LED driver, yawn, I will pick something cheap from the catalogue", plenty of cheap drivers from China and they are NOT all utter junk.

Secondly the guy who does understand TCO "I want the good stuff, Phillips have not let me down yet, they are worth the extra 25% on a part which is not a major cost of the system", getting the sort of reputation that sells to those guys is hard and takes years. They understand that a driver (or even entire lamp head) is a tiny part of the price of the installed street light and that lifetime maintenance can easily swamp everything else, so he is conservative in what he buys.
 
Instead, trade on unique selling points that your customers are actually willing to pay for, Harvard for example seem to have something which I suspect is mesh networking built in to their kit. Software has zero marginal cost, add value here.  I have product with BOM costs in the 10-20% of FG price region, where most of the value is in the code, it is a nice place to be.

I would note that custom magnetics are actually NOT that expensive, by the time you are ordering a few hundred pieces the NRE is starting to become amortised and by the time you hit a few thousand....

Have you actually got relationships with the sales reps and FAEs from your parts suppliers (And I don't mean Mouser/Farnell/Digikey), using full service distribution is a mugs game in production volumes.

Regards, Dan.

[Ice-Tea]

I would note that custom magnetics are actually NOT that expensive, by the time you are ordering a few hundred pieces the NRE is starting to become amortised and by the time you hit a few thousand....

This.

And also the stuff about not bothering if you're just making a 'me too' product.

[Jeroen3]

Would you say that it is now impossible for a small company to enter the  SMPS based LED streetlghting market?

I'd say you just need the right connections to get the job. It's called politics.
Maybe you can offer a small municipality or business park a trial for good PR?

[tggzzz]

I'll echo the other points, and add that your focusing on component cost is probably a red herring.

Most large companies divide themselves internally into autonomous business units. Each business unit will sell its products to any customer (internal or external); the price principally is based on volume and business risk - and the people that negotiate prices.

There's no point in reducing prices on an unreliable product; all that means is that you'll lose money faster. Hence, produce a reliable product, once you have a sales record you will be seen as less of a business risk and will be able to negotiate a lower price.

BTW, what about Plessey Semiconductors; they seem very active in innovative LEDs and lighting.

[IanB]

As such,  why do Harvard compete in the 150W streetlight driver market? They surely will be out-priced at every level?

Price should not be a differentiator in a small volume business model. If you are a small company you need to have unique selling points other than price.

Look at any product space where there are small volume players. There is always something special and different about their products that makes them attractive to customers compared to the high volume market. If a small volume manufacturer is to stay in business they have to come up with those special USPs.

[Nusa]

Harvard Technology is a British company. There are no British Semiconductor fabrication plants in existence. As such, Harvard Technology cannot reap the benefit of component cost reductions like Philips can.     
...
As such,  why do Harvard compete in the 150W streetlight driver market? They surely will be out-priced at every level?           
  They surely  will have to pay more for their electronics components? They have no association with any semiconductor fabrication plant. How do they manage to compete and  sell their products which are pretty much the same spec as their more fortunate competitors?….(or do they not manage to sell their  “like for like” products?)

What's your evidence that they have no association with fab plants, or that their products are even assembled in the UK? Is not the entirety of the EU a single market (at least until Brexit plays out)? There's no significant penalty for dealing with a distributor/fab plant outside of the UK but within the EU, right?

If you really want to know who makes the semiconductors in their products, simply buy some and look.

Do Harvard Technology get a UK government grant to produce  LED streetlight drivers? 

Maybe not a grant (conspiracy theory when suggested without facts), but I suspect that UK government will favor UK companies when purchasing if they are competitive and capable. That's sort of how governments work.

[ocset]

Maybe not a grant (conspiracy theory when suggested without facts), but I suspect that UK government will favor UK companies when purchasing if they are competitive and capable. That's sort of how governments work.

Thankyou for bringing this up...since you have instigated this topic i think its only contributory for me to note the following in relevant  reply to yourself
https://massey276.wixsite.com/ukdecline

..Because in UK there is certainly a total lack of desire to put the UK first.
(i will delete the above website if you wish, but it is a relevant answer to Nusa's kindly contributed comment.)

Is not the entirety of the EU a single market (at least until Brexit plays out)? There's no significant penalty for dealing with a distributor/fab plant outside of the UK but within the EU, right?

I am sorry but i totally disagree with that...the EU is not about an equality of nations at all in my opinion. Its unfortunately naive to believe that the UK is considered anything but an unwanted competitor for business to the major countries  of the EU..in my opinion. (i can, if you  wish, back this up).

If you really want to know who makes the semiconductors in their products, simply buy some and look.

