Presentation on theme: "Standards Coordination Office The Economic Impacts of Documentary Standards: A Case Study of the Flat Panel Display Measurement Standard Erik Puskar Standards."— Presentation transcript:
Standards Coordination Office The Economic Impacts of Documentary Standards: A Case Study of the Flat Panel Display Measurement Standard Erik Puskar Standards Coordination Office National Institue of Standards and Technology (NIST) June 2011
Status Report Assessment of a documentary standard using the NIST approach Why do we care? Documentary standards in the U.S. Getting a handle on NIST support for SDOs The Flat Panel Display Measurement (FPDM) Standard Background Findings & Illustrations Measures of Economic Impact Lessons Learned Whats next? 2 Outline
Contractor developed Full report is in review Expected to be finalized in summer 2011 To be published as NIST publication 3 Status Report
Assessment of a documentary standard Involves communicating rich details with performance metrics focused on: Project-specific sources of value creation, absorption, and diffusion Generation of cumulative social benefits NIST has conducted dozens of micro-economic, case-based, economic impact assessments Quantitative and qualitative Retrospective and prospective Utilize a microeconomic framework refined by NISTs Dr. Gregory Tassey Emphasizing infratechnology In the case study tradition of Griliches/Mansfield 4 Economic Impact the NIST Way
5 Why Do We Care About Economic Impact? Standards & the Innovation Process Adapted from Gregory Tassey, The Economics of R&D Policy, 1997.
Documentary Standards in the U.S. Voluntary/Industry-driven NIST plays an important supporting role How do we best manage NIST support for SDOs? Over 300 NIST experts are involved in more than 1100 documentary standards committees (2011) Impact assessments provide clues about how NISTs expert resources should be focused: to advance measurement science and maximize economic competitiveness, safety, health, and quality 6 Why Do We Care About Economic Impact?
FPDM Background (1) 1960-1980 U.S., Asian, and European firms productized and commercialized underlying FPD material, component, and device technologies 1992 Significant demand for IBM Personal Computer Company Thinkpad precursor to 14 inch killer app 1992 NIST Flat Panel Display Laboratory (FPDL) established 1994-2000 Notebook PC and FPD TV industry take off 1995 VESA organizes the FPDM Workgroup with NISTs FPDL as a collaborator and editor 1998 FPDM 1.0 released. 2001 FPDM 2.0 released. 2007 VESAs FPRM Workgroup reorganized within Society for Information Display (SID) as the International Committee for Display Metrology (ICDM) 2010 NIST discontinues Display Metrology project funding 2011 Expected release of Display Measurement Standard (DMS) by ICDM/SID 7 Flat Panel Display Measurement Standard (FPDM)
FPDM Background (2) 8 Flat Panel Display Measurement Standard (FPDM) Industry Value Chain Testing Laboratories Measurement Equipment Manufacturers Original Equipment Manufacturers (OEMs) Display Manufacturers Component Manufacturers End Users Westar, Microvision, Autotronic Melchers, Eldim, Radiant Imaging, NEIO, AMA, Contrel, G&H, Datacolor Dayton T. Brown, ITRI General consumers Professional consumers Dell, Apple, Sun Microsystems, HP, Sony, Lenovo, Sharp, Samsung, AUO Boeing, Lockheed-Martin, Raytheon, Northrop Grumman Samsung, LG, AUO, CMO, CPT, HannStar, Innolux (Aerospace Displays) Honeywell, Rockwell-Collins, American Panel Corp
FPDM Findings ( 1 ) FPDM standard enabled the transition to structured dialog between FPD manufacturers and application OEMs Users able to specify tolerances of product attributes Technology to measure attributes is available, reliable and unambiguous Procurer understands how, when, and why variation will affect system performance 9 Flat Panel Display Measurement Standard (FPDM)
FPDM Findings ( 2 ) Economic Impacts of FPDM: Industry metrology labor-saving (measured) SDO consensus-making labor saving (measured) Enhanced quality of products that use FPDs, FPD industry revenues, and consumers willingness to pay (unmeasured) Measurement device designs (a product of NISTs role in the FPDM Workgroup) transferred to industry (unmeasured) 10 Flat Panel Display Measurement Standard (FPDM)
