One of my favorite stories about great engineering is about one of my favorite companies, Honda. A friend of mine who races motorcycles was telling me how he'd been thrashing his Hawk (Hi Dan) for years and he was going to rebuild the engine. Having worked on a number of different brands he found himself shocked at what he found. The Honda had more than 20% fewer parts! Even more to his amazement was the fact that after all of the abuse he had dished out the major moving parts showed NO sign of wear. Honda had used great engineering to decrease the number of parts and then spend the savings on making the parts that were left better. Due to this discipline Honda has an operating margin of 11%. This is higher than anyone in the car business. They engineer costs out, quality in and make money where others loose it. I love it.
Yesterday the news came out from the research house iSuppli that the new Blackberry Storm costs them $202.89 each to build. This compares to the iPhone 3G at $174.33. So while the average retail of the Storm is lower then the iPhone, Apples engineers have made a device that sells at a higher price, is percieved as premium and costs less! I love it! It's outselling the Storm four to one, it's driving post sales revenue through it's AppStore that recently crossed the half a billion downloads and it's less expensive. The profitability can be reinvested into innovation to further their advantage. I really love it!
It's such a wonderful case study of great engineering and great business that I had to gush about it.
Friday, January 30, 2009
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