FEW THINGS are more frustrating to OEM builders of industrial machines, skids, and robots than to sell a machine to a customer and discover that same customer later built 10 more copy cat machines on its own. Its even worse when a competitor mimics every aspect of your machines design, undercuts your price, and damages your market share.
In an ideal world, this would not be possible since the cost of your products simply would be the sum of parts and labor. This would make it next to impossible for anyone else to make a similar machine for less. But in the real world, every machine you sell carries an overhead burden of its research and development costs. If others can avoid this burden simply by copying your design, they can have a frightening cost advantage.
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Medium-volume OEMs have a few arrows in the quiver to defend themselves from copycats, chief among them private labeling, embedded hardware and embedded software.
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So it seems the surest way to prevent copying is to drive your costs down to a level that makes copying unprofitable. Easier said than done, you say, but it can be accomplished in many instances, especially for higher-volume machine builders.
At the other end of the spectrum, industrial OEMs that build fully custom products also are largely immune from copying because their one-off designs are applicable only to a narrow range of applications.
Stuck in the middle, not surprisingly, are the medium-volume OEMs, with build counts too low to achieve significant economies of scale, but high enough to attract copycats.
But medium-volume OEMs have a few arrows in the quiver to defend themselves from copycats, chief among them private labeling, embedded hardware and embedded software.
Private labeling can be very helpful when your company has searched far and wideand founda perfect product to solve a vexing design problem. Often this type of solution comes from outside the mainstream OEM marketplace, a reason why your search was so time-consuming and expensive. Wouldnt it be nice if you could realize the advantage it offers without its instant adoption of by your competitors?
Private labeling can be a means to accomplish this goal, if the agreement with the products manufacturer contains language that limits sales to direct competitors for some period of time.
Another way to restrict copying is to embed hardware and software within your systems.
When I was the control systems manager at a skid builder company in the 1980s, we spent a lot of time and money to develop a patented closed-loop control system. Our competitors were still running open loop at the time, as were our older design machines.
We wrote a C++ program to perform the closed-loop algorithm, and downloaded the compiled code only to our PC-based controller. This allowed us to fully implement our solution while still protecting our intellectual property.
We could have accomplished the same thing by exposing the code, diligently monitoring the market, and vigorously suing competitors. But why monitor the market if you can control it?
Many controllers, both PC-based and other, allow industrial OEMs to embed compiled code as part of the control software program. This embedded code lets an OEM provide off-the-shelf brand name hardware while still protecting critical intellectual property.
A related solution is embedded hardware. This can take many forms, from custom-designed printed circuit boards to custom application-specific integrator circuits (ASICs) to field programmable gate arrays (FPGAs).
Perhaps the easiest of these technologies to implement is FPGAs, as this technology can be used to embed a custom hardware controller within an off-the-shelf brand-name controller.
Some of your customers may resist the notion of private labeling, embedded hardware and embedded software. These customers would rather have a machine with off-the-shelf products, fully open source code, and no embedded control.
The solution: consider supporting two levels of product performances; one for high-end customers and another for those lower on the pecking order.
The high-end customers generally specify many of the items on your machine, and they often can be charged more for this customization. These customers are the most likely to resist private labeling, embedded hardware, and embedded software. But, they also are the least likely to copy your designs or give them to other OEMs.
Most low-end customers, however, have that overriding concern with cost. Offer them a standard machine that includes private label products, embedded hardware, and/or embedded software. If this group is more likely to copy your designs or work with others to do the same, this solution helps you guard your secrets.
