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North Coast May update

Thu 18 May 2017 by mskala Tags used: , , ,

It's been a while since I posted an update on where things are going with the synthesizer business, so here are some notes.

The next major milestone will be opening the the Web storefront, after which I can actually start selling products. I still have a few legal and accounting kinds of issues to resolve before I can do that: getting a bank account for the business; resolving a few questions about bookkeeping procedures; registration to collect sales tax in provinces other than Ontario to the extent that that may be necessary; and so on. I've resolved the import/export issues I was facing, which had been a major sticking point, and those went more easily than I had feared.

On actual production of products: I organize my products by "modules," each of which represents a specific design for part of a synthesizer. Each module may actually represent several different specific products aimed at different levels of hobbyists. My first one, probably the only one I'll have at the initial launch, is the MSK 010 Fixed Sine Bank, which will be available in three different forms: a fully assembled 8HP module for $320, a do-it-yourself kit for $160, and just a set of circuit boards (you supply all the parts that plug into them) for $24. Those prices are all in Canadian dollars, and may possibly change (but probably won't) before launch.

It is very popular in this market for people to buy what are called "PCB and panel" sets, containing both the circuit boards and the front panel. That's because both are items that have to be custom made and aren't easy to produce to professional quality levels in a home shop. So I anticipate that some of my customers are going to wish they could buy that kind of set from me. But I've run the numbers in several different directions and it just doesn't make business sense. The profit margin on PCBs is excellent: my customers are going to be willing to pay me a lot more for a PCB than my cost for making one, due to a combination of quantity discounts and a cultural perception that the PCB is the embodiment of the development cost. For panels, it is not good at all; if I sold "PCB and panel" sets I'd have to either charge more than people are willing to pay, or else sell the panels at or below cost, subsidizing them with the profits from the PCBs (which is effectively what I do when I sell panels as part of the "full kit" and "assembled module" options). A contributing factor there, in turn, is that I'm insisting on proper aluminum panels as part of my branding. Some of my competitors who offer "PCB and panel" make do with fibreglass panels run off on the PCB production line - which are cheaper but look like it and have some other disadvantages. So the bottom line is that I don't plan to offer "PCB and panel"; people who want that can buy the plain PCBs and make their own arrangements for panels, or else go for the full kit. We'll see how well this decision plays out in practice once I start making actual sales.

A similar decision, though the considerations are slightly different, is that I don't plan to offer "partial kits." Those are another somewhat popular option: serious hobbyists usually have a stock of standard electrical components (like, say, resistors and capacitors and some common ICs) and they may want to buy a kit that leaves those out, containing only the harder-to-find and unique parts for a given project. I had planned initially to offer something like that, but when I looked carefully at what items would be in the partial kit and what items I could reasonably leave out, it became clear that the items I would need to include would be all the most expensive items. As a result, a partial kit if I did it right would cost about 80% of the cost of a full kit, and so I'd either have to price it at about 80% of the price of a full kit (in which case I don't think people would buy it - they think "partial kit" ought to be a way to save real money) or effectively pay people to take it (which would only make sense if by doing so I could sell to customers who really would not buy my products any other way, and not harm sales of my higher-margin offerings). And on top of all that, having another product in the line-up increases my inventory and other costs. So, that's another business decision: no partial kits, at least not for the MSK 010. The choices are PCBs, full kit, or fully assembled.

One major obstacle from an engineering perspective was getting the output voltages right. This module produces its signals at a voltage level determined by the behaviour of Zener diodes, and it's operating those Zener diodes at a current level much lower than is usual for them. As a result it's tricky to calculate the relationship between the Zeners' own voltage rating and the eventual output of the module - higher voltage for one means higher voltage for the other, but there's no precisely specified formula. On top of that, I had trouble with some of my test equipment (shoddy intermittant connections in a cheap breadboard socket), and the result was that I ended up having to build five prototypes with different ratings of Zener diodes before I got one that had the output level I wanted. Five prototypes was less than the budget (six) but more than my hoped-for target (two). Meanwhile there were other smaller issues having to do with stuff like a batch of film capacitors that were physically larger than I had planned for and so didn't fit on the board in some configurations; some flaky power cable connectors; and that sort of thing. I'm pretty confident of the design now, and I have on hand all the electrical parts for the first production run. In fact, I've already done a lot of the work for the first production run - I have 50 "bare PCB" sets bagged and ready to sell, 15 "full kits" ready except for adding the aluminum front panels, and most of the work done on 9 "assembled module" sets.

