OEM to ISP Transformation
-
Upload
hkiurca-hong-kong-industry-university-research-collaboration-association -
Category
Business
-
view
171 -
download
1
Transcript of OEM to ISP Transformation
A Presenta*on at Hong Kong Business Associa*on of Hawaii -‐ Hong Kong/China Forum @ Hilton Hawaiian Village, Honolulu, HI (June 4-‐7, 2014)
Prepared by: Al Kwok Member, HKSAR “IP Trading” Working Group Founder, Interna*onal IP Commercializa*on Council
Governor & Co-‐founder, Savantas Policy Ins*tute President, CASPA PRD Chapter Founder, China Interna*onal Intellectual Property Services Former VP & CIPO, NetLogic Microsystems (“NETL”)
OEM to ISP Transformation 1
OEM to ISP (Integrated Service Provider) Transformation: "Turning a
Product Company into a Service One"
June 5, 2014
Evolution of Intangible Assets – U.S. Companies
Knowledge-based Economic Trend
2 June 5, 2014 OEM to ISP Transformation
Mkt. Cap. / Intangible Asset: 1) Apple: ~US$656B / >99% 2) Foxconn: ~US$5B / <20%
The Value Hierarchy (Business Models) Va
lues
/Pro
fit M
argi
ns
Applications (Mkt. & Standards)
System Integration (Archit., …)
Engineering (Design, ODM,..)
Manufacturing (Process, OEM)
Intellectual Property (IP)
Out
sour
cing
Tr
end
Consumer recognition Core competency
Brand Innovation
50%
40%
30%
Presented at Intellectual Property Symposium 2002 in Guangzhou on December 10, 2002
OEM to ISP Transformation 3 June 5, 2014
Value Chain (=> Demand!Supply in Alignment)
IC H/W Platform
IC S/W Platform (API, drivers, etc.)
System Application Platform(s)
Generic Reference Design (w/ other chips)
Differentiated Application Designs
Various Applications/Services
Consumer Markets (End Users)
IC Design houses
System Integrators
Service Providers
For Consumer Electronics Market (Ecosystem)
System Manuf.
Great end-‐to-‐end push-‐pull effect for market scaling thru lifecycles
OEM to ISP Transformation 4 June 5, 2014
Raising Values of a Product (IP is the Core) " Price = Value to Customers =>
Price = Mftg. Costs + Services + Embedded IP License + Brand
" Pre-sale services mean design-win efforts providing solutions to address customers’ problems " This is the best sources of
innovation and ideas for the next-generation products
" Post-sale services mean reducing customers’ costs of ownership, extending the useful lifetime of the product, generating recurring sales
" Embedded IP licensing means the customers can use the product IP for their own product uplifting & differentiations - e.g., “Intel Inside”
" Brand recognition means the customers recognize the product and its maker for superb quality, performance, reliability & services
IIPCC Confidential & Copyright Protected 5 Jan. 19, 2014
Manufacturing Cost (⽣生产成本)
Pre- & Post-Sale Services (售前及售后的服务)
Brand Recognition (品牌认可)
Embedded IP Licensing (隐含IP授权)
Incr
easi
ng V
alue
s ( 提⾼高增值
) Price = Values to Customers
(价格 = 给客户的价值)
>70%PM
~10%PM
>60%PM
>40%PM
Mkt. Cap. / Intangible Asset: 1) Apple: ~US$393B / >99% 2) Foxconn: ~US$3B / <20%
Demand Side
Demand Side
Demand Side
Supply Side
Profitability vs. IP Creation (Competitiveness)
OEM to ISP Transformation 6 June 5, 2014
Manufacturing Cost (⽣生产成本)
Pre- & Post-Sale Services (售前及售后的服务)
Brand Recognition (品牌认可)
Embedded IP Licensing (隐含IP授权)
Incr
easi
ng V
alue
s ( 提⾼高增值
) Price = Values to Customers
(价格 = 给客户的价值)
>70%PM
~10%PM
>60%PM
>40%PM Demand Side
Demand Side
Demand Side
Supply Side
OPEN
OPEN
PRIVATE
Trademarks
Utility Patents, Design Patents, Copyrights…
Trade Secrets (Know-how)
Only <20% Know-how for Patents, the rest kept as Trade Secret
Serv
ice
requ
irem
ents
driv
e H
/W p
latfo
rm im
prov
emen
ts
Existing OEM/ODM business model breaks the IT Business Food Chain without positive feedback from Service to drive next product dev. cycle
Mkt. Cap./Intangible Asset: 1) Apple: ~US$393B / >99% 2) Foxconn: ~US$3B / <20%
Integration vs. Standardization vs. Scalability # Hierarchy of IT Business (from “service to consumers” as the top
of the food-chain with highest Gross Margin then down): Much Higher Value Creation from Demand-side
Service (to consumers) <=> Domestic market (localization) (China market is huge enough) Application (for service) <=> Domestic market (localization) (China centric standards & IPs) Network platform <=> Domestic stds. for local services/appl. International stds. (for global interface)
System Integration <=> Domestic market (localization) vs. Int’l. mkt. (for applications) (China centric standards & IPs vs. Int’l. ones)
S/W & F/W platform <=> Int’l and domestic stds. (global & local) H/W platform <=> International stds. (global IC supplies)
OEM to ISP Transformation 7 June 5, 2014
Mature (must have)
Und
er-d
evel
oped
Ecos
yste
m
Wel
l-dev
elop
ed
Cut-throat Competition
(me too!)
