Despite all the reasons I listed in my last blog post on why Heathkit could not successfully reenter the kit business today, I believe they still can. Here are some reasons why, and how, they could do it.
1. Reinvent yourself. Heathkit started as an airplane manufacturer, then got into aviation electronics. Then test equipment, amateur radio, audio, and computers. The company twice lost their president in airplane crashes and had to reinvent itself. The new Heathkit could and probably should be different from the Heathkit during the heyday of the past. There are many opportunities for products different from those that Heathkit traditionally offered. They need to think outside the box and come up with new ideas for product opportunities.
2. Leverage the Internet. The Internet means there is no longer a need for brick and mortar stores. No printed catalogues or advertising. The Internet means global markets. To be successful, Heathkit needs to adapt to the times. As just one example, the large effort to write assembly manuals could be crowdsourced by allowing users to edit and improve the manuals, much like Wikipedia. Support for building kits could be handled by on-line forums. People who are active in helping others in the forums could be rewarded with some type of badges, promotional items, or discounts on kits.
3. Buy some expertise. Buy out or recruit some successful small kit companies, like Briel Computers, for example, or license their designs. Expand them in size to offer better ordering, distribution, manuals, and packaging than a one person outfit can handle.
4. Fill a size niche. I think there is a gap between the small one-person companies and the large electronics firms that Heathkit could fill and be successful while still remaining small and lean.
5. Crowdfund startup costs. Get initial funding using sites like Kickstarter and Indiegogo. Take one good idea, maybe a new solid-state ham radio transceiver like a redesigned HW-8, that is internally a new design but has the original retro look. Fund the cost of getting it to market and get initial orders using crowdfunding. That revenue could then fund R&D for future products.
6. Steal ideas from successful competitors. The experts said you couldn't offer a kit that competed with commercial amateur radio equipment for price and features. Elecraft did it. They said the market for hobbyists is too small? AdaFruit is doing okay. Learn from the successes of competitors and adopt ideas that worked for them.
7. Partner and contract out. Sell through Amazon. Have someone else do kitting. Avoid the need for a big factory and inventory. Run the company as a virtual distributed organization with staff located world-wide.
8. Link it to education. There is a huge demand for learning materials for electronics hardware and software, as evidenced by products like the Arduino and Raspberry Pi. Leverage Heathkit's expertise in developing training materials and courses (one of the last areas where they were successful).
9. Capitalize on nostalgia. Offer some of the original kits again, even if only on the outside. Consider offering some vacuum tube designs. Make the assembly manuals look like the old ones, possibly offering a printed manual (rather than download) as an extra option when ordering a kit.
10. Build credibility and reward early adopters. Lots of people would like to see Heathkit succeed. Offer incentives to people who pre-order. Reward early purchasers and they will give you free marketing. Be open about plans for the future, and the keep promises you make. As just one example, why not make the legacy Heathkit manuals available as free downloads as a goodwill gesture and a sign that Heathkit is serious about coming back?
In summary, I believe Heathkit could re-enter the kit business if they adopt some of the ideas I've outlined here. It won't be easy, and the clock is ticking as the old Heathkit becomes a faded memory, but it can be done.
Showing posts with label kits. Show all posts
Showing posts with label kits. Show all posts
Thursday, July 24, 2014
Wednesday, July 23, 2014
Can Heathkit Make a Comeback? No, and Here's 10 Reasons Why.
Last year Heathkit announced on their website that they would be making a return to offering kits, placed an extensive survey on their web site, and held a Q&A session where they presented many ideas for kits that they hoped to offer in the near future. Little or nothing has been heard from them in the last few months. Here are ten reasons why I don't think Heathkit can successfully make a comeback to the electronic kit business.
1. Economics. There is a huge one time cost (often called NRE or Ron-Recurring Engineering cost) to bring a new product like a kit to market. You not only have to design a product that works, but it needs to consistently work when built by customers without sophisticated test equipment, you need to develop the assembly manuals, obtain sources for components, stock the parts, have expensive custom plastics and cabinets manufactured, and put all the right pieces in the kits without making errors. If Heathkit is going to sell a kit for, say, a digital multimeter, it will likely cost a couple of hundred dollars. Meanwhile, I can get an assembled, calibrated, and working meter at Harbor Freight for $5 or free with a coupon. In addition, unlike in the past, almost every product today relies on a software component, something that is very expensive to initially develop and needs to continue to be maintained.