Thanks, you wouldnt believe how heavy , gungy and sticky and damned unpleasant the potting compound is. I started gouging it off, but it was flying all over the place as the "spudger" kept slipping, and  went all over the carpet, so i got told to stop.

Price should not be a differentiator in a small volume business model. If you are a small company you need to have unique selling points other than price.

Thanks, i agree, but with streetlights,  they're  a bit prescriptive, and its difficult to think of any novel variations on theme for them.

BTW, what about Plessey Semiconductors; they seem very active in innovative LEDs and lighting.

https://en.wikipedia.org/wiki/Plessey#Plessey_Semiconductors_Ltd.
Thanks, but Plessey semiconductors dont have any offerings suitable for the LED streetlighting market (not at the moment anyway).
The CamGan LED business that Plessey semi bought has been a "jam tomorrow" business for the last 10 years at the very least......no jam anywhere in sight yet though. "Auger recombination" stands against the   ambitions of CamGan, and still is nowhere near being solved.

[dmills]

Pretty sure I can come up with some things that would be at least possible selling points.

How about adding a pin photodiode or two and actually networking all the units in an area optically by modulating the array itself? Low data rate, but if it means that the lamp either side can report on a failed unit?
Or can report that the optical head efficiency is down and that it needs attention?

How about including local leakage current detection for the incoming and loop out power connections? Being able to report that the cable linking lamp 103 and lamp 104 has been compromised and has 10mA of earth leakage might be good for the preventative maintenance guys?

Given the very high cost of getting a crew out with a cherry picker to fettle these things, there has to be margin in a really good telemetry and status reporting scheme, planned maintenance is always cheaper then doing it as needed?

I don't know, not a streetlight expert, it is for your marketing people to tell your product managers what your customers pain points are, that is kind of their job.

Regards, Dan.

[Howardlong]

In general, I discovered (accidentally) some years ago that USP is the only way to compete if you want to maintain margin.

I do monitor competitive products to mine mostly to roughly determine margins, and occasionally it’s about the technology itself particularly if I see a possible performance benefit I could learn from.

Most of what I learn is from my own product development cycle: I already have the concept, reverse engineering a competitor product for any more than a passing interest in the key parts they’ve used, or a block diagram, I just don’t bother with. Frankly, the amount of time you can spend reverse engineering can far outweigh just figuring it out yourself, particularly if there’s software involved.

Thankfully I haven’t needed to lift someting out of epoxy, but bearing in mind your market I would seriously encourage you to do so, if only to satisfy your own curiosity.

For the volumes these folk are doing, and the size of their outfit, they will likely be manufacturing in, and using parts from the far east. The parts will not necessarily be in the catalogues of RS, Farnell, Mouser or Digikey. They will have their own people on the ground there benefitting from the secondary market of no-name and generic parts, organising and managing cheap manufacturing and, this is key, understanding the culture.

I don’t necessarily buy that Philips get (or even use) NXP parts on the cheap, certainly not to the extent where it would be make or break for a competitive product wih USP. Sure, there may be quantity discounts, but they would be open to anyone.

[IanB]

They recently installed LED street lights in our office parking lot. They come on at dusk, as you would expect, but only with a low level of illumination. However they have motion detectors and whenever they detect movement nearby they switch temporarily to a much brighter level. That's an example of intelligent thinking. The LED emitters will run cooler, last longer, and use less power.

[dmills]

Matches my experience.

Getting too hung up on rev engineering is a mugs game, there is **very** seldom much secret sauce, and if you spend time copying what is already out there you are not developing the next thing.

De-encapsulate for a quick look to see if there is anything really clever (Seldom!), then design something cool of your own.

Regards, Dan.

[nctnico]

Maybe not a grant (conspiracy theory when suggested without facts), but I suspect that UK government will favor UK companies when purchasing if they are competitive and capable. That's sort of how governments work.

Thankyou for bringing this up...since you have instigated this topic i think its only contributory for me to note the following in relevant  reply to yourself
https://massey276.wixsite.com/ukdecline

..Because in UK there is certainly a total lack of desire to put the UK first.
(i will delete the above website if you wish, but it is a relevant answer to Nusa's kindly contributed comment.)

The epic fail in that reasoning is the misguided idea you can make labour intensive products cheap in the UK (or anywhere else in Europe). Anyone who says they want to bring manufacturing back to a country is a complete and utter idiot (blond hair or not).

The only way to compete is to be smarter and more innovative. As Howardlong wrote: Philips is able to leverage cheap labour in China without compromising the quality. You have a chance if you design a product in a way that it is cheaper to produce in Europe OR design a product which offers better value for money despite the higher price.

