Strategically Blogging

What’s going on with CREE?

Martin Shih 06/26/2015

Cree has announced that the company will restructure its LED business in order to reduce overhead and to improve the business’s cost structure in the future.

Turn-Key Connected Lighting Solutions May Not Be Appropriate For All

Shonika Vijay 06/26/2015

This blog is another piece on the connected lighting market. To see our previous articles on the connected lighting market refer to: 'With More LED Street Lights Comes More Connected Lighting,' 'Lighting Industry: 2014 in Review and What to Expect Next,' and 'Let's Talk Controls'.

Key takeaways from Guangzhou International Lighting Exhibition - Pricing, pricing and pricing!

Martin Shih 06/10/2015

This week we attended Guangzhou Light Exhibition, the biggest lighting fair in China. There were more than 3,000 booths and full-three-day conferences. 

CSP: Big Potential in a Tiny Package?

Stephanie Pruitt 06/03/2015

Chip Scale Packaging (CSP), originally from the semiconductor industry, continues to make headlines in the LED industry.

Sales of Laser Pico Projectors Projected Up

Allen Nogee 06/03/2015

Back in 2009, LG released the first pico projector smartphone combination, the LG eXpo. This smartphone was sold by AT&T and the pico projector was sold as an add-on for an additional $180. 

On photonics executives, complexity, and margins

By Tom Hausken
Last month's Photonics West went well again. People were in a good mood, including the executives at SPIE’s forum , where I moderated. One topic was “managing complexity.” It sounds like a buzzword, until you think about it.

Take Coherent. It has to manage different kinds of lasers (excimer, CO2, solid-state, diode), selling to different end-user sectors (semiconductors, medical, university research, etc.), in different regions and through different types of sales channels. Edmund Optics is another example. It’s catalog has 26,000 optics and is available in 10 languages. Just managing that complexity is a task. While there are advantages to scale, it also can create some inefficiencies, compared to a small company with a single product and a few customers.


There can be great advantages to complexity. Clayton Christiansen, the Harvard business guru (he coined “disruptive technologies”), says that the margin in the supply chain goes to where there is the greatest complexity . Google, Apple, and Cisco all manage a lot of the complexity that is in their supply chain. Suppliers of standardized components do not. When specifications are standardized, the customers play the suppliers against each other, and the margin gets razor thin.


Low margin complexity. Sadly, the kind of complexity that our panelists (from Coherent, Edmund Optics, Hamamatsu, IDEX, Jenoptik, Newport, and Trumpf) have to manage is not the high-margin kind. That’s because the customers don’t want to pay to manage that complexity. It’s simply what the suppliers have to do as large companies. In fact, to the extent that the larger suppliers are just federations of smaller business units, a company like Coherent competes with small companies too.


So there you go: larger photonics companies have advantages with their brands and scale efficiencies, but what seemed to be on these executives’ minds was managing the complexity of it all, when they don't get to charge margins for it.


Feb 14, 2012

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