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I agree with the observation of how things are (high on outsourcing, low on tech & talent). I do disagree with how things got there. In a competitive market, w

I agree with the observation of how things are (high on outsourcing, low on tech & talent). I do disagree with how things got there. In a competitive market, when you outsource, you get immediate costs savings. If your competitor outsourced more things than you have, you'll be at a financial disadvantage for some amount of time before the "innovation debt" catches up. That can be decades - the quality of the outsourced parts can remain equivalent or superior for quite a while (or even perpetually, in case of fuses). A similar thing happens with companies that do actually want to innovate. All of them are spending all available resources competing with each other, that the R&D for big tech projects simply cannot happen without external intervention or external funding. Historically, none of the well-staffed and well-funded research labs have been funded by companies whose products are a commodity.

kingsuper20 5y ago
>In a competitive market, when you outsource, you get immediate costs savings. That's a good point. In addition, there's the (mostly) inevitable tendency for economies of scale to push for outsourcing. Several companies I've worked for shut down their board shops while I was there, there's just no way to practically keep up with that. Fabs got bigger. Specialty sheet metal shops can pound out the work faster than you can. One related thing I've noticed is that older companies (dunno about places that make exclusively software) are never well equipped to deal with perpetually cheaper products with smaller margins. As a side note, I suspect that the real magic in making toasters, if all done in-house and using simple inputs, is to design the manufacturing facility. The toaster itself is relatively simple. The Rouge must really have been something.
- genericone 5y ago
  Well for those reasons and more, every consumer hardware is about design for manufacturability these days. If you cant get the manufacturing right, scaling doesn't happen. Redesign will be costly or impossible without having those design methodologies front and center at the start. If your design is only possible with CNC, then say goodbye to the larger market.
  - kingsuper20 5y ago
    I agree with you ('consumer' being the keyword if it's meant to mean 'high volume') but I wonder how a company digs it's way out of the situation defined in the thread's article. Is a company intended to become better at toaster components? push the component complexity down to a more basic level and then have more bespoke manufacturing done? or to become a manufacturer/final assembler and all that that really implies? The real answer I guess is to command that your outsourced engineers design in some IoT toaster sorcery that allows you to sell toaster information to third parties.
    - Scene_Cast2 5y ago
      I've seen a couple of ways industries change on this. One is when a funded startup comes in and brings the necessary progress. Another is when the industry forms a group and tasks a neutral third party to carry out the R&D.
tremon 5y ago
In a competitive market, when you outsource, you get immediate costs savings Isn't that just a different phrasing of what the article means by "in the longer term, [shareholders] are not strategically interested in the company, because if the company doesn’t do well, they will invest in another company. And so a lot of this stuff is actually driven by shareholders and consultancies"? Or are you arguing that it is competition that drives outsourcing, not public ownership? the R&D for big tech projects simply cannot happen without external intervention or external funding I think you may have a point there: the KPN Neherlab mentioned in the article never was KPN's. It was part of PTT, the Dutch national post & telecommunications service. PTT was rebranded KPN when it was privatized, and KPN subsequently closed the Neherlab.
- Scene_Cast2 5y ago
  I meant that selling a gadget at +10% price compared to competition will immediately tank sales - unless there is a tangible benefit to in-house dev as well as the customer being aware of this benefit. This is regardless of whether the company is public or not.

kingsuper20 5y ago

>In a competitive market, when you outsource, you get immediate costs savings. That's a good point. In addition, there's the (mostly) inevitable tendency for economies of scale to push for outsourcing. Several companies I've worked for shut down their board shops while I was there, there's just no way to practically keep up with that. Fabs got bigger. Specialty sheet metal shops can pound out the work faster than you can. One related thing I've noticed is that older companies (dunno about places that make exclusively software) are never well equipped to deal with perpetually cheaper products with smaller margins. As a side note, I suspect that the real magic in making toasters, if all done in-house and using simple inputs, is to design the manufacturing facility. The toaster itself is relatively simple. The Rouge must really have been something.

genericone 5y ago
Well for those reasons and more, every consumer hardware is about design for manufacturability these days. If you cant get the manufacturing right, scaling doesn't happen. Redesign will be costly or impossible without having those design methodologies front and center at the start. If your design is only possible with CNC, then say goodbye to the larger market.
- kingsuper20 5y ago
  I agree with you ('consumer' being the keyword if it's meant to mean 'high volume') but I wonder how a company digs it's way out of the situation defined in the thread's article. Is a company intended to become better at toaster components? push the component complexity down to a more basic level and then have more bespoke manufacturing done? or to become a manufacturer/final assembler and all that that really implies? The real answer I guess is to command that your outsourced engineers design in some IoT toaster sorcery that allows you to sell toaster information to third parties.
  - Scene_Cast2 5y ago
    I've seen a couple of ways industries change on this. One is when a funded startup comes in and brings the necessary progress. Another is when the industry forms a group and tasks a neutral third party to carry out the R&D.

tremon 5y ago

In a competitive market, when you outsource, you get immediate costs savings Isn't that just a different phrasing of what the article means by "in the longer term, [shareholders] are not strategically interested in the company, because if the company doesn’t do well, they will invest in another company. And so a lot of this stuff is actually driven by shareholders and consultancies"? Or are you arguing that it is competition that drives outsourcing, not public ownership? the R&D for big tech projects simply cannot happen without external intervention or external funding I think you may have a point there: the KPN Neherlab mentioned in the article never was KPN's. It was part of PTT, the Dutch national post & telecommunications service. PTT was rebranded KPN when it was privatized, and KPN subsequently closed the Neherlab.

Scene_Cast2 5y ago
I meant that selling a gadget at +10% price compared to competition will immediately tank sales - unless there is a tangible benefit to in-house dev as well as the customer being aware of this benefit. This is regardless of whether the company is public or not.