[dmills]

You have a chance if you design a product in a way that it is cheaper to produce in Europe OR design a product which offers better value for money despite the higher price.

the second is **FAR** easier to do in general.

Regards, Dan.

[Kjelt]

Phillips is a Dutch company, and has a close association with NXP semiconductors, -as such Phillips can reap the benefits of massive component cost reduction

Not true, they are seperate companies and if you ever tore down a driver you would see there is no NXP microcontroller in it. They do however produce a lot of drivers so they can negotiate good prices for components.
However it is a huge company and all the managers, secretaries, buildings and other overhead need to be paid. That is probably why there drivers are sold at three times the cost unable to compete on price with chinese products.
So there is your answer, a small company without much overhead can compete but not if that company does not have the knowledge and/or quality products the consumers expect.

Not only that, but the huge multinational electronics corporations have huge financial backing which enables them to make their own custom Ferrite cores and formers.

Not entirely true, a lot of them are from WE but if you need a special non existing item they can make it for you but ofcourse that will only be viable at huge quantities. If you are starting out and don't have large sales that is your main issue, how to get marketing and sales up.

We simply cannot compete with this, since we cannot afford to do that. We have to use off-the-shelf cores and formers which are inevitably larger than the custom ones that the huge corporations get custom made. This makes our product not only more expensive, but also unfavourably larger in size.

If WE has made such a product it would be strange if you could not buy it. But you have to make contact and start negotiations, whining from the side does not result in anything. Asking for 100 samples promising sales in the 100 thousands would get you started.

When we place a tender for an order for led streetlight drivers, the large corporations simply tell all the buyers that they will charge 10 Euros less than what we charge.

They cannot keep that up. So keep on going someday they have to make a profit and as said before to keep a huge company running costs way much more money than a small company.

Would you say that it is now impossible for a small company to enter the  SMPS based LED market

No but to be honest having read many of your topics about failures in the field, unknown sw developers and continuing problems, my guess is that your company has way larger problems on its own than from competitors.
It is easy to sell German cars that have a good reputation, it is very hard to sell Russian cars with a bad reputation, it is extremely hard to sell an unknown brand car without any reputation 

[ocset]

That is probably why there drivers are sold at three times the cost unable to compete on price with chinese products.

Thanks but that is incorrect....Phillips is the biggest provider of UK streetlight drivers..by a long way.
British Local Government literally make out specs which they have already matched to Phillips Xitanium drivers....so that Phillips drivers get  purchased.

That is probably why there drivers are sold at three times the cost unable to compete on price with chinese products.

I cannot understand how Chinese products can compete in the EU...there are enormous tariffs imposed on Chinese products into the EU.

Not true, they are seperate companies and if you ever tore down a driver you would see there is no NXP microcontroller in it.

As you know, NXP makes far more than just microcontrollers.

The epic fail in that reasoning is the misguided idea you can make labour intensive products cheap in the UK (or anywhere else in Europe). Anyone who says they want to bring manufacturing back to a country is a complete and utter idiot (blond hair or not).

..Thanks,  that is classic "Big corporation" speak.
It is essential for any country to be able to  design and make the vast majority of its own stuff.....else that country will become incapable and stagnate and die off.....like the UK is doing...just look at us....
https://massey276.wixsite.com/ukdecline
..the UK is the biggest "user" of Chinese imports....look where its gotten us!!!
We're not down and out yet, but the rate of our descent  down toward  the third world is phenominal.
We're plummeting and will be dead ducks soon....within a decade.

[IanB]

..the UK is the biggest "user" of Chinese imports....look where its gotten us!!!
We're not down and out yet, but the rate of our descent  down toward  the third world is phenominal.
We're plummeting and will be dead ducks soon....within a decade.

It's not the "making" step where the value is added, it's the "designing" step. The UK and other Western countries can compete very well in areas like good design, good service, good support, and so on.

Case in point, designing streetlight drivers that are reliable, that work in adverse and real world conditions, that do not fail unexpectedly and let the customer down... 

[Benta]

Let's get back to basics.
From what I read, you're in a small/medium sized company making LED drivers for street lamps. So who are your customers?
Certainly not the public services responsible for street lamps, they want a complete lamp.

Do you offer at least the complete head unit with LEDs, optics, housing etc.? It doesn't seems so.

You are uncompetitive in every way against "corporations" that offer complete lighting solutions.

My suggestion: go for architectural lighting. Cooperate with someone who knows about this. And someone who knows about LEDs. And someone who knows about optics. This is the kind of low-volume, high profit market where you can excel.

And stop whining about big companies, EU, Brexit etc. Just go for it.

