Article: How to Compete With China in Product Development

Note: -This is an Article on Low Cost Product Development.

1. Reduce cost of Hardware by focusing and spending time on Design

Most of the standard designs available online do not focus on component cost. By spending time on good hardware design and component selection, it is possible to reduce the total cost of hardware by up to 40%.

2. Develop knowledge based products

Knowledge based products rely heavily on the software for providing most of the value of the product. Value here means value to end user.Now all product cost consists of Hardware cost, and cost of developing software. Cost of development is usually amortized over the lifecycle of the product. If hardware cost can be reduced to less than 30% of the total cost of product, it is possible to develop low cost products. This is because, majority of the product cost is software, and this is where India is very cost competitive.

3. Include a after sales service model

After sales service model in terms of updates etc will help make products competitive. Basically, the hardware should have a long lifecycle. Monetization of the product can be spread over this long lifecycle. This means updates are software updates, where again India is very cost competitive.

4. Low Cost Low volume product development

This model is very useful for Startups, where large volume is not possible initially, due to lack of demand. This also reduces cost of inventory. The only way to do this is focus on Design.

5. Variety of products, which then develop own eco system

Manufacturing countries are successful because they manufacture a large variety of products.This is important because it creates a eco system useful for all. So everybody need not make everything from scratch. If this eco system is not available, off the shelf products become very costly, and so cannot be used in end products. This is the scene in India today.This has to change.

6. Create awareness about products and their competitiveness

There is a perception that Indian products will be far more expensive than other countries, and so investors shy away from investing in Hardware startups. Along with developing world class products which are cost competitive, it is important to change this perception.

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