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Leotek Electronics CorporationThe Leader in Electro-Optics Technology
Address: No. 50, Lung-Yuan 7th Road, Lung-Tan, Tao-Yuan Hsien, Taiwan, R.O.C.
Tel: 886-3-499-5939, Fax: 886-3-499-5930, E-mail: [email protected], Website: //www.leotek.com.
LEOTEK
TM
技術、市場與資金 – 分享我的個人經驗
Integrating Patents, Venture Capital andDevelopment of Products for Commercialization
-- A Reflection on the Journey of Leotek in Taiwan
Presented by:
Chen H. Wu, Ph.D. ( 吳振和 )
June 7, 2003
Table of Contents
Introduction
The Starting Point
Going Through the Process
The Future Challenge
Conclusions
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
I.
II.
III.
IV.
V.
Henry Ford Theory of a 3-Leg Stool• Mr. Henry Ford was once
asked: “ You said that Technology, Marketing and Financing are the three most important ingredients for a company to be successful, can you tell me which one of these three is the most important ?”
• Mr. Henry Ford answered: “ Technology, Marketing and Financing are just like the three legs of a stool, now can you tell me which one of these three is the most important ?”
TechnologyMarketing
Financing
Quality AssuranceHuman ResourcesProduction, SalesMIS, etc.
COMPANY
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
I. Introduction
II. The Starting Point
II-1. Product Selection
II-2. Attractive Market Potential
II-3. Competitive Situation
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
II-1. Product Selection
• Product: Light-Emitting Diode (LED) products * Energy-efficient product: a world-wide trend * Environmentally friendly, low maintenance cost and compact size: Technology of the future; Everything that lights up will be made by LEDs
• Market: LED traffic signal light grew at a rate of 80~100% per year
• Technology: * My expertise and strength * Team: Available in Taiwan; Taiwan was (and is) the 2nd largest LED country in the world.
• Financing: Available in Taiwan (Many VCs)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1994 1996 1998 2000
Actual (1994~99)
Forecast (2000)
Total U.S. Market Size = 12,000,000 units; 1.5 B$
II-2. Extremely Attractive and Exciting LED Traffic Signal Market
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Calculation of Return of Investment of LED Traffic Signal Lamps
Traffic Signal Type
Ave. on-time
Incandescent Bulbs LED Traffic Signal LampsAnnual
Difference (US$)
Initial Cost Difference
(US$)
ROI
(year)Annual
Electricity (US$)
Annual Maintenance
(US$)
Annual Total (US$)
Annual Electricity (US$)
Annual Maintenance (US$)
Annual Total (US$)
12” Red
50% 52.56 30.00 82.56 4.20 0 4.20 78.36 60.00 0.765
12” Yellow
5% 5.26 30.00 35.26 0.81 0 0.81 34.45 60.00 1.742
12” Green
45% 47.30 30.00 77.30 3.78 0 3.78 73.52 110.00 1.496
Total100%
105.12 90.00 195.12 8.79 0 8.79 186.33 230.001.234
(Ave.)
Conclusion: Based on the above calculations, the average return of investment for a set of traffic signal lamps (including one of each red, yellow and green) is 1.23 years.