2. Startup costs. Similarly, to get economics of scale to be profitable, you need to set up manufacturing, distribution, and agreements with component suppliers. I don't believe that the new owners of Heathkit have deep enough pockets. Are they going to open dozens of retail stores as in the past? When companies like Radio Shack are going bankrupt?
3. The market has changed. While there has been some resurgence, the hobbyist market (sorry, now it's called the "maker movement") is small. Ham radio users are ageing. Probably Heathkit's most popular kit of all time, the HW-101 transceiver, would not have specs that would interest modern hams other than some nostalgia buffs. No one today wants to build a stereo or TV set from a kit.
4. Changing technology. Most new electronic components are only available as surface mount technology (SMT) devices that the average user cannot solder. And forget about getting vacuum tubes in any quantity. Even if they could assemble it (or it came with SMT parts pre-assembled), the average user doesn't have the test equipment needed to test, calibrate or debug modern equipment.
5. Safety. Most kit companies shy away from anything powered by line voltage. It is too easy for the user to electrocute themselves. In the litigious North American market you can be sued if a customer hurts themselves trying to do something they were not explicitly warned not to do in the instructions, no matter how ridiculous. Many of the original Heathkits required aligning or adjusting the equipment under power. But limiting the products to battery operated or external power supplies will make it impossible to offer some of the most interesting kits. This alone could be a showstopper.
6. Too much competition. The market already saturated with established players like AdaFruit, Elecraft, qrpme.com, etc. Many of these are small, Internet-savvy operations with low overhead. Some are run by a single employee on a part-time, break-even basis.
7. The need to go global. In order to get a decent sized market today you have to expand beyond just North America. But this will introduce even more challenges in distribution. How about the famous Heathkit manuals - can they be economically translated into 30 languages?
9. Lack of goodwill. A number of years ago the Heathkit name carried some cachet, but it is now long past it's expiry date. Heathkit has been out of the kit business since the early 1990s, almost 25 years now. The in-house staff and expertise that Heathkit once had is now long gone (most are retired if they are even still alive). They can no longer rely on the Heathkit name to carry any weight with customers
9. Staffing. It is very difficult and expensive to find good engineering staff, especially those with the specialized knowledge to build kits. Technical writing is also expensive and a specialized task that can't be done by the engineers. It takes a long time to build up an engineering team. And will the best people want to relocate to Benton Harbor, Michigan?
10. Differing expectations. If you poll people it seems like everyone would like to see Heathkit come back, but all for different reasons. Some hams want to see the old kits come back, others want new state of the art kits. Some users want computers, robots, radio controlled equipment, and 3D printers. They all have different expectations, but any one of these markets is too small a niche for a viable business.
Given all that, in my next blog post, I will present ten reasons why Heathkit could re-enter the kit business and be successful.
1. Economics. There is a huge one time cost (often called NRE or Ron-Recurring Engineering cost) to bring a new product like a kit to market. You not only have to design a product that works, but it needs to consistently work when built by customers without sophisticated test equipment, you need to develop the assembly manuals, obtain sources for components, stock the parts, have expensive custom plastics and cabinets manufactured, and put all the right pieces in the kits without making errors. If Heathkit is going to sell a kit for, say, a digital multimeter, it will likely cost a couple of hundred dollars. Meanwhile, I can get an assembled, calibrated, and working meter at Harbor Freight for $5 or free with a coupon. In addition, unlike in the past, almost every product today relies on a software component, something that is very expensive to initially develop and needs to continue to be maintained.
2. Startup costs. Similarly, to get economics of scale to be profitable, you need to set up manufacturing, distribution, and agreements with component suppliers. I don't believe that the new owners of Heathkit have deep enough pockets. Are they going to open dozens of retail stores as in the past? When companies like Radio Shack are going bankrupt?
