standards coordination office the economic impacts of documentary standards: a case study of the...

Standards Coordination Office

The Economic Impacts of Documentary Standards:

A Case Study of the Flat Panel Display

Measurement Standard Erik Puskar

Standards Coordination Office

National Institue of Standards and Technology (NIST)

June 2011

• Status Report

• Assessment of a documentary standard using the NIST approach

• Why do we care?

Documentary standards in the U.S.

Getting a handle on NIST support for SDOs

• The Flat Panel Display Measurement (FPDM) Standard

Background

Findings & Illustrations

Measures of Economic Impact

•Lessons Learned

•What’s next?2

Outline

• Contractor developed

• Full report is in review

• Expected to be finalized in summer 2011

• To be published as NIST publication

3

Status Report

• Assessment of a documentary standard

• Involves communicating rich details with performance metrics focused on:

Project-specific sources of value creation, absorption, and diffusion

Generation of cumulative social benefits

• NIST has conducted dozens of micro-economic, case-based, economic impact assessments

Quantitative and qualitative

Retrospective and prospective

Utilize a microeconomic framework refined by NIST’s Dr. Gregory Tassey

Emphasizing “infratechnology”

In the case study tradition of Griliches/Mansfield4

Economic Impact “the NIST Way”

5

Why Do We Care AboutEconomic Impact?

Standards & the Innovation Process

Adapted from Gregory Tassey, The Economics of R&D Policy, 1997.

• Documentary Standards in the U.S.

Voluntary/Industry-driven

NIST plays an important supporting role

• How do we best manage NIST support for SDOs?

Over 300 NIST experts are involved in more than 1100 documentary standards committees (2011)

Impact assessments provide clues about how NIST’s expert resources should be focused: to advance measurement science and maximize economic competitiveness, safety, health, and quality

6

Why Do We Care AboutEconomic Impact?

FPDM — Background (1)

1960-1980 — U.S., Asian, and European firms productized and commercialized underlying FPD material, component, and device technologies

1992 — Significant demand for IBM Personal Computer Company Thinkpad— precursor to 14 inch “killer app”

1992 — NIST Flat Panel Display Laboratory (FPDL) established

1994-2000 — Notebook PC and FPD TV industry “take off”

1995 — VESA organizes the FPDM Workgroup with NIST’s FPDL as a collaborator and editor

1998 — FPDM 1.0 released.

2001 — FPDM 2.0 released.

2007 — VESA’s FPRM Workgroup reorganized within Society for Information Display (SID) as the International Committee for Display Metrology (ICDM)

2010 — NIST discontinues Display Metrology project funding

2011 — Expected release of Display Measurement Standard (DMS) by ICDM/SID

7

Flat Panel Display Measurement Standard (FPDM)

FPDM — Background (2)

8


Industry Value ChainTestin

g La

bora

torie

sM

easu

rem

ent E

quip

ment

Manufa

cture

rs

Original Equipment Manufacturers (OEMs)

Display Manufacturers

ComponentManufacturers

End Users

• Westar, Microvision, Autotronic Melchers, Eldim, Radiant Imaging, NEIO, AMA, Contrel, G&H, Datacolor

• Dayton T. Brown, ITRI

• General consumers• Professional

consumers

• Dell, Apple, Sun Microsystems, HP, Sony, Lenovo, Sharp, Samsung, AUO

• Boeing, Lockheed-Martin, Raytheon, Northrop Grumman

• Samsung, LG, AUO, CMO, CPT, HannStar, Innolux

• (Aerospace Displays) Honeywell, Rockwell-Collins, American Panel Corp

FPDM — Findings (1)

• FPDM standard enabled the transition to “structured dialog” between FPD manufacturers and application OEMs

Users able to specify tolerances of product attributes

Technology to measure attributes is available, reliable and unambiguous

Procurer understands how, when, and why variation will affect system performance

9


FPDM — Findings (2)

• Economic Impacts of FPDM:

Industry metrology labor-saving (measured)

SDO consensus-making labor saving (measured)

Enhanced quality of products that use FPDs, FPD industry revenues, and consumers’ “willingness to pay” (unmeasured)

Measurement device designs (a product of NIST’s role in the FPDM Workgroup) transferred to industry (unmeasured)

10


FPDM — Illustration of Metrology Labor-Saving

• Metrology labor saving (net): ~$2.4 million annually (1998-2010)

• In 1994, prior to the publication of FPDM 1.0 (1998), a NIST workshop on display standards concluded that:

Few companies could afford to follow all the display standards activities

Industry metrologists needed access to the latest measurement developments

OEMs needed a bedrock of measurement standards to enable their choice of the best display for their application.