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Energy Saving of LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Facts and Numbers Unit
1. Number of Traffic Intersections in USA 300,000 Each
2. Average Wattage in Each Intersection When Using Conventional Incandescent Bulbs
1,750 Watt
3. Average Wattage in Each Intersection When Using LED Lamps
140 Watt
4. Average Energy Saving Per Intersection 1,610 Watt
5. Energy Saving if All Intersections Are Replaced with LED Lamps
483,000,000 Watt
Energy Saving of 483 Mega-watts can be Realized if All Traffic Signal Lights in the U.S. Are Replaced with LED Lamps or A Saving of US$423,108,000 Annually (US$0.10/KWH)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Company NameBegan LED Traffic Signal Business
Estimated Percentage of Market Share
No. of Patents in LED Traffic Signal
Ranking
Dialight 1992 ~40% 1 1
Ecolux 1992 ~30% 2 2
Precision Solar
1993 ~15% 2 3
Electro-Tech 1992 ~10% 2 4
Atlite/Cooper 1994 ~2% 0 5
ITCPI 1995 ~1% 0 6
Traffic Parts 1995 ~1% 0 7
Leotek 1998 ~1% 1 8
II-3. Competitive Situation in LED Traffic Signal Lights (1999)
Dialight40%
Ecolux30%
Precision15%
Atlite2%
ITCPI1% Leotek
1%
TrafficParts
1%Electro-
Tech10%
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
II-3. Competitive Situation in LED Traffic Signal Lights (1999)
DialightEcolux Precision
Solar
Electro-Tech
AtliteLeotek
ITCPI
Total U.S. Market Size:• 12,000,000 Lamps• 1.5 billion US$
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
1999 Market Size: • 170,000 Lamps• 20 million US$
Traffic Parts
II-3. Competitive Situation in LED Traffic Signal Lights (1999)
III. Going Through The Process
III-1. The Dilemma
III-2. The Answer
III-3. The Strategy
III-4. The Achievement
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
III-1. The Dilemma (Year 1999)
• Market Share: ~95% of market share occupied by 4 major companies; Leotek had only ~1%
• Technology: These 4 companies combined owned 7 major patents; Leotek had only 1.
• Financing: 3 of these 4 companies were subsidiaries of large companies with strong financial backing; Leotek had very little financing.
• In Addition: These companies entered the market much earlier, with well-known names, strong management and technology teams, well established management systems, etc.
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
My Question• The LED traffic signal light market is being
occupied by many established companies, do I have any chance here?
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
My Answer• No, I don’t think I have any chance here.
• Even if I think I had a chance here, I don’t know how to do it because I don’t own much of any marketing, technology or financing.
So, should I give up ??? YES
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Go over,go under,go around,
orgo through
But never give up
從上面 , 從下面 , 從旁邊 , 或從中間 ,
但永不放棄
My Question• The LED traffic signal light market is being
occupied by many established companies, do I have any chance here?
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
My Answer• No, I don’t think I have any chance here.
• Even if I think I have a chance here, I don’t know how to do it because I don’t own much of any marketing, technology or financing.
So, maybe I should not give up.But, if I don’t, is there an “Answer” ???
III-2. The Answer: The Lion and The Gazelle
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Every morning in Africa, a Gazelle wakes up, it knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death. It doesn’t matter whether you are a Lion or a Gazelle…….when the sun comes up, you’d better be running.
III-2. The Answer: The Lion and The Gazelle
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
The original statement:
It doesn’t matter whether you are a Lion or a Gazelle ………. When the sun comes up, you’d better be running.
My interpretation:
It doesn’t mean you are always going to win because you are a Lion; and it doesn’t mean I am always going to lose because I am a Gazelle. All I need to know is what do I need to do to win
III-2. The Answer: SWOT
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
• Their Weakness: * Even though big and strong, but move too slowly (an old Lion) * High product manufacturing costs * High operating costs: marketing and Overhead * Slow in new product development * Products too diversified
• Leotek’s Strength: * Flexible and move fast (a young Gazelle) * Strong technology base * Lower costs in manufacturing, marketing and Overhead
III-3. The Strategy
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
1. Develop Better Products: * Analyze and understand product technology * Determine competitors product weakness and improve upon it * Develop products with much better quality and lower installation costs * File patents to protect the technology
• Optical Design - Better optical designs allow Leotek to use fewer LEDs to meet the ITE specifications at lower cost - Filed 2 patents
• Driving Circuit Design - Better temperature compensation circuit design allows Leotek to have lower cost of the driving circuit - Filed 1 patent
