Crystallising the cutting edge

Sir Peter Maire

What doesn’t seem to come naturally to Kiwis is thinking laterally about how to convert science into something people want, which is exactly what lies behind Apple’s success. Apple didn’t invent the portable MP3 player but they did make it a really elegant and enjoyable way to load and listen to music.

It’s that ability to make different elements together that creates a successful consumer electronics product. The physical platform, or the hardware, and the software that runs on it, are the beating heart but you also need all the other bits that clip round the edges to deliver something people want to own.

That’s what Navman was able to do with its in-car GPS navigator in the late 1990s and early 2000s. We started by taking apart GPS car units on Japanese imports and looking, quite literally, at every component, right down to the last screw. Round the world, the units were selling for around US$2500 and our goal became to build the first in-car navigation product that retailed for under US$1000.

Part of that was knowing we had to be at least 50 per cent cheaper than anyone else or we’d never be able to take an unknown brand to the market. But it also had to work well and be small and simple to use.We pooled the knowledge we’d gained in making GPS devices for the marine industry, asked a lot of questions, experimented and eventually launched our product in 2003. Between 2004 and 2006, Navman’s earnings went from NZ$100 million to NZ$460 million.

Once I’d had a taste of selling consumer electronics in the global marketplace, that’s where I wanted to be. My personal desire is to use science to compete globally in areas most people fear to go. We spend a lot of time in New Zealand looking for niche market opportunities but, frankly,

I’ve always thought that was a bit like giving up before you even got started. Niche is a good place to begin but once a product becomes mainstream it’s very hard to compete. If you want to go for the jugular and play in the mainstream, you have to out-think the current winner in the category. You also need a lot of sheer guts and pigheadedness.

Those attributes are what’s helped Rakon grow from an idea hatched in founder Warren Robinson’s garage to a world leader in making crystal oscillators for the global GPS, telecommunications and aerospace markets. There is smart science at Rakon’s core supported by a well thought out, cradle to grave, business plan.

Rakon had the courage to raise capital post its IPO (initial public offering) to fund a number of acquisitions that have greatly extended its product range, intellectual property portfolio and manufacturing footprint. With sales now close to NZ$200m (NZ$60m at IPO) the company has emerged as a major international player within the crystal industry.

While this level of growth would not have been possible using internal organic development, the company continues to make significant investments in developing its manufacturing process and has recently worked in partnership with IRL scientists on developing a new cutting edge manufacturing process (see story page 8). Rakon understands that the hidden elixir in its business is not owning a silicon chip design but the process of manufacturing its product. Knowing its advantage helps Rakon out-sprint the opposition.

The magnitude of Rakon’s achievement is huge. Accuracy of the company’s oscillators has gone from around 50 parts per million in the early 1990s to 50 parts per billion today and they’re significantly smaller and cheaper. Already big by New Zealand standards,

Rakon is poised to get much bigger once its manufacturing facility in Auckland is complemented by a soon-to-open factory in China. Rakon’s goal of producing the volume of crystal oscillators needed to make it a serious player in the smart phone market is within reach.

We can compete globally from New Zealand and using science creatively is the way to do it. I was recently part of a group of business entrepreneurs who came up with the idea of crossing the vanilla bean with a strain of grass. Cows feeding on the pasture would produce vanilla flavoured milk, effectively creating a one-step process to delivering vanilla ice cream.

Who knows if it will ever be a reality, but it’s a great example of how we might use the areas where New Zealand is strong in science to create something consumers want. That has to be good for both science and the New Zealand economy.