• Other standards spoke to the issue of what to measure but nothing had been published on how to measure and how to avoid the pitfalls of bad metrology 11


FPDM — Illustration of Metrology Labor-Saving (Continued)

• Prior to the development of FPDM, a producer or buyer of flat panel displays (FPDs) would consult any (or all) of a number of existing standards, depending on the specific application and:

Expend considerable resources working out which measurements best suited a given need

Working out the numerous technical measurement inconsistencies among the various measurement standards

Negotiating agreement on chosen metrics and measurement procedures to be used in qualifying a FPD for future use

• The FPDM resolved many of these technical difficulties by offering a measurement standard with a set of measurement procedures that is unambiguous, that applied to multiple display technologies, and that was practical to utilize

12


FPDM — Illustration of Consensus Labor-Saving

• Consensus labor-savings (net): ~$640,000 annually (1995-2001)

• The range of reduced time commitment for industry WG participants by 10-1200 hours.

• Prior to the resolution of measurement issues in the FPDM, attempts to reach consensus in so technically challenging and complicated a field could be bogged down in “specsmanship”:

Reporting a measured value that could mislead or where the display is measured in a configuration in which it would never be used but provides better reporting values to hide a deficiency for competitive purposes

• NIST staff analyzed, tested, reviewed, composed, and edited the FPDM drafts under the auspices of NIST’s Flat Panel Display Laboratory

13


FPDM — Illustration of FPDM’s Revenue Impact

• One test equipment manufacturer with average annual sales of $700,000 (2005-2010) estimated that, without FPDM, sales would have been much lower, in the range of only $200,000 - $500,000

• FPDM was developed faster due to NIST’s participation

FPDM 1.0 (1998): Avg. estimate was 4.5 years faster

14


FPDM — Illustration of FPDM’s Consumer Surplus Implications

• Intense competition in the FPD industry forces prices below some consumers’ willingness to pay. Economist call this benefit, “consumer surplus”

• A few survey respondents indicated that FPDM increased consumer surplus (increased willingness to pay above competitive market prices) by 36%, 36 cents worth of value for each dollar actually spent by consumers for FPDM-supported products

15


FPDM — Measures of Economic Impact

Very conservative estimate of VESA’s/NIST’s return on investment (ROI) in FPDM

Net Present Value (NPV) in 1992: $15,573,930

Value, in 1992 dollars, of the eventual outcome of the VESA/NIST investment

Net Present Value in 2010: $56,323,545

Value, in 2010 dollars, of the 1992 NPV invested for 19 years at 7% per annum

Real Social Rate of Return: 48%

The discount rate that makes NPV 1992 = 0 and makes BCR = 1 (VESA/NIST “breakeven”)

Benefit-to-Cost Ratio (BCR): 4

NPV of benefit stream/NPV of cost stream 16


• Documentary standards have significant economic impacts, similar to the economic impact of other “infratechnologies”

• NIST collaboration with SDOs is a significant technology transfer platform

• NIST involvement in SDOs improves the efficiency of the SDOs operations by reducing consensus-making time and speeding standard release date

• NIST’s measurement know-how played a critical role in the dynamics of this global, knowledge-driven industry, enabling the “structured dialog” that lead to the proliferation of FPD applications

17

Lessons Learned

• NIST Standard Coordinating Office (SCO) plans to continue to support the development of impact assessments

• SCO will translate “lessons learned” into a strategic planning approach to advise NIST staff about the likely impact of their SDO collaborations

• Ultimately “leading indicators” of the economic impact of NIST engagement with specific SDO committees

Many economic studies point to the value of standards in general: “more is better”

The management question is, “Will this engagement in standards development be economically significant and add significant value and best support NIST’s mission?”

18

What’s Next?

standards coordination office the economic impacts of documentary standards: a case study of the...

Documents

fpdm findings

fpdm background

fpdm workgroup

publication of fpdm

development of fpdm

economic impacts of

best display

nist way slide