• Installation Design - Easier and faster installation designs allow 5- minute installation compared to 20-minute installation of competitor’s products - Filed 4 patents
Key Technology in LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Example: Installation of LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Incandescent Light Bulb
Housing
Reflector
Front Lens
Terminal Strip
Door To Controller
Example: Installation of LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Incandescent Light Bulb
Housing
Reflector
Front Lens
Terminal Strip
Door To Controller
LED Module
Average Installation Time = 20 minutes
Competitor’s Module
Example: Installation of LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek’s Module
Average Installation Time = 5 minutes
LED Module
Key Feature:
Leave reflector, socket and wiring in place
Example: Installation of LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek’s Module
Average Installation Time = 5 minutes
LED Module
Major Advantages of Leotek’s Module• 5 minutes installation
time vs. 20 minutes
• Lower installation costs
• Less traffic interruptions
• No need to dispose
reflectors and light bulbs
• Can re-install light bulb if
needed
Competitors’ Patents Area of
Technology
Leotek’s Patents Granted/Pending
(Year 2000) Dialight Ecolux/ Gelcore
Electro-Tech
PSC/ Others
Optical Design 2 1 2 0 1
Driving Circuit Design
1 0 0 2 1
Installation Design 4 0 0 0 0
Total 7 7
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Use Better Technology to Develop Better Products
Mission Accomplished: Develop Better Products
III-3. The Strategy
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
1. Develop Better Products: * Analyze and understand product technology * Determine competitors’ product weakness and improve upon it * Develop products with much better quality and lower installation costs * File patents to protect the technology
2. Recruit Marketing V.P. from Competitor: * Convince him Leotek has the best products among all leading manufacturers * Convince him Leotek is capable of becoming the number one company in the industry * Provide incentives to join a fast growing company
Done
III-3. The Strategy
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
3. Manufacturing Lowest Cost Products: * Utilize superior technology, lower labor and overhead costs in Taiwan to manufacture lowest cost products
4. Capital Infusion * Capital infusion of 4.35-M$ to finance rapid growth
5. Aggressively Grabbing Market Share: * Energy crisis in California in 2001 provided great market opportunity for Leotek * Occupied 50% market share in California and 20% market share world-wide in 2001 and became the number three manufacturer in the world
Capitalization of Leotek
0
2
4
6
8
10
12
14
1992 1994 1996 1998 2000 2002
ActualFuture
Capital Infusion Date
CapitalInfusion(M-US$)
Capitaliza-tion
(M-US$)
May, 1993 0.036 0.036
Dec, 1993 0.25 0.29
April, 1995 0.33 0.62
Sept, 1996 0.29 0.91
Mar, 1997 0.58 1.49
July, 1998 0.87 2.36
Dec., 1998 0.58 2.94
July, 1999 1.91 4.85
Dec., 1999 1.91 6.76
Oct., 2000 4.35 11.11
July, 2002 2.31 13.42
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Unit: Million US$
III-4. The Achievement: Leotek’s 2001 Sales Revenue
0
2
4
6
8
10
12
14
16
18
1995 1996 1997 1998 1999 2000 2001
Orignial ForecastAdjusted ForecastActual
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Unit: Million US$
Turn-over Rate:(Revenue/Capitalization)
= 1.56
Revenue per Employee:
= $327,000
Change of U.S. LED Traffic Signal Light Market Share
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
CooperLghting
5%
Electro-Tech5%
Precision15%
Others5%
Dialight40%
Gelcore30%
Year 2000
Leotek’s market share jumped from 3% in 2000 to 20% in 2001
Gelcore35%
Dialight35% Leotek
20%
Precision5%
All Others2%
CooperLighting
3%
Year 2001
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
LED Traffic Signal Market Position in 2001
Dialight EcoluxPrecision Solar
Electro-Tech
Atlite
LeotekITCPI
Total U.S. Market Size:• 12,000,000 Lamps• 1.5 billion US$
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
2001 Market Size: • 900,000 Lamps• 90 million US$
Traffic Parts
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
From Patents to Miracles
用專利創造奇蹟 2003 年 3月
Summary• Leotek was established in 1993, with no products,
no market and very little money (US$36,000 capital).
• Spent 5 years searching for products to manufacture, to market and sell.
• Decided to focus on LED traffic signal lights in 1999 with a market share of 1% in U.S.A.
• In 2001, Leotek became the world 3rd largest LED traffic signal light manufacturer, with a world-wide market share of 20%
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
The Key: Use Technology to Create Miracles
IV. The Future Challenge
IV-1. What’s next ?
IV-2. Goal in LED traffic signal light
IV-3. LED commercial product market
IV-4. When you are in a pack
IV-5. Summary
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
IV-1. What’s Next ?
