[sdiy] Korg shows us how to sell more synths for less and make more money

[cheater00 .]

If you still haven't seen it, Korg have released their first true modular:

http://www.synthtopia.com/content/2013/11/04/korg-littlebits-synth-kit-lets-you-snap-together-a-modular-synthesizer/

So far, Korg have been insanely successful in every type of synth gear
they made. It's likely a good idea to sit down and think about what
makes them so popular and so successful. Just saying "economy of
scale" is a cop-out; there's much more to learn than "make more of a
thing".

What's interesting is the fact that they've got a littlebits-style
modular, likely in the $150 price range - the most expensive thing on
http://littlebits.cc is $199, so it wouldn't make sense for Korg to
position themselves higher than that. I'm assuming Korg will aim for
the same value/price ratio as littlebits. And that littlebits stuff is
so insanely overpriced - I mean they have a module that's literally
just a LED and it costs $14. Even including the custom connector they
use, they're still pocketing 90% of the price of that thing. So if
Korg can go that low and still make mad markup like that - and I
wouldn't expect them to do any less - it just shows where the synth
market might be going if Korg keep this up. I think they've really got
a tight hold on the niche that everyone else overlooked: the niche of
"don't include the unnecessary bits that eat most of your product's
price".

So the question is where that leaves musicians who want "a bit more
quality". The circuit's obviously not the issue when it comes down to
price, so what are we dealing with here? You pay for better plugs and
wood sides and metal panels. Those are likely better supplied locally,
in a standard format. Which shows that maybe we shouldn't only have a
standard format for modular synth module dimensions, but for the
panels as well. A few pre-made panels that can be produced in mass,
and modules that fit them. Silk screened white labels under each hole
to add your own descriptions and off you go. Are there really infinite
possibilities of synth modules that can't be reconciled by just adding
a second panel with more holes? People have been saying for years that
the most expensive part of a synth is the mechanical bits. Korg have
listened to that, made it into a business, and created instant
classics JUST by doing this.

Some time ago I've spoken with EveAnna Manley about what her biggest
complaint was when trying to price her products and she said "the cost
of raw iron going up". True enough, there's a lot of that in every
enclosure, mechanical part, potentiometer, and jack. We weren't even
talking about the transformer. Parts suppliers follow the price of raw
materials very closely, floating the price of parts off of that. I've
gotten fairly scared myself when I was looking at prototyping some
front panels.

If one agrees on holes large enough to fit a little more than a 1/4"
jack, then that'll also fit a 1/8" socket, banana socket, a
potentiometer shaft, a switch, a button, and an LED, and any connector
that people will start using for polyphonic modulars (hint: SFF-8644).
You'll need angle brackets for mounting - no more mounting by the
pots, but that's a good thing rather than bad. If manufactured in a
smart way, this could be just one piece of sheet metal, bent to form
an angle.

There are very few modules that won't fit this format - and most often
that's because they have an LCD, and this kind of thing can be
provided for as well by having a second module panel with a
rectangular cutout. That stencil could also fit VU meters, joysticks,
keypads, capacitive pads, larger, uncommon connectors such as midi,
etc.

By doing this we could decouple the business of making electronics (at
which synth makers excel) and buying iron (which most synth makers
have no idea how to do). This way, the company doing the electronics
can stock their inventory at the right times, dedicate their skill to
electronics (mechanical stuff takes a LOT of focus for someone who
isn't doing it as their day job), and gear their business towards -
exactly - electronics. And the company in panel making business can do
this in their tempo as well - stock metal sheet when it's cheap, order
it in bulk (much higher volume than any single synth manufacturer),
and optimize their manufacturing process. Or put another way: would
you ask Schaeffer AG to sell you VCAs? Even if they subcontracted to
one of us, you can see the issues very clearly.

By using only one or a few simple formats we're removing the most
important cost factor when doing metal work - the setup cost. A
company that does front panels could set up once and build a thousand
panels.

I conjecture that in the long run it'll be a better idea to just have
a few sets of front-panel stencils to use, and have to use two panels
for a single module every now and then - rather than have
purpose-made, artisan metal-work supplied by companies who aren't in
the business.

Say you had modules in sizes of: 16 holes (4x4), 8 holes (2 columns of
4), and 4 holes (stacked vertically). What's the worst thing that
could happen? On the one hand, you'll have left-over holes. No big
deal at all, just plug em with something. On the other hand, you might
find your module has used up that 16-hole front panel and needs just
one more hole to be perfect. Tough luck. Change your module to use
another 4 holes (the minimum increment), or eliminate that one extra
feature, or use a concentric pot, or do something else.

And hey, if you want to stylize the module to "mark your territory":
just send them a vinyl sticker to put on the front panel. There might
even be a spot left on the generic front panel to put the name of the
module down, that's where a small sticker could go.

Going further, maybe most people won't use any front panels at all,
lowering the entry point to modular synthesis for them. Or just use
cardboard cutouts. Because seriously, how many people take their
modular to a gig? And if you do, you can rationalize the cost of
actually getting those bits of metal, because you're likely being paid
to gig, and even the meager $500 gig can buy a lot of sheet metal with
holes in it. Maybe a nice and cheap alternative would be a plastic
front panel for those who don't want or need metal. If we come up with
a mechanical standard that lets people put bare unpanelized modules in
a simple modular case, then we've won a lot of customers who would
otherwise turn away for the gear being too expensive. And we're
scaring them off because we're pushing iron, forcing them to buy it.