Application
Futuristic (nice to have)
Too Far-out: Not ready,
hype, bubble
Future Growth: Longest-term
Future Growth: Long-term
Future Growth: Short-term
Well-developed infrastructure: consumer market by nature with lower (30->50%) profit margins
Bui
ldin
g in
frast
ruct
ure
&
ecos
yste
m:
Indu
stria
l m
arke
t by
natu
re w
ith h
ighe
r (5
0->7
0%) p
rofit
mar
gins
Market Positioning – Product/Service Focus
OEM to ISP Transformation 8 June 5, 2014
June 5, 2014 OEM to ISP Transformation 9
MxXxxx Ltd.
Case Study: MxXxxx Ltd (2007)(Hong Kong - Shenzhen)
Business/Market Strategies # Business focuses/existing revenue sources
# AMR system (#1 priority) - Towngas as the lead customer # GPS/GPRS logistics service platform (#2 priority) - Nippon Express (for
cargo) & Eternal East (for passenger) as the lead user/customer # Wireless data acquisition system (#3 priority) - existing business
# Business model # Fully-integrated solutions to build long-term service platforms # Scalable service platforms for recurring revenue streams from top-tier
customers. # Add high-value service items to grow revenue/account.
# Customer channel development - mostly by referrals (endorsements) # Top-tier users/customers introduce their partners as new customers
# Follow and support top-tier customers’ expansions for growth # Market expansion -- as led by top-tier customers
# Hong Kong (as the market test site) -> PRD -> Mainland -> Global # Setting up service/data centers in Beijing, Shanghai, Chengdu and Xian
June 5, 2014 OEM to ISP Transformation 10
OEM to ISP Transformation 11 June 5, 2014
AMR System - Architecture (for Towngas)
Gas meter -Low Speed
DTS
GPRS Modem
Control Centre
A/D Converter
Commercial & Industrial (C&I) Users
Domestic
Household
Gas meter -High Speed
MS/RMS CMS
GBS
Mid-way collector
1X
20 X
240 X
2Y
Y
Y 240 X
: Items currently supplied by MxXxxx
DTS : Item to be supplied by MxXxxx : Items to be integrated
Billing
Customer service
Resource Planning
Marketing IVRS
Towngas existing internal system
GPRS
IVRS = Interactive Voice Response system
CBS CBS
RF
OEM to ISP Transformation 12 June 5, 2014
AMR System - Milestones
GBS
Jan 2005
CBS CMS
Control Center
Sep. 2008
Jan 2006
RMS
Dec. 2008
Nov. 2008 Adoption
into 60+ JVs in China
Sept. 2005
Dec. 2006
MxXxxx Product/Technology Roadmap
DTS *
Jan. 2009
R/T Data Analyses
Billing Customer services, IVRS, Gas supply planning
Values to Towngas
* = under development Full system integration capability for any AMR system in all flow-based applications incl. gas
AMR System - Realized Benefits to Towngas Direct Cost Reduction Benefits # Monthly data transmission charge (GPRS vs. phone line)
# HK$20 vs. HK$148 # Installation cost reduction (w/o digging, drilling & cabling)
# HK$200 vs. over HK$5,000 # Monthly staff cost reduction for collecting meter reading manually
# HK$2.4M (over 200 persons @ $12K/mon) CRM, Productivity & Efficiency Benefits # Enable real-time gas usage monitoring, down to 1 minute interval,
for CRM, ERP and gas supply/distribution/delivery planning # Enable proactive CRM to retain high-value customers # Enable accurate billing based on real data instead of estimates # Connectivity in all situations regardless physical accessibility
June 5, 2014 OEM to ISP Transformation 13
Service = Highest-level Value/IP Integration
MyCard Confidential 9August 1, 2008
GPS/GPRS Logistics Service Platform - System Architecture
GPRS
Logistics & PassengerLogistics & Passenger
Logistics Co.