FPDM Illustration of Metrology Labor-Saving Metrology labor saving (net): ~$2.4 million annually (1998-2010) In 1994, prior to the publication of FPDM 1.0 (1998), a NIST workshop on display standards concluded that: Few companies could afford to follow all the display standards activities Industry metrologists needed access to the latest measurement developments OEMs needed a bedrock of measurement standards to enable their choice of the best display for their application. Other standards spoke to the issue of what to measure but nothing had been published on how to measure and how to avoid the pitfalls of bad metrology 11 Flat Panel Display Measurement Standard (FPDM)
FPDM Illustration of Metrology Labor-Saving (Continued) Prior to the development of FPDM, a producer or buyer of flat panel displays (FPDs) would consult any (or all) of a number of existing standards, depending on the specific application and: Expend considerable resources working out which measurements best suited a given need Working out the numerous technical measurement inconsistencies among the various measurement standards Negotiating agreement on chosen metrics and measurement procedures to be used in qualifying a FPD for future use The FPDM resolved many of these technical difficulties by offering a measurement standard with a set of measurement procedures that is unambiguous, that applied to multiple display technologies, and that was practical to utilize 12 Flat Panel Display Measurement Standard (FPDM)
FPDM Illustration of Consensus Labor-Saving Consensus labor-savings (net): ~$640,000 annually (1995-2001) The range of reduced time commitment for industry WG participants by 10-1200 hours. Prior to the resolution of measurement issues in the FPDM, attempts to reach consensus in so technically challenging and complicated a field could be bogged down in specsmanship: Reporting a measured value that could mislead or where the display is measured in a configuration in which it would never be used but provides better reporting values to hide a deficiency for competitive purposes NIST staff analyzed, tested, reviewed, composed, and edited the FPDM drafts under the auspices of NISTs Flat Panel Display Laboratory 13 Flat Panel Display Measurement Standard (FPDM)
FPDM Illustration of FPDMs Revenue Impact One test equipment manufacturer with average annual sales of $700,000 (2005-2010) estimated that, without FPDM, sales would have been much lower, in the range of only $200,000 - $500,000 FPDM was developed faster due to NISTs participation FPDM 1.0 (1998): Avg. estimate was 4.5 years faster 14 Flat Panel Display Measurement Standard (FPDM)
FPDM Illustration of FPDMs Consumer Surplus Implications Intense competition in the FPD industry forces prices below some consumers willingness to pay. Economist call this benefit, consumer surplus A few survey respondents indicated that FPDM increased consumer surplus (increased willingness to pay above competitive market prices) by 36%, 36 cents worth of value for each dollar actually spent by consumers for FPDM- supported products 15 Flat Panel Display Measurement Standard (FPDM)
FPDM Measures of Economic Impact Very conservative estimate of VESAs/NISTs return on investment (ROI) in FPDM Net Present Value (NPV) in 1992: $15,573,930 Value, in 1992 dollars, of the eventual outcome of the VESA/NIST investment Net Present Value in 2010: $56,323,545 Value, in 2010 dollars, of the 1992 NPV invested for 19 years at 7% per annum Real Social Rate of Return: 48% The discount rate that makes NPV 1992 = 0 and makes BCR = 1 (VESA/NISTbreakeven) Benefit-to-Cost Ratio (BCR): 4 NPV of benefit stream/NPV of cost stream 16 Flat Panel Display Measurement Standard (FPDM)
Documentary standards have significant economic impacts, similar to the economic impact of other infratechnologies NIST collaboration with SDOs is a significant technology transfer platform NIST involvement in SDOs improves the efficiency of the SDOs operations by reducing consensus-making time and speeding standard release date NISTs measurement know-how played a critical role in the dynamics of this global, knowledge-driven industry, enabling the structured dialog that lead to the proliferation of FPD applications 17 Lessons Learned
NIST Standard Coordinating Office (SCO) plans to continue to support the development of impact assessments SCO will translate lessons learned into a strategic planning approach to advise NIST staff about the likely impact of their SDO collaborations Ultimately leading indicators of the economic impact of NIST engagement with specific SDO committees Many economic studies point to the value of standards in general:more is better The management question is, Will this engagement in standards development be economically significant and add significant value and best support NISTs mission? 18 Whats Next?