3. The market has changed. While there has been some resurgence, the hobbyist market (sorry, now it's called the "maker movement") is small. Ham radio users are ageing. Probably Heathkit's most popular kit of all time, the HW-101 transceiver, would not have specs that would interest modern hams other than some nostalgia buffs. No one today wants to build a stereo or TV set from a kit.
4. Changing technology. Most new electronic components are only available as surface mount technology (SMT) devices that the average user cannot solder. And forget about getting vacuum tubes in any quantity. Even if they could assemble it (or it came with SMT parts pre-assembled), the average user doesn't have the test equipment needed to test, calibrate or debug modern equipment.
5. Safety. Most kit companies shy away from anything powered by line voltage. It is too easy for the user to electrocute themselves. In the litigious North American market you can be sued if a customer hurts themselves trying to do something they were not explicitly warned not to do in the instructions, no matter how ridiculous. Many of the original Heathkits required aligning or adjusting the equipment under power. But limiting the products to battery operated or external power supplies will make it impossible to offer some of the most interesting kits. This alone could be a showstopper.
6. Too much competition. The market already saturated with established players like AdaFruit, Elecraft, qrpme.com, etc. Many of these are small, Internet-savvy operations with low overhead. Some are run by a single employee on a part-time, break-even basis.
7. The need to go global. In order to get a decent sized market today you have to expand beyond just North America. But this will introduce even more challenges in distribution. How about the famous Heathkit manuals - can they be economically translated into 30 languages?
9. Lack of goodwill. A number of years ago the Heathkit name carried some cachet, but it is now long past it's expiry date. Heathkit has been out of the kit business since the early 1990s, almost 25 years now. The in-house staff and expertise that Heathkit once had is now long gone (most are retired if they are even still alive). They can no longer rely on the Heathkit name to carry any weight with customers
9. Staffing. It is very difficult and expensive to find good engineering staff, especially those with the specialized knowledge to build kits. Technical writing is also expensive and a specialized task that can't be done by the engineers. It takes a long time to build up an engineering team. And will the best people want to relocate to Benton Harbor, Michigan?
10. Differing expectations. If you poll people it seems like everyone would like to see Heathkit come back, but all for different reasons. Some hams want to see the old kits come back, others want new state of the art kits. Some users want computers, robots, radio controlled equipment, and 3D printers. They all have different expectations, but any one of these markets is too small a niche for a viable business.
Given all that, in my next blog post, I will present ten reasons why Heathkit could re-enter the kit business and be successful.
Sunday, December 22, 2013
Heathkit "Ask Me Anything" Session
A member of the board of directors of the newly forming Heath Company gave an "Ask Me Anything" session on reddit.com on December 21, 2013. I thought I would post a short summary and a few thoughts on the session.
Some people were frustrated by the reddit user interface (one of the issues, for example: you need to refresh the web page to see new results), the slow pace that questions were being answered, and the lack of many specifics in the answers. Some people left after an hour, however the questions continued to be answered for almost three hours.
Here are some of the key points that were mentioned:
On the plus side it is good to see some information coming out from the new Heathkit. They seemed to be excited and are exploring a lot of new opportunities while being true to the values of the original Heathkit.
On the minus side they was a distinct lack of details: nothing about specific kits and no time frames other than the first half of 2014. Nothing really new was mentioned that was not already covered
on their web site.
When asked about 3D printing, the response included the statement "We have some ongoing negotiations in this area right now." That implied to me that they may be partnering with some existing manufacturers rather than building all of their expertise in-house. This could significantly reduce their time to market. The original Heathkit did this, one example being the Thomas electronic organs they sold as kits.
In conclusion, I would say I am still cautiously optimistic about the "new" Heathkit. Some attendees were asking whether they should hold off on a planned purchase and wait for Heathkit. I would encourage people to be patient and not expect much to develop until at least this summer.
Finally, they announced a little contest. To honour founder Edward Heath there is a cache hidden in the city of his birth (Brooklyn, NY). It is within arm's reach of a photo they posted. Inside is a passphrase and a set of instructions. The first fan to send the passphrase will receive one of the first kits signed by the Heathkit team.