ForwardingAgents
SecurityMonitoring &
Alerts
Customer-specified Call
Services
Functions of Control/Call/Data Centers & Service Platform
Customs
InsuranceCo./ Bank -Asset Mgt.
Real-timeLocationTracking
Coordination,Security Checks
& Alerts
Data analyses / Bus.Intel., Map Database &
User Web Portal
CallCall
CenterCenterControlControl
CenterCenterData Center /Data Center /
Access PlatformAccess Platform
Data Storage &Archives
Map Database Mgmt.
User Access Control &Portal Management
GUI & Templates
EmergencyAlerts
Senders &Receivers
Transformation from Product to Service: OEM -> ODM(S/S) -> IDM(D/S) -> ISP(D/S)
OEM to ISP Transformation 14 June 5, 2014
Supply-side OEM = Original Equipment Manufacturers ODM = Original Design Manufacturers
---- A Big Gap In-between ----
Demand-side IDM = Integrated Design Manufacturers ISP = Integrated Service Providers
OEM to ISP Transformation 15 June 5, 2014
GPS/GPRS Log. Service Plat. – Network
Customers monitor vehicle activities on MxXxxx web-portal
Hutchison
PCCW (Sunday)
China Telecom
MxXxxx
Sinotrans
China Mobile
Inte
rnet
4M+ lease line
10M lease line
MxXxxx capabilities: • Web ASP services • Map database • Data center
In Hong Kong In Mainland
Wireless network
Wireless network
Wired & wireless network
Wired network
Wired network
OEM to ISP Transformation 16 June 5, 2014
GPS/GPRS Log. Service Plat. - Milestones
Launch in HK - Single-SIM
2nd-gen. Device w/ Additional Interfaces
Dual-SIM Device
Cross-border Logistics Co.
Cross-border Passenger Vehicles
Partnership with TC - the largest smartcard payment service provider for bus in China
90 cities in China with 98,000 bus
Overseas markets
Aug. 2004
Mar. 2006
Dec. 2007
Aug. 2008
Oct. 2008
Jan. 2010
Total Solution to Customers - Fully integrated System
MxXxxx Service/Technology Roadmap
Market Development
Local Logistics Co.
Full system integration capability to send other device data thru GPRS
Eternal East as the lead customer
GPS/GPRS LSP - Realized Benefits to Users Direct Cost Reduction Benefits # Saving on fuel consumption: $4,000 estimated vs. $220 for a monthly
service fee to MxXxxx $ As reported on a newspaper, a saving of HK$120,000 in fuel expense for 30
trucks on monthly basis, with the assistance of MxXxxx’s fuel consumption report
# Saving on toll expenses: $3,360 estimated vs. $220 for a monthly service fee to MxXxxx
$ Testimony by CEO of Eternal East: a potential saving of HK$3,360 in toll expenses for each coach on monthly basis, with the help of MxXxxx’s specified location report
CRM, Productivity & Efficiency Benefits # Has become a mandatory requirement (de-facto standard) for cross-
border cargo logistics by the largest forward agents in HK - MxXxxx is the sole source!
