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SMALL FORM FACTOR FORUM

Small Form Factor Costs of Ownership

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Feeling the warmth of the freshly printed 2013 budget or R&D project plan, you set off to surf the web for that small form factor (SFF) board with just the right blend of features. Like a kid in a candy shop or a post-holiday bargain shopper, your heart is pounding for that elusive $70 dual LAN ARM board. Before making that impulsive purchase, a voice inside your head calls out “TCO”…“Total Cost of Ownership”…all the while from high atop the search results beckons the barebones bargain basement board.

There are many suppliers of SFF boards on the web. It’s not hard to design a system around one of these off-the-shelf boards. With the latest 32-bit and 64-bit processors, the breadth and depth of supply is overwhelming. But wait…what about bring-up support? And who will be around years later if revision changes or quality issues arise?

It’s easy to just think of a board price as simply a bill of materials (BOM) cost plus mark-up. The vendor deserves to make some modest profit from selling a large quantity of boards, after paying for design costs and indirect costs of selling and supporting the products. But maybe the mark-up shouldn’t be too high; after all, we can design these boards ourselves, right? Maybe if we actually had more time and resources and less risk aversion.

The “opportunity cost” of designing your own board is the value of the best alternative usage of your time. Everyone talks about focusing on “core competencies” and “value-add.” Rather than simply beating up your supplier to reduce prices because you know how much the components cost, consider their profit margin as the amount you save by not having to design it yourself. Harder to estimate is the inherent value of their effort in wringing out the design, tweaking the firmware, loading operating systems and testing device drivers. All things you’d face yourself in the very likely event your board doesn’t work 100% on the first pass. Don’t forget the considerable free investment of time your supplier makes during the 1-2 years of your development before they get a production PO from you. Finally, there is the time value of money and time-to-market advantage of a working board on day one. Value: Priceless. Or if the board doesn’t work, there are dozens of suppliers whose boards work fine. Double-check that it’s not “operator error.”

TCO includes all of the costs you pay for the product over time, from up-front design until the last field service spare/repair. For a thorough analysis, consider vendor warranties (30 days, 1 year, 2 years) and whether they optionally sell additional years for a few extra percent. After the warranty ends, you cannot RMA the boards for repair/credit. What is the cost of field failures of your system? What does your end user’s down time cost, and how does that impact your company’s reputation and future business as well as your job security? For remote installations, truck rolls are expensive. Mean time between failures (MTBF) calculations predict reliability using Telcordia or other methods. Be sure to consider parameters used such as temperature and ground. Your system design and thermal solution / air flow have a huge impact on actual reliability. This is your issue, not just the board vendors.

Finally, what are the costs of revision changes, the resulting re-qualifications / re-certifications and obsolescence? Does the board use embedded roadmap and long-lifecycle components? Does your vendor offer a last time buy opportunity? How much inventory will you have to stock for the remainder of the program after your vendor’s EOL, including service spares? What is your accounting team’s cost-of-money for inventory sitting in the warehouse? What is your supplier risk, could they go out of business? Is that $70 Internet seller reputable, or just fly-by-night? Is the board built to an industry standard where an alternate source could be found? A better approach is to qualify a second source up front to mitigate some risk. All these considerations are not to be taken lightly.

Go ahead and resume searching the web or contacting your rep or distributor. Gather information, but don’t be too quick to pull out the credit card or write the purchase requisition. In these economic times, nobody wants to spend more than absolutely necessary for a board. While hobbyists and researchers can focus on price and get by, system OEMs are wise to monetize the entire SFF TCO lifecycle costs.