V1.5s–product redesigns typically aimed at cost reduction, bug fixes, supply chain optimization, and / or manufacturabilty improvements–have none of the glamour of their high-bred cousin, the V1.0 new product design, or even their favored step-sibling the much touted Widget2. Often a V1.5 redesign is transparent to the end user, or changes are downplayed rather than hyped. While the most common driver for doing a V1.5 redesign is cost reduction, plain and simple, there can be other drivers, including better optimization of the supply chain–either proactively or reactively (e.g. EOL components); optimizing for manufacturing / assembly / yield / test; and bug fixes, or attempts to turn lemons into lemonade.
Occasionally a V1.5 can also provide a marketing or a pricing upside as well, although this is rare. Years ago I led a V1.5 redesign of the then best selling Palm III pda. In the end we were not only able to achieve a substantial cost down, but we added a feature twist that actually allowed for a new, higher price point in what became the Palm IIIe/x family. Of course this was not at all publicized, for obvious reasons, but a brown bag is the lunch of choice for us productization types in general
But most of the time redesigning is below the radar, digging for savings often to the right of the decimal place. Designing out boutique components and designing in no-name equivalents. Optimizing assembly, spending money on fixtures design optimization and automation instead of labor. Improving test coverage and lowering test time. Simplifying what is too complex and spending the extra effort to do the tough engineering for that which is too simple. Many world class design teams actually lager their V1.5 hit list even during the V1.0 design, whether for risk avoidance or time-to-market, and pull these back out to capture the costs savings before the true volumes hit with a quick V1.5 spin. Its also a great time to pull out the DFMEA (Design Failure Mode Effects Analysis) that hopefully was done way back when and double check for fixes that were postponed or deprioritized during the rush to V1.0 release.
Another V1.5 driver can be lessons learned from the design post mortem and from the V1.0 production ramp results. Despite best engineering efforts up front, its rare that a design is perfect. This is where its crucial to get feedback from out side of the design world: listen to what the production engineers have to say, discuss yield with a test engineer, go over failure reports with the reliability and sales teams, and listen to what the customer service and field technicians have learned.
And redesign is often not just a one shot deal–there can be V1.1, V1.2, V1.3, depending of course on product life. Cost reduction should be an ongoing effort, and its no something that should just be left to the factory and the supply chain managers. But working in conjunction with these groups is crucial.
Companies who actively enagge in design based redesigns can also realize substantial benefits from their existing vendors. Many classes of components are sold based on the idea of sole source design wins, which allows s for clout in sustaining high prices. I once had a high level product marketing executive for a leading boutique analog IC company, famed for their design support and high prices, come to me and told me that his team had just realized that my design group was were redesigning them out on product after product . I answered truthfully that it was because they weren’t listening when our buyers asked for price breaks and favored allocations based on rapidly increasing volumes. He laughed and said, “We’re listening now.” And for a while at least they did listen, and we stopped designing them out.
Cost reduction needs to be holistic–understanding true cradle to grave costs–and also needs to be in tune with business subtleties. A purchasing manager may be already buying a component at below its standard cost (resulting in a favorable PPV, or Purchase Price Variance) or cash flow constraints may in fact favor paying more in return for favorable terms. And both risk and ROI analysis are essential to make sure that the effort to do the redesign will be repaid, even when risk is factored in