[coppice]

The epic fail in that reasoning is the misguided idea you can make labour intensive products cheap in the UK (or anywhere else in Europe). Anyone who says they want to bring manufacturing back to a country is a complete and utter idiot (blond hair or not).

You can bring manufacturing back to Europe or America. What you can't do is bring manufacturing jobs back to Europe or America.

When jobs moved from Europe and America to Asia the choice was not whether to keep or export the jobs. The jobs were always going to go. The question was whether it was cheaper to automate and keep production local, or keep the work manual, and use cheaper workers. In most cases the low up front costs of using cheap labour won out. Very little work is inherently labour intensive. China is going through similar changes now. As labour costs have risen in China large amounts of assembly work has been taken from Chinese manual workers. Some has been automated and kept in China. Some has moved to Bangladesh (mostly clothing), Vietnam or Indonesia.

Once things are highly automated a factory can be sited wherever the best tax and finance deals exist. That could be anywhere in the world.

[rstofer]

There's more to buying stuff than price.  TCO is the real incentive and it is generally unknowable for a new product.  Product warranty is worthless when the cost of labor swamps the cost of material.  Unless the warranty covers labor, it is meaningless.

When I was looking to buy 3 million feet of CAT 3 cable (back when), AT&T cost a lot more than the generic equivalent.  The IT director got right to the point:  Nobody ever got fired for buying AT&T.  The implication was that buying a known quality product, especially if it subsequently failed (it didn't), would do a lot less damage to a career (mine) than buying generic could ever save.

Same story when buying from IBM or any other name brand.

There's the entire subject of game theory that applies to decision making:

Consider a 2x2 matrix with the two rows labels "Buy AT&T" and "Buy Generic".  Label the two columns "Project Success" and "Project Fail" and fill in some kind of reward or penalty.
Maybe "Buy AT&T" with "Project Success" gives +5 - not a great score but  passing.  After all, you bought the most expensive material, it should be a success.  Now, let's move to "Buy Generic" and "Project Success" - it still might just be a 5 or maybe a little more but basically, the job is done and there is no post-mortem.  The savings are forgotten!  And you will forever have to fight with IT when they can't get a network card to work.  It's not even the cable's fault but it will always be the first thing on their minds.  Plan to support the "Buy Generic" decision forever!

Now let's move to "Buy AT&T" and "Project Fails" - the score is probably -5, not good but not necessarily a career ender.  You bought the best and it wasn't good enough!  But should you wind up in "Buy Generic" and "Project Fails", you will incur the maximum penalty.  Not only did you fail, you were too stupid to buy quality material.  Your career is toast!

Just sayin'...

[dmills]

British Local Government literally make out specs which they have already matched to Phillips Xitanium drivers....so that Phillips drivers get  purchased.

That is called an architects specification, very common and most companies publish them for their products.

"Product shall be a 150W driver 92% efficient in a package measuring xmm by ymm, with mounting holes on zmm centres, product shall support... " Basically the specifier decides what they want to use then copies the paragraph from the back of the product datasheet into the tender document.

Lazy? Possibly, but it means that I as a designer can meet a requirement to tender while still getting the stuff that I trust.

Just means that you have to convince the guy writing the spec that he wants to put your architects spec on there instead of the Philips one.

The last thing you want when required to tender for technical things is to write the thing so loosely that you get responses using different vendors kit, makes tender analysis a pain and "Best Value" something that often ends up in court, much better to make damn sure that only one OEMs stuff fits. If you are being really sneaky you make damn sure that only your preferred supplier is a dealer for that OEM....

Incidentally, do this right and good scotch, expensive restaurants and free holidays come your way, funny how that happens.

Regards, Dan(Who was once involved in tendering parts of a £5M job).

[coppice]

Incidentally, do this right and good scotch, expensive restaurants and free holidays come your way, funny how that happens.

And don't forget your children go to public school. 

[calexanian]

I concur with most of the responses. Forget cost. You can't compete at first. What you need to do is offer something the current companies do not offer. Listen to the customers. Let them tell you what they need. When something is needed to fix a problem in the field, or make somebodies life easier cost is less of a concern. Also think about value added. Can you make your easier to install, more efficient, longer lived, easier to service, etc etc. Do you even offer service. Many large companies do not. If you plan on selling in your geographical area set up a post box they can send units in for repair if required, or loaner units available for trade or temporary use. That goes a long way.

[james_s]

I think the window of opportunity has passed, unless you can come up with something really innovative that does something none of the other products on the market do. I've done a couple of side projects for the streetlighting industry and we have not even considered building the drivers, the market is flooded with them. Every lighting company out that does anything related to streetlights already has luminaires and drivers on the market. Most of them mature products that perform as advertised.

As a small company you have to find and fill a niche.