# Intelligent fleet management through “Fixed Route Control” or “Fixed Area Control” with SMS/e-mail alerts on rule violations for proper supervision
# Effective security measure against robbery/theft with the on-line SOS button # Ability to real-time coordinate vehicles for optimized job assignments
June 5, 2014 OEM to ISP Transformation 17
Differentiating Advantages & Strategies # “Full System Integration” solutions
# End-to-end proprietary solution from “H/W+F/W+Interface S/W” device platform to “Application S/W + User Interface (GUI & templates)” IT service platform
# Embedded through customization into customers’ operation systems as an integral part of its daily operation - hard to replace
# Becoming de-facto standards with on-going customer driven improvement cycles once every 3 months
# Comprehensive core competency for location-based total-solution service capability (“Entry Barrier”)
# “Full System Integration” know-how endorsed by lead customers # Proprietary map database system customizable to cust. needs
and capable of fast search (benchmarked as the best by PCCW) # Proprietary wireless transmission evaluation platform to ensure
proper optimization for high-reliability data transmission # Data center and call center capabilities to support customers’
needs for “Total Solutions”
June 5, 2014 OEM to ISP Transformation 18
Diff. Advantages & Strategies – Cont. # Close collaborations with lead customers/users
# For wireless real-time flow-based intelligent-control total-solution # Towngas - AMR “total system” solution development
# For location-based real-time intelligent logistics managmt. system # Nippon Express and SinoTrans - cargo logistics GPS/GPRS tracking # Eternal East - passenger logistics GPS/GPRS tracking # Tianjin IC Card Public Network System - integrating GPS/GPRS
tracking with smartcard (RFID) applications
# Business connections and leverage: # Being the Shenzhen base of National Engineering R&D Center
for Mobile Communications - a market-leader making platform! # pre-approved authority to pilot-test in new frequency spectrum -- 1st
mover advantage with >1 year’s lead # Attractive platform to team up with the best device (H/W) providers
# Strategic partnership with leading network service providers in China: China Mobile, China Telecom and Sinotrans in Mainland; Hutchison and PCCW in HK
June 5, 2014 OEM to ISP Transformation 19
Business/Technology Developmt. Roadmap # Comprehensive Business Intelligence (BI) enabling
capabilities as core strategy # 1st stage (present status): GPS/GPRS
# For “real-time” (updating) location-based service platform for time/mission critical applications
# Generation of appropriate management reports # 2nd stage: GPS/GPRS + RFID
# RFID: add real-time item tracking capabilities # For Location-based item-tracking service platform for Item-based
logistics management and BI services # 3rd stage: GPS/GPRS + RFID + environmental sensor
technologies # Sensors: add real-time environmental (temp., humidity, pressure,
etc.) monitoring capabilities # For high-end high-profit comprehensive critical-item tracking and
logistics management services
June 5, 2014 OEM to ISP Transformation 20
June 5, 2014 OEM to ISP Transformation 21
MxXxxx Ltd.
Looking Ahead
Methodology for “CRE + Con*nuing Innova*on”
Lead Customers’ Requirements => 2nd G => 3rd G =>…
Differentiating Value Creations => 2nd G => 3rd G =>…
Business Model => 2nd G => 3rd G =>…
Service/Product Roadmap => 2nd G => 3rd G =>…
Application/Technology Roadmap => 2nd G => 3rd G =>…
IP Portfolio Development => 2nd G => 3rd G =>… The next innovation ideas come from customers (CRE) & “Stress Tests” identifying (1) The weak-links in product design & performance and scalability (2) System (architecture) integrity and scalability (elasticity) issues (3) The bottlenecks for scalability (technology and manufacturability roadmap)
Close collaboration between the customer (CRE) and the vendor Mission-&-Time Critical Requirements along Demand-chain
OEM to ISP Transformation 22 June 5, 2014
Strategies in the “Cloud” & IP Protection Barriers in Cloud Computing era against copycats # Business Model – Service-franchising is the best
# Contractual framework in favor of the franchisor.
# Business/operation process – proper SCM # Close-loop fully-traceable certified process is the best
# Network system integration # Real-time monitor and surveillance is the best
# System integration - PaaS # Proprietary firmware as trade secrets
# Software - SaaS # No source code disclosure is the best
# Hardware - ASIC # Anti reverse-engineering practice is the best
OEM to ISP Transformation 23 June 5, 2014
Key Advantages of HK for Business As stated by international business executives why they pick HK for
doing business # International heritages and appeal
# International Business Hub – no visa controls for businessmen # Foreign employees – can bring in engineers from India and Mainland
# International Financial Centre – no currency exchange controls # Pro-business & pro-free-market-economy environment
# A World’s Freest Economy # Little government interferences – a “hands-off” & “behind-the-scene” policy
# A Free and Open Society – open book for rules of the game # Anti-corruption is the norm – relatively equal plain field for all!
# Accountable Government – has a civic process to review and criticize # Open and cost-effective legal system
# The Rule of Law # Based on well-familiar British Common Law
# International Arbitration and Dispute Resolution Centre # Update Arbitration Law – autonomy to establish new ones if needed # Available domain expertise from international channels
June 5, 2014 OEM to ISP Transformation 24