The cool interior of Ericsson’s new development centre in Lund exudes Swedish style. Its glass tile walls, steel staircases and blonde wood create a sense of calm and space. The young inhabitants, average age 31, go about their business quietly and are rarely glimpsed, except for a quiet “cluster” meeting in the café.
But appearances can be deceptive. These seemingly serene employees set aside five per cent of their time to go wild. They get paid for it. It’s seen as essential.
Ericsson director and deputy general manager of research and development for mobile phones Tord Wingren, encourages “wild ideas”. He says they may not come to anything – Ericsson applied for 1,200 patents last year – but an outlandish idea today may be just the ticket in five years’ time, or sooner.
At the beginning of July, the latest development from Lund hits the UK high streets. The SH888 is the first mobile phone to take the Internet off the desk and onto the train, beach or wherever – without cable connections. It’s all done with infrared signals.
Mobile telecoms is an industry famed for fast movement. As the product technology gets more complicated, manufacturers struggle to make handsets simpler to use. And as the lifecycle of a phone, currently between 12 and 18 months, gets shorter, the time allowed for research and development also shrinks.
It took Ericsson two and a half years to bring the SH888 to market. The shift from technology-led product development to customer focused development is apparent every step of the way.
The SH888 concept was in development for a year. The research and development boffins examined the technology needed to produce the idea – the components, the micro-chips. The next one and a half years were spent on product development.
Ericsson develops products for a particular type of customer. It believes there are five types, but it is only interested in three – obviously the ones that readily part with cash.
Every new innovation starts with targeting”The Pioneer” – the techie who wants the latest product, whatever the cost. The SH888 is also aimed at “The Achiever”, who wants a product which enables a job to be done more quickly and simply.
The third segment, “The Sociables”, are relationship-driven, community- and environmentally- conscious. Ericsson’s interest in this growing sector of consumers is made abundantly clear in its “empowerment” brand campaign “Make yourself heard”.
The five-segment formula, developed in association with RISK research in Paris, is the basis of Ericsson’s global marketing strategy. This comes into its own during the second part of the R&D process – market research and evaluating customer needs and wants.
The last 12 months of the SH888’s development focused on getting the phone ready for production, sourcing materials and ensuring they are the best combination. But it is indicative of how flexible the process has to be that the SH888’s retractable aerial was replaced with a conventional one after its first public unveiling. As a result, commercial launch time was put back by a matter of weeks – to the beginning of July in the UK.
The three-year timescale is fairly typical of the company’s present research and development cycle. But one-off projects can be turned around much more quickly.
Enter Ericsson’s wristwatch of the future – Infowear Concept One. The entire project was completed in six months, including electronics, user interface, software, radio protocols, mechanics and design. Infowear Concept One combines a traditional watch function with an e-mail inbox, and can pick up information such as weather reports or stock market prices. It also contains contacts, task lists and a calendar.
Ericsson chairman Lars Ramqvist is a firm believer in R&D. Five years ago, when he was chief executive, he caused a stir within the company by announcing that 20 per cent of turnover would be ploughed into the area.
Today that figure still stands at 16 per cent – higher, Ericsson claims, than any other mobile phone manufacturer. Most spend about 15 per cent. Ericsson’s main competitors, Finland’s Nokia and Motorola from the US, are also busy shifting the focus of R&D from technology to customers.
Nokia global marketing research manager John Markham says it now takes about 15 months to move a product from concept to market: “We very much put customers first: we research end-users’ needs and interpret the skills they will need for tomorrow.”
The development of Nokia’s 9000 Communicator all-in-one voice, data and personal organiser phone shows how far, how fast. It was subject to two and a half years of development from its 1993 inception to the spring 1996 launch.
Nokia, like Ericsson and Motorola, develops products with particular consumers in mind. The research is fed into the R&D cycle right at the beginning, at the “pre-concept level” of what potential users want.
For the 9000 Communicator, qualitative research and consumer feedback on design and features was undertaken and market intelligence taken into account before any product development took place. Internal prototype studies of the actual product then took over, and user studies were undertaken for feedback into the next cycle of R&D, after the global launch had come to an end.
Motorola’s product development is based on 11 different consumer segments and takes between one and three years. But UK & Ireland marketing manager Patrick Mulligan says timescale necessarily depends on the complexity of product and importantly, especially for the future, on the involvement of third-party suppliers. For instance, Motorola’s new smartcard phone, which is to launch at the end of this year, involves smartcard companies.
Motorola’s R&D is similar to that of Ericsson and Nokia. Customer needs are defined, features are designed, then software and hardware engineers move in.
Mobile phone users change phones every 12-to-18 months and switch between manufacturers, with 30 per cent “churn” in the UK. Ericsson estimates the number of subscribers will soar, from the current 200 million to 830 million by 2003 across the world.
But mobile phones are not developing in isolation. Increasingly, as Motorola’s Mulligan points out, third-party operators are coming on board with the convergence of the telecoms, computer and media industries. Ericsson, for example, is working with IBM, Microsoft, Intel, Novell and Texas Instruments.
But as the technology gets more complex, consumers demand products which are easier to use. Ericsson’s head of consumer lab Henrik Plsson acknowledges just that: “We must understand non-techies: they are equally important in creating our future society – in some respects more important. The PC industry divides people into the techies and the stupid, but they need to understand that the majority of people fall in-between.”
Consumer research and feedback, and marketing-led initiatives, are all-important in the R&D process now mobile phone manufacturers have realised they must listen to what people want rather than thrust the latest technology at consumers and expect them to buy it.