Buy or build? That's a question that always confronts system manufacturers. It makes sense to buy standard components, but you want to own the designs for components that give your product a performance edge. Starkey Laboratories has answered the question about a major component in its hearing aids by selling its chip design group to AMI Semiconductor, Inc., which produces DSP chips for a number of hearing aid manufacturers around the world. Standard products can be produced in high volumes that help lower the cost of the system, whereas the propriety components, while they are more expensive to build, can help the system manufacturer command a higher price because they give a competitive advantage to the end product.
The digital signal processing (DSP) chips that power hearing aids present a dilemma. Better processing performance is wonderful, but because the chip is such a big part of the system, a lower price for the DSP chip can drive lower prices for consumers and expand the overall market. Therefore it's tempting to go to a third-party supplier of standard DSP chips whose higher volumes enable lower component prices. But it's still possible to get high performance with a standard DSP chip, because so much of the performance of hearing aids depends on the software. That's where I imagine Starkey will continue innovating.
Starkey is one of the world's largest hearing-aid manufacturers and in recent years has been developing and introducing a series of new high-performance products that its engineers have designed. This past year it has introduced an entirely new "nFusion" software-driven architecture that eliminates feedback in its new Destiny family of hearing aids, and it has leaped headlong into the Bluetooth peripherals market with a very cool family of "BluPal" products. It has also invested heavily in basic research with the Starkey Hearing Research Center, a San Francisco Bay Area Lab headed by hearing aid research luminary Dr. Brent Edwards. Starkey will achieve significant savings from sale of the DSP design group, along with a new long-term supply contract for the basic DSP chips from AMI that will help lower its cost of components. Don't be surprised if those savings go into furrther investment in R&D and new product development that continues to move Starkey into the forefront of hearing-aid products and adcessories.
Posted by David at 10:27 PM on Jul 20, 2006 in INDUSTRY NEWS, TECHNOLOGY
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