References:
Some people were frustrated by the reddit user interface (one of the issues, for example: you need to refresh the web page to see new results), the slow pace that questions were being answered, and the lack of many specifics in the answers. Some people left after an hour, however the questions continued to be answered for almost three hours.
Here are some of the key points that were mentioned:
- They seem to want to do this on a big scale and cover most or all of the traditional Heathkit product lines.
- They plan to focus on more complex kits (much as they did in the past).
- They want to revive some original kits, possibly updating them.
- They want to move into new areas such as 3D printing.
- They hope to introduce a few kits in the first half of 2014.
On the plus side it is good to see some information coming out from the new Heathkit. They seemed to be excited and are exploring a lot of new opportunities while being true to the values of the original Heathkit.
On the minus side they was a distinct lack of details: nothing about specific kits and no time frames other than the first half of 2014. Nothing really new was mentioned that was not already covered
on their web site.
When asked about 3D printing, the response included the statement "We have some ongoing negotiations in this area right now." That implied to me that they may be partnering with some existing manufacturers rather than building all of their expertise in-house. This could significantly reduce their time to market. The original Heathkit did this, one example being the Thomas electronic organs they sold as kits.
In conclusion, I would say I am still cautiously optimistic about the "new" Heathkit. Some attendees were asking whether they should hold off on a planned purchase and wait for Heathkit. I would encourage people to be patient and not expect much to develop until at least this summer.
Finally, they announced a little contest. To honour founder Edward Heath there is a cache hidden in the city of his birth (Brooklyn, NY). It is within arm's reach of a photo they posted. Inside is a passphrase and a set of instructions. The first fan to send the passphrase will receive one of the first kits signed by the Heathkit team.
References:
Friday, December 20, 2013
Heathkit Test Equipment Model Number Scheme
In my last blog post you may have noticed the Heathkit model numbers for the various shortwave receivers. Three were in the AR series, four were GR models, a couple were SB, and the last two Heathkit made were designated with SW. We also had the GC-1 and GC-1A. There seems to be some pattern here but not a very consistent one.
While researching my book Classic Heathkit Electronic Test Equipment I spent some time looking into the commonly used model series for test equipment.
Over the years Heathkit used various product naming systems. Other than some early accessories, they followed a system that used one to three letters indicating a major product line, followed by a unique number. For example, the IM-18 denoted an instrument in the IM (meter) series. During the heyday they had a pretty consistent product naming scheme. The table below lists the major product series. Some units, particularly test equipment, could be bought either in kit form or assembled. Some of the product lines indicate factory assembled or "wired" versions. For products that were offered assembled only, they were sometimes branded as "Heath", particularly in the later days when they were out of the kit business and the units were part of an educational product. Often the wired and kit versions used similar model numbers, such as SM-1212 and IM-1212, but this was not always the case.
| Series | Description |
| numbers | Adaptors and probes |
| AG | Audio Generators |
| AV | VTVMs |
| C | Condenser Checkers |
| ES | Power Supplies |
| ETI | Instruments from Educational Series |
| EU | Malmstadt-Enke Instruments |
| EUW | Malmstadt-Enke Instruments (wired) |
| G | Signal Generators |
| GD | Grid Dip Meters |
| IB | Impedance Bridges |
| IG | Signal Generators |
| IM | Meters |
| IN | Component Substitution Boxes |
| IO | Oscilloscopes |
| IP | Power Supplies |
| IR | Chart Recorders |
| IT | Miscellaneous Testers |
| O | Oscilloscopes |
| OM | Oscilloscopes |
| PK | Probes |
| PKW | Probes (wired) |
| PS | Power Supplies |
| S | Electronic Switches |
| SG | Signal Generators |
| SM | Factory Assembled Versions of IM Series |
| SO | Factory Assembled Versions of IO Series |
| SP | Factory Assembled Versions of IP Series |
| T | Signal Tracers |
| TC | Tube Checkers |
| TS | TV Sweep/Alignment Generators |
| TT | Tube Testers |
| V | VTVMs |
| VC | Oscilloscope Calibrators |
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