Success is a journey,not a destination
成功是一個歷程 ,而不是一個終點
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
IV-2. Goal in LED Traffic Signal Light
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
DialightEcolux
Precision Solar
Electro-Tech
Atlite
ITCPI
Total U.S. Market Size:• 12,000,000 Lamps• 1.5 billion US$
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
2004~5 Market Size: • 2,000,000 Lamps• 150 million US$
Traffic PartsLeotek
ONE WAY
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Potential Energy Saving of LED Products
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Energy saving of 483 mega-watts can be realized if all traffic signal lights in the U.S. are replaced with LED lamps
If all commercial signs are replaced with LEDs, a number of nuclear power reactors can then be eliminated
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
IV-3. LED Commercial Product Market
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Color Kinetics
DuraLED
PermLight
Leotek
Total U.S. Market Size:• 1.5 billion US$ (2002)• Annual Growth Rate = 20%
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Products: • Street Name Sign• Channel Letter• Illuminated Commercial Signs• Border Tube
Sloan LED
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Area of Application
Number of Patent Granted/Pending Details
LED Light Bulb 2 Both patents granted in U.S. & Taiwan
LED Step Light 1 Granted in Taiwan
LED Signs 2 Both patents granted in U.S. & Taiwan
LED Traffic Signal Light 9
4 patents granted in both U.S. and Taiwan, including 2 patent pending in 22 other countries;
Claims have been allowed in 2 patents in U.S.;
4 patents pending in U.S. and Taiwan
LED Commercial Products 3 Pending in U.S.
Total 17 ---
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek’s Patent Applications (2003)
Leotek’s 2003 Target
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003
Sales Revenue (M$)
Target
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Unit: Million US$
Turn-over Rate:(Revenue/Capitalization)
= 1.56 (2001)
= 2.15 (2003)
Revenue per Employee: = 327 K$ (2001)
= 330 K$ (2003)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
IV-4. When You Are in A Pack
• Let marketing lead technology
• Evaluate market potential and competition before jumping into a new product
• Avoid developing products that are hard to sell or not sellable
• Quickly develop marketable products that are patentable
• Competitive-ness is the key
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TMLeotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
IV-5. New Products
The following are products that have been developed and introduced to the market place by Leotek
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
LED Street Name Signs
18”
18”
48”~96”
Market Potential = 0.8~1.0 B$
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
LED Street Name Signs
18”
Leotek is the world leader in this technology
Channel Letter Module (CLM)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
LED Border Tubes (BTL)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Illuminated Commercial SignsFixed Signs
(Neon Replacement Signs)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Illuminated Commercial SignsAirport Way-finding signs
24”
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Illuminated Commercial SignsVarious Menu Boards
V-5. Summary
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
TechnologyMarketing
Financing
Quality AssuranceHuman ResourcesProduction, SalesMIS, etc.
COMPANY • When you are behind the pack - Use technology to create miracles
• When you are in a pack - Use Marketing to lead technology
• When you are ahead of the pack - Make sure you have strong marketing, technology & financing
A Brilliant
Performance
Begins with
Confidence
Saying of The Day
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
In a cyclic society, the onus is on business not just to keep up, but to stay a step ahea
d - Maddy Dychtwald, Cycles: How We Will Live, Work, and Buy
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
The key to success is not to look for the perfect answers, you have to keep
moving - Carly Fiorina, HP
V. Conclusions (1/4)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Go over,go under,go around,
orgo through
But never give up
從上面 , 從下面 , 從旁邊 , 或從中間 ,
但永不放棄
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Every morning in Africa, a Gazelle wakes up, it knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death. It doesn’t matter whether you are a Lion or a Gazelle…….when the sun comes up, you’d better be running.
V. Conclusions (2/4)
V. Conclusions (3/4)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Success is a journey,not a destination
成功是一個歷程 ,而不是一個終點
V. Conclusions (4/4)
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
A hundred years from now it will not matter what my bank account was, the sort of house I lived in, or the kind of car I drove…….
but the world maybe different because I made contributions to the world that I once lived.
Leotek Electronics CorporationThe Leader in Electro-Optics Technology
LEOTEK
TM
Thank you for your time and attention !!!