HOW FAR can the app economy grow? Can the acquisition of an application like Whatsapp for a whopping US$19bil (RM60.61bil) announced by Facebook earlier this year occur again?
According to Ken Fisher, founder, chairman and chief executive officer of US-based independent investment adviser Fisher Investments, the thing investors should be most cautious of is overconfidence.
“It’s because of the crazy people out there who forget fundamentals and think all life is an app. The other is because of the crazy people there who think they are the answer to all the world’s problems,” he told StarBizWeek.
In fact, what Fisher thinks will be in demand are physical consumer products doing phenomenal things.
An example of a local company doing just that is Databitz Electronics Service or DES Sdn Bhd.
DES has been helping companies ranging from SMEs to multinationals to design various physical products that incorporate unusual functions, from home and office retail appliances like audio visual amplifiers, half boiled egg makers, health care equipment to elevator controller testers.
Founder and managing director Yu Chee Leak said the company, which he started with a few partners after about a decade of employment, during which he worked jobs ranging from being a technician in a computer shop to a service engineer with various electronic manufacturing companies, is a continuation of his interest in what electronics can do.
“It wasn’t easy, we started with purely supplying electronic component and testing of the electronic printed circuit boards (PCB),” he tells Metrobiz.
With RM10,000 in capital and one clerk, he started the company in a rented 1,400sq ft office in Sungai Petani, Kedah in 1999. Back then, that was all he needed to do everything by himself.
The company subsequently started doing more testing work, which included testing computer hardware, CD players, audio amplifiers and other electronic equipment.
Yu said thanks to his exposure to the various requirements for different electronic appliances, he was able to understand how they worked and was able to design different test jigs for these appliances.
As more testing jobs moved to China, he said the company moved on to do assembly and testing from 2001 to 2005. He, invested about RM100,000 for an assembly line and hired a few factory operators before moving on to doing design work in 2007.
He says he realised the company needed to move higher up the value chain because the margins for assembly work were low and he still had to worry about payrolls when the assembly work slowed.
The company hasd since expanded to a rented 4,800 sq ft shop lot in Permatang Pauh, Penang for all the design, assembly and testing of original design manufacturer (ODM) products.
“We now cover designing an electronic product from scratch to when it becomes a functional and marketable product,” he said.
He elaborated that design work covers hardware and software design, PCB assembly, mold fabrication, test designs and others.
With contract values ranging from RM4,000 for simple development to RM1mil, which includes PCB assembly, he said these are mainly for low-volume products for niche customers.
“One recent example is LED lighting that is durable and stable enoughfor heavy vehicles which we manufacture for a client which subsequently exported the product to US,” he said.
Another example is a wearable device that is able to detect a hypoglycaemia attack in diabetic patients and sends a message via smartphone to caregivers.
Yu said the the device, which consist of a wristband designed by his company, has the ability to detect the cold sweat associated with a hypoglycaemia attack via a sweat sensor. The wrist band, which is paired to smartphone via bluetooth, makes a phone call or sends an SMS when the wristband detects a cold sweat.
This is made possible thanks to the software in a mobile application that makes decisions based on threshold settings.
These are just some unique examples of products that have yet to hit mainstream market.
“A lot of testing needs to be done as it is a medical product and it has to have high reliablity,” he says.
He added that when the companies behind the devices are able to secure large orders, they then engage large manufacturing companies to mass-produce the products.
Currently, the company is helping another company to manufacture a multi-function Islamic clock.
The clock, apart from having backup battery which prevents the clock from shutting down during a power outage, also allows users to programme Quran readings to be played according to prayer times.
“Users can also change the colour of the clock display according to their mood,” he says.
The company will soon be moving to a new 8,000sq ft two-storey semi-detached factory in Sungai Petani, Kedah to cater to more design work from SMEs next year.
Foreseeing more demand for smart products, he says the new factory will also make use of more sophisticated testing equipment to ensure that the products function as required.
“Design involves functionality and reliability as well. We will also develop our own products with our own branding in the near future,” Yu says.
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