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Who will win and lose as nanotechnology pervades consumer goods? The answer will differ greatly by industry and product category, according to a new report from Lux Research entitled "How Nanotechnology Adds Value to Products." Nanotech could slash the cost of breast cancer treatment by 39% and add an average of seven years' to patients lives, reinventing the field -- but in another sector like automotive, nanotech innovations will add a series of small, incremental innovations from which component suppliers benefit the most.
"First-generation consumer products incorporating nanotechnology are already on the market. They show price premiums of 11%, on average, over conventional products. For example, Easton Sports' Synergy SL hockey stick is built from a carbon nanotube composite, and Wyeth's Rapamune immunosuppressant tablets are milled into nanocrystalline grains," said Matthew Nordan, Vice President of Research at Lux Research. "But these products form a poor guide to the future. Second-generation nano-enabled products will differ by tapping many nanotechnology innovations instead of just one, employing active nanostructures, and requiring new manufacturing processes to exploit."
To calculate the value that will be created and destroyed by nanotechnology in second-generation products, Lux Research built detailed, quantitative case studies of 1) a high-volume consumer truck, 2) a high-end 3G mobile phone, and 3) the course of treatment for breast cancer. For each, Lux Research identified a shortlist of nanotech innovations likely to have the greatest impact in a five- to ten-year time frame and quantified how much value would be created and destroyed if the innovations were deployed in volume -- as well as who would capture the net value created.
Based on the case studies, the report finds that:
- Nanotech's impact on a consumer truck is broad but shallow, with many
minor advances. If six emerging nanotech innovations were all applied in
one model year of a high-volume truck like the Ford F-Series, tier-one
suppliers to the auto manufacturer would win the most with $493 million
in incremental revenue for that model year. Consumers would rank next
with $327 million in cost savings over five years of use, mostly from
better fuel economy, as well as soft benefits in performance and safety.
The truck manufacturer itself would follow with a net $248 million in
cost savings and boosted resale value, plus points of differentiation
against competitors. But incumbent suppliers of materials like talc-
filled composites and microparticulate platinum group catalysts would
lose $297 million in combined sales displaced by nanoscale alternatives.
- The mobile phone case is narrower but deeper, where nanotech will
sustain existing price/performance curves. The biggest winner from
nanotech in one model of a high-end 3G mobile phone would be the
manufacturer, which could use five emerging nanotech innovations to gain
crucial market share and keep giving consumers more for their money
every year. New suppliers would earn $355 million from nano-enabled
components like OLEDs and single-chip memory solutions, at the expense
of $251 million in lost sales by incumbent suppliers.
- Breast cancer treatment sees a revolutionary, narrow-but-deep impact
from nanotech. If four emerging nanotechnology innovations were
universally applied to breast cancer treatment, patients would win the
biggest with seven years of life added on average -- a gain impossible
to quantify in dollars. Fifteen-year treatment costs for one year's
worth of diagnosed patients would drop by $4 billion -- a savings of 39%
-- and entirely new franchises would be created in new nanoscale
screening tools that replace mammography, nano-enabled MRI contrast
agents that replace biopsies, nanoparticulate ablation procedures that
replace lumpectomy and mastectomy, and nano-reformulations of existing
chemotherapy agents. Incumbent suppliers would lose: for example, entire
classes of chemotherapy agents worth billions of dollars in annual
revenue would be displaced.
"The rise of nanotechnology in consumer products will spur action from start-ups and large corporations alike," Nordan commented. "Start-ups should pay attention to their partners' and customers' soft branding issues as well as hard business case concerns: Although few consumers are likely to use a nano-enabled solar cell recharger packaged with their mobile phone, Konarka could sell millions of such rechargers to Nokia anyway if they provided a means to differentiate against competitors' phones. Corporations should consider 'blocking acquisitions' that allow them to gate the introduction of nanotech enablers rather than letting competitors set the pace, in the same way that they pursue 'blocking patents' in nanotech today."
http://www.luxresearchinc.com/
Posted 31st March 2005
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