Quote:
Originally Posted by Tom Line
That's the very unfortunate aspect of what is going on with the new speed controls. In the short 2 year time that the Talon came on the market, we saw an upgraded 888 and a price cut of around 50%.
I hope some creative FIRSTer can get involved and bring another competitive product to market. A single-source supplier for such a critical component usually isn't a good thing from a consumer's point of view. Alternatives are important.
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I don't think that's going to happen. The economics just don't work out.
Let's take a look at what would happen if I (yes, me personally) were to try to get into the speed controller market.
Let's say that I haven't found the "killer app" for speed controllers, I just want to make something that's cheap, reliable, fairly linear, small, etc. Basically, I want to clone the new Vic. Maybe I adapt the package to the requests people have made in this thread, but nothing too out of the box.
First of all, I'd have to invest in commercial CAD software. Eagle (ECAD) runs ~$200 per license, and SolidWorks is probably several thousand dollars, without a whole lot of bells and whistles. Now, I can actually start designing. I'd estimate that it would take me about two weeks working part time to get a solid first revision of a speed controller.
Once I've got a first rev ECAD and MechCAD, I send it around to a few friends to take a look at, make revisions, and start to order prototypes. I can get a run of probably 15-20 speed controller boards at something like $300 for the lot (you don't usually pay per board for prototype PCBs, it's essentially a fixed price for a board of a given size of parts). FETs are going to run about $10 per H-bridge, plus annother $15 for other components, assuming we don't put anything too too fancy on the board. Some basic logic chips, LEDs, caps, etc. Now, let's say that I beg some machine time from a local team I'm friends with rather than pay probably ~$1000 for a run of 15 prototype aluminuim enclosures. Still, I have to pay for material, and maybe some tooling, so let's say that that adds annother $150.
I just paid around $825 assuming I make 15 prototype boards and assemble them myself (and not including the price of the CAD software!). This is just a broad estimate, without doing the research, it's my best guess, but in reality the real number could be anywhere between $500 and $1200. That's around $55 per prototype board, assuming $825 total in prototyping costs. Maybe I give these controllers to some teams to run at offseasons, and make updates to the product as requested for the regular season.
Alright, we've just invested some money in prototype speed controllers, now let's take a look at what kinds of costs well incur from the real production run. In order to make any money on these things, I'm going to get them made offshore, and assembled and tested there as well. We can probably get the board costs down to ~$5 a board for a large run, and let's also say we can bring component costs down, to $15 per board. Assembly is probably going to add $2-3 per board, so with board MFG, components, assembly, and testing, let's say that were paying $25 per board. I'd expect VP to be paying something similar, maybe as low as $15 per board, and certainly no higher than $30 per board. Then I have to pay to get the enclosure made. The Vic casings are aluminuim molded, so that means high startup costs, and low unit costs, so I'm not really sure what that would end up costing per unit. I'll just estimate $10 per unit, including ano. None of this includes the probably ~$1500 trip I have to take to make sure all of this stuff is getting made to my specifications.
Let's ship all this stuff over to the US for, let's say, $5 per unit, assuming we don't break the bank for air shipping. We paid about $40 for each unit. Now, we have to pay some guy to assemble the PCB in the casing, and put it in a nice little cardboard box. Maybe that adds annother $5 per unit, maybe a little less. Were looking at a total cost of $45 per unit. Maybe my estimates too high, but I'm guessing even for VP, they must be paying over $30 per unit that they can actually sell.
So, how do we price them then? Well, even if we assume we have a slightly better product in terms of features than VP, we definitely can't price them any higher $60. No one would buy a new unproved product from a completely new company unless they got some really awesome features or a really awesome price. Let's say I price them at $49.99 per unit in the hopes that I can undercut VP.
Ok, I cross my fingers that the things work well (they do), people like the product (they do), that China doesn't screw up (they don't), and I actually get them in stock in time (I also do). These are really big gambles, but let's just roll with it. Let's also say that I am really confident these guys will sell and order a run of 500. That's probably 3-5% of the FRC market. At $45 in costs per, that's $22,500 invested just in inventory. Finally, imagine these guys do sell like the dickens (again, a big gamble), I've just made $2500. That might, just might, be enough to pay off my development costs.
So, after a season of hard work, big investments, big gambles, and a lot of luck, how much dough did I rake in? Well, if I'm lucky, I didn't lose anything. This is for a probably $20,000 investment from my personal savings (not that I have that much!), and hundreds of hours of work.
I could have made probably $1200 from my actual job, coaching swimming, instead of working on this project, and to earn that money, I wouldn't have had to put up such a crazy amount of money with such a crazy amount of risk. I could have probably make even more money if I got a paid technical internship (designing speed controllers for example).
Basically, my point is that the speed controller market requires a lot of capital, and if you don't have the experience and established reputation like VP and CTRE do, it just becomes really, really risky to get a product that works well at a price that could sell well. While I don't agree with all of VP or CTRE's decisions, I don't think they're putting out a bad product or gouging us. They're probably making a big of money off of speed controllers, but I don't blame them. They've got full time engineers to pay, and a business to run. They're selling good, reliable products, and as a consumer, I feel like I'm getting my money's worth.
But anyway, given the costs and risks involved, it doesn't make that much sense to get into the speed controller market at this point.
Edit: Paul beat me.