Make or buy Life cycle cost of ZigBee® solution Ørjan Nottveit, Radiocrafts AS Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Agenda ¾Different HW solution ¾True cost of a ZigBee HW solution ¾LCC (Life cycle cost) ¾RISK ¾Business solution ¾Key factors for choice Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Different HW platforms ¾ Single chip solution (SoC) ¾ Dual chip solution (MCU + transceiver) ¾ Module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Myth Price USD Single chip Dual chip Module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved What is the true cost ¾ Total solution = LCC cost ¾ Chip(s) ¾ Supporting components ¾ Crystal(s), Balun, Shielding Can,++ ¾ Design cost ¾ Test cost/Yield loss cost ¾ Supply chain cost ¾ Design support cost ¾ Financial cost/risk Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved What is the true component cost ¾ Chip (single or two) ¾ Two crystals ¾ Antenna ¾ Balun ¾ Shield can ¾ PCB, Passive components ¾ Might need EEPROM, Flash, PA, RF switches, filter, logic… Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Design cost ¾ 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. ¾ If you will produce 50k this will add $3 per end product Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Test cost ¾ You need to test to check for failure and monitor critical parameters ¾ Test jig with RF instrumentation ¾ Automatic test program to reduce test time ¾ Total investment estimated to $100k ¾ Test time ¾ That equals $2 per end product for a 50k volume Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved ETSI/FCC qualification ¾ ETSI certification for CE marking ¾R&TTE directive 1999/5/EC. ¾ETSI EN 300 440, EN 300 328 ¾ERC RECOMMENDATION 70-03 ¾ FCC require formal certification ¾Tests must be done at FCC approved lab ¾ Time-consuming and costly Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Good yield is crucial for low cost ¾Example ¾99% yield ¾1 out of 100 must be analyzed and repaired= $50 ¾Increased cost by 50 cent Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Supply chain cost ¾Compare prices and negotiate prices with many vendors ¾Purchasing and logistics for 1 vs. >30 components ¾125h @ $120 = $15k= 30 cents per product ¾Shipping, insurance and payment fee Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Design support ¾Component change notification ¾New suppliers ¾Yield changes ¾Support cost ¾15hours*11 months=165 hours ¾165 hours*$120= 40 cents per end-product Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved How about that myth again.. Price USD Test Test Design Design BOM Design BOM Single chip Dual chip Module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Cost @ 1k Chip Module BOM ~$ 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 Incl. RF instrument $ 100 000 0 Total per device(1k) $ 283.3 $ 32.2 Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Cost vs. volume Chip based $100 Module $10 $1 1k 10k 100k 1M 10M Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Making your own module ¾ZigBee functionality to more than ONE product ¾Ending up making a company module Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved RISK ¾RISK of not selecting the “best” chip ¾RISK of being too late in the market ¾The RISK of upfront investment ¾The RISK of poor RF performance Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Future proof ¾A new and cheaper chip is available before your project ended ¾Your chosen chip supplier is no longer competitive Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Cost of upfront investments ¾$250k upfront for design, sourcing, test development, prototype series ¾This gives a monthly cost of $1000 Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Time to market ¾Making a chip solution will take 6-9 months longer than buying a module. ¾If you are 6 months behind your competition, will that matter? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Time to profit Profit Module Time Chip solution Loss Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved A good RF solution ¾A design that works might not be good enough ¾Compliance to standard ¾Range Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Other business options ¾Start with module for low and medium volumes and optimize cost for high volume ¾Customized modules ¾Licensing of IP ¾Making a chip based solution Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Licensing IP ¾Proven design ¾Small adjustment needed to adapt to new PCB ¾No SW change when going from medium volume to large volume ¾No large investment in development Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Licensing IP 100 Module Single chip solution Licensing 10 1 100 1k 10k 100k 1M 10M Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Key factors in choice ¾Do you have the competence? ¾Do you have the instrumentation? ¾What is your time schedule? ¾What is your volume? ¾Do you have the money to take financial RISK? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Competence ¾RF resources are hard to find ¾Hiring RF consultants is expensive ¾Utilizing unused internal resources is a good option, if they exist Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Instrumentation ¾RF instruments are expensive ¾RF signal generator ¾RF spectrum analyzer ¾RF network analyzer Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Time schedule ¾If you need to release your product within one year, you should go with module ¾If you shall enter the market in 18 months you could evaluate a chip solution Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved What is your volume ¾ <50k – Buy module ¾ >500k – Chip design or licensing ¾ 50k-500k – Depends on other factors Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Summary ¾Life cycle cost vs. chip ¾RISK ¾Business model ¾Factor that influence choice Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Using ZigBee has never been easier than it is today! Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved Questions? Radiocrafts Embedded Wireless Solutions Copyright © 2007 All rights reserved
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