Full kits and assembled modules have to wait until I get the aluminum front panels, which are currently on order from the factory in China. I expect to receive them in June. But those are the only remaining parts needed for building MSK 010 modules; I have all the others in hand. It was, as I've mentioned before, really difficult and time-consuming to arrange the panel manufacturing, much more so than I'd expected at the outset. However, I'm reasonably confident that I'm past that hurdle now - the order is placed, the price was acceptable, I have received samples of this same design from this same manufacturer and those were acceptable (with some reservations, but the bottom line is, good enough), I believe all the proper procedures are in place so that I can import the shipment without trouble, and so on. About the only thing that remains to go wrong would be if the "production" panels don't match the quality of the "sample" ones.

I'm starting to think about my next products. My second module design is the MSK 008 VC Octave Switch. It's planned to go out in the same three options and at the same prices as the Fixed Sine Bank, and I thought I had the engineering all worked out with three prototypes built. But on playing with the prototypes a bit, I realized there's another design change I want to make which will be pretty significant for users even though it's minor for manufacturing (involves rearranging some traces on one of the PCBs, which will necessitate ordering another round of prototype PCBs and building up at least one of them to be sure it works; but no other changes to the parts list), and I want to change the value of the frequency-compensation capacitors. So I figure I need to build at least one more octave switch prototype and it no longer seems realistic that I can launch with both the MSK 010 and the MSK 008 at the same time. I do have most of the parts for MSK 008 production in stock, though, so when I do press ahead on that (probably not until after I have some MSK 010 sale to generate cash flow) I should be able to bring the MSK 008 to market pretty quickly - certainly faster than the MSK 010 now that it looks like I have the panel supply chain worked out.

Third product: pretty firmly planning for that to be the MSK 007 Leapfrog Filter, which is something of a flagship for North Coast. The design (several years in the making, by this point) is in good shape. I've built one of them and it works well, but there are changes needed for things like front panel design in order to make it saleable. So it's a matter of ordering parts, building at least one prototype (with luck, only one), and then going into production. That's going to be a relatively big and expensive module, though, and it uses some parts that are expensive, so it'll cost more to get started on it than the smaller modules have cost. I'd like to have sales of the first two going first, both so that I can use them to fund Leapfrog production and so I can build some trust in the market. It's not so easy to launch a product for $560 (current projected MSRP for the Leapfrog) as a complete unknown.

I've been giving some thought to future products even further down the line. One I'm toying with is a frequency shifter. Everybody wants a frequency shifter, and there aren't really any analog ones on the market anymore, and even though it's an easy effect to achieve with digital techniques, there are a lot of people who want an analog frequency shifter. The trouble is that I don't think I can do it at a price people will be happy to pay; the MSRP for a complete frequency shifter built the way I'd want to build it could easily top $1000 and I think a lot of people who say "Oh, I'd really like a purely analog frequency shifter" would balk at that.

The thing is, though, it splits naturally into three functions that could be modules in themselves: the Hilbert transformer, the quadrature oscillator, and the modulator/mixer. Two of those are readily available as commercial modules from other manufacturers; only the Hilbert transformer isn't. And the Hilbert transformer is something especially suited to North Coast's (i.e. my) competencies - I can build one based on leapfrog technology, using my experience from developing the Leapfrog Filter, and my competitors basically can't match that. So the path for me into frequency-shifting would be to build and sell a module that is just the Hilbert transformer, and encourage customers to combine it with a quadrature oscillator and modulator/mixer that they might buy from other manufacturers. Only if it did well, I might then also sell my own quadrature oscillator and modulator/mixer to provide an all-North-Coast frequency shifter offering. I can see some pitfalls on that path and am not sure if I'd want to pursue it; but it's one of the directions I'm looking.

Other ideas I'm toying with include some kind of guitar-synthesis module; a "Voronoi quantizer"; and some intelligent sequencing and counterpoint-related modules. All of those would involve going in a more digital direction, which may or may not be what I want to do.

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