On the other hand this could really help out the small synth
manufacturers as well. The initial cost to build a run of modules is
an excruciating load to bear, and having the cost of panels removed
could help many more people enter the business, making this more
popular and more lucrative for the bigger companies, who are
established, and who gain new customers that the small companies
reached. If a small mom & pop shop only offers two modules, the next
place one of their customers will go is one of the bigger
manufacturers.

The sales part is not lost on me either. It seems like nowadays the
"in" thing is to show people bare PCBs, overwhelm the customer with
the visual complexity of what they're seeing, and let their
imagination go to town. There's so much of that happening on the
"maker" crowd. Even with consumer electronics, people are mesmerized
with teardowns. And this is becoming commonplace with synths as well -
specifically because of Korg's unwritten permission to mod the hell
out of their synths. You go to the Korg website and a bare PCB sits
right at home.

If this lifts off, then plastic fittings that reduce the generic hole
to the specific requirement (LED, button, switch, 1/8" jack, usb jack,
...) could be produced in amazing mass and used to make the things
more pretty. Perhaps one of those could cost under 50 cents in bulk.
But I wouldn't expect most people to cry if they don't have it at all.

Going further, perhaps the PCBs shouldn't include the most common
mechanical bits such as jacks either, just headers to connect them.
This follows the same kind of logic as with front panels.

I think all of this really applies to desktop and rack synths as well.
How many different options do we have - honestly? There's very few
things you couldn't do with a generalized stencil that has cutout for
a single LCD and simply covers the rest in "generic" holes.  A similar
thing has been achieved by the x0xb0x guys, who use the same PCB over
and over, but offer it in different enclosures, based on what you want
to spend. Or just look at the automotive industry - many inexpensive
cars have control panels with blind holes where buttons for extra
functions would go. Again, sure, a generalized layout might be a bit
bigger than if you made it exactly to fit your layout... it might have
holes you don't need or some knobs might have to be rearranged... but
who's complaining when the price is much lower? Are we in it for the
synths and the music, or are we in it for the metal front panels?

The way to start isn't too difficult. Once we've agreed on a specific
kind of standard, start making panels in this format, for your own
use. It likely won't cost much more, but you'll put yourself in the
position to sharply minimize the cost of manufacture. This may mean
that the format has to be somehow backwards-compatible to eurorack,
but it might turn out to be unimportant as well if we think about it.

If you're offering modules lower in height than the format agreed upon
here, you can still make your modules fit the raster. This way, in the
future, your customers can retrofit your modules to the standard, and
use the left-over holes for mults, mixers, or just leave them be.
Never enough mults though.

If you're offering modules higher in height than the format agreed
upon here, you could make sure the PCB will fit, and make sure the few
front panel elements at the very top or bottom are not PCB-mounted.
This way, in the new format they could be moved to a neighbouring
panel, and you're still compatible.

An industry-agreed logo could be agreed upon, and manufacturers could
use it to inform their customers of the compatibility. It could easily
become an important selling point.

The panel work could be shared by manufacturers, allowing for
purchases in even higher bulk. The cost is reduced again. Customized
stencil work could be done, either just with a manufacturer's logo, or
actually with the right labels for the connectors and controls.

Next up, once that's established, you could start offering some of
your modules without the front panel. Maybe the customer doesn't need
a front panel because he only ever uses his synth a thome. Or maybe he
has an older module he doesn't want anymore, would sell the PCB, and
buy a new PCB for the left-over panel. He's sending the PCB only to
the next owner, reducing shipping cost.

If you go with jacks and other elements that aren't PCB mounted, the
DIY crowd (which the modules without front panels are geared at) can
easily attach those to a particle board sheet front-panel, or come up
with one of a multitude of other options.

In the next step, once a lot of format-compatible offerings exist, the
companies we've been ordering bulk panels from could start selling the
panels directly. They'll be able to create a good pricing scheme,
lower than any synth manufacturer could. This should happen in sync
with the manufacturer's backlog, so that no one's stuck with front
panels nobody wants to buy because they're more expensive. That's a
trick that needs to be learnt, but also an investment to be made to
reach the ultimate goal. Perhaps at some point they could supply
stencils made with an industrial jet, which wouldn't have setup cost.
One of those things that's like an ink printer, but it sprays lacquer.
Extremely expensive, but, and here's the point: one of the things a
front-panel manufacturer can rationalize buying.

Finally, you stop offering front-panels, populate your website with
"example photos" rather than photos of the actual unit. Now, you don't
need to worry about fasteners, sheet metal, iron prices, stencil
quality, mechanical layout, knob quality, etc etc. You achieve Nirvana
and can fully concentrate on pushing the envelope with novel designs.
As a bonus everyone can finally order the kind of knob they prefer
most.

I'm interested what you guys think. Do you see the front panel,
fasteners, and mechanical bits as taking up an unnecessary amount of
your product's price? Would you like to forget about that and get on
with your synth designs? Do you think your business could work better
if a standard like this existed? What panel formats do you think are
necessary in order to satisfy 80% of all needs? E.g. 16 round holes, 6
round holes plus rectangular cutout, 6 round holes plus three large
round holes, you name it? Do you think this can be reconciled with one
of the popular modular formats - or do you think it'll work with all
of them?

Cheers,
D.