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Customer Focus Rules, Even in the
Technology Business
An
interview with Harvey Kaylie, Founder and President of Mini-Circuits.
By Todd Judd Erickson
Editor
The majority of news reported
in the wireless components industry regards new products, new technologies, and
market analysis and predictions. What is not widely reported is news and
commentary on good business practices and procedures. Like any other industry,
component companies must follow solid business practices and procedures to
survive and succeed.
When Harvey Kaylie was an
electrical engineer in 1969, he knew mixers. He also knew good customer service
when he saw it. So he combined his knowledge of component technology, customer
service and solid business principles to start Mini-Circuits Inc. Kaylie, now
Mini-Circuits president and CEO, sat down with RF Design in December 2002 to talk about the success of his
company, the wireless components industry in general, and how slow growth in
2003 will better the industry in the long term.
RF Design: How did you become involved
in the electronic components industry, and how was Mini-Circuits founded?
Kaylie: I
worked at various companies in the communications area as an electronic
engineer. I wanted to advance in the industry and had interviews with various
companies, but it was all the same — I would still be just a designer.
So I decided to do something
that I knew. At that time, frequency mixers had undergone a technology
revolution, the development of the double-balanced mixer. It was small and had
very good performance.
So it was a very good way to
enter a market with something I knew, and with something that, from an
investment point of view, was relatively small. In fact, I stared in the living
room of my house, and then opened a small storefront.
Underlying all of our
product development is one basic question: Why should someone buy our products?
They have to offer some advantage over existing products, whether it is better
performance, smaller size, lower price, or some combination.
RF Design: Do you agree with the market
forecasts that say 2003 will be a small, but steady growth year for the industry?
Kaylie:
First of all, let's look at history. The year 2000 was hot, very hot. Every
time you picked up the telephone, it was for a new order. It was very easy. In
fact, it was too easy, and I think it hurt the industry because there was a slackness in some of the basic virtues our industry is
based on.
In 2001 and 2002, reality
set in. However, if we look at past revolutionary changes, when there has been
new technology, there has always been a recurring process: exuberance,
speculation, bust, and then build-out.
We've gone through the
exuberance, speculation and bust cycles, and now we are in the build-out cycle.
I believe there will be more filtering of companies that are not strong enough
to survive in the build-out cycle. You have to have resources, you have to have
capability, and you have to have that devotion to supporting your customer.
Build-out is a slow process.
But technology will continue to revolutionize our social way of doing things. I
do believe there will be an uptake in 2003. I predict it will be slower
compared to the growth we have seen.
RF Design: What geographic markets in
the world do you consider promising?
Kaylie: If
I had to make a general statement, I would say there is a shift towards Asia. I
think China is a very hot territory — they have more cell phones today than we have in the U.S. I would say
we are doing quite well in Japan, and Korea is very strong. There is still
quite a bit of business in the European Union, which we still support very
heavily.
RF Design: You said you believe
technology will always revolutionize business. Are there any technologies you
have come across that will have great impact in the few years?
Kaylie: We
are putting a tremendous amount of effort and resources into low-temperature, low-fired
ceramics, or LTCC.
LTCC enables us to design circuits and print them on
ceramic. The advantage is that it automates the process. Being automated, the
costs will go down, repeatability will be improved, and size will shrink.
The reason size will shrink
is because the circuit will be designed in three dimensions. Currently, most
circuits are designed on a flat circuit board. But with this technology, we can
design in the X, Y, and Z directions. That allows for reduced size, and reduced
size in this case reflects in reduced costs of anywhere from 30 percent to 80
percent.
LTCC is just now becoming available because it takes
years to develop the technology for it. There are two aspects to the process:
design and manufacturing. We are using foundries to support us for the
manufacturing of the ceramic.
The difficult part is
design, because it takes a very specialized RF design. You have to have very
good capability from an RF point of view, plus very good software and
simulation.
It's taken our top engineers
six months to a year to become proficient in these designs. We have four design
centers — New York, California,
Israel, and India — just
designing for LTCC.
The next step in our plan,
which we are starting to implement now, is to design multiple types of circuits
on one LTCC substrate.
RF Design: What strategies did you
employ that allowed your company to survive the 2001, 2002 downturn?
Kaylie: The
first was continuing to offer new products. The second was increasing our
advertising. The third was increasing and improving our customer service.
The fourth was offering,
from an engineering point of view, much more data to engineers. For example, we
issued a 1,300-page catalog on a CD-ROM. This gives engineers more data, and it
includes technical articles. It is really focused on helping engineers make
their decisions.
Finally, we also developed
and continued to support Yoni, our online search engine for finding
Mini-Circuits' parts. We spent over $1 million to develop Yoni because it
searches actual data, not just specs. That's a very important point.
We have specifications on a
lot of our products, and they are usually based on worst-case scenarios, such
as frequency end-points. In reality, throughout their entire frequency ranges,
they may have very good performance. How would anyone know this? Not by the
spec. Only by examining actual data. There are many
applications where you don't need that full frequency range because the
applications tend to be more narrowband.
We feed data into Yoni every
day, as we develop more products. Even products that don't get into catalogs go
into Yoni. We are also working on putting it on a CD-ROM.
RF Design: Has the economic slowdown not
only changed how much business is being done, but how business is being done?
Kaylie:
There has been a major shift in the industry, and not only in
telecommunications. Before the slump, when companies planned production
schedules, they would order eight weeks out for shipment dates another 10
weeks, 26 weeks and in some cases even a year later. Today it has changed
dramatically.
Companies do not want to
have too much inventory. Business is uncertain, so companies are not ordering
so far out. Lead times have shrunk dramatically. And if someone orders in large
quantities, they still want that short turnaround, and if you don't it, someone
else will. They also don't want any repercussions if they cancel orders, so
it's a very short window for cancellation. It means you really have to be fast.
That's an issue that has affected the way we do business today.
Todd Judd Erickson is the editor of RF Design. He can be
reached at
terickson@primediabusiness.com.