IHS Insight - Smart Meter Market
IHS IMS Research covers this area in depth and can provide some context for these teardowns. Per IHS IMS Research's report entitled 'Smart Electricity Meters - World - 2011'
The World Market for Smart Electricity Meters
- In 2016, global annual revenues of electricity meters are forecast to increase to more than $8 billion, primarily due to smart metering rollouts in the EU, Brazil, the UK, and China.
- Global annual shipments of electricity meters are forecast to remain relatively stable at around 148 million units from 2010 to 2016.
- Annual shipments of advanced electricity meters are forecast to increase from 35 million units in 2010 to 88 million in 2016, while revenues are forecast to more than double to $6.4 billion in 2016.
It is worth noting that in our 2011 figures estimating smart meter shipments - our estimates for units shipped is much lower than the volumes used as 'assumed' forward-looking volumes.
100,000 Average Annual Production Cadence
15 Production Lifetime Estimate
For the purposes of this teardown analysis, we have assumed an Annual Production Volume of 100000 units and a Product Lifetime Volume of 15 year(s).
Teardown volume and production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed volumes are different by an order of magnitude, minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis because of this.
The costs in this BOM analysis are the costs to the actual producer - the contract manufacturer (EMS provider). Most assemblies were labeld with EMH's logo, this meter is also made in Germany. This leads us to the assumption that this meter is produced by EMH.
IHS IMS Research suggests that each of these parties (Enel, Elster, EMH, and Echelon) - with the sole exception of Landis+Gyr, purchase very modest volumes annually of meters, and that based on this information - were we to fully account for the cost implications of such low volumes, the material costs could be much higher - especially for sub-assemblies that are custom-made for the meter in question. Charges like NRE charges and tooling - when amortized over just a few thousand units - have a much bigger 'per unit' cost impact, than if they are amortized over millions of units produced.
Furthermore, when purchased in modest volumes (10's of thousands of components) most electronic components are purchased through distributors whose markups can vary a lot, based on those production volumes. Manufacturers building in modest volumes are the types of customers where distributors such as Avnet, Arrow, Future, and others 'make their living' (i.e. charge greater margins), further driving up prices and making accurate estimations more difficult. There can be a lot of variability on these component costs.
It is important to realize that IHS iSuppli BOM costs are just that: a total of the unit costs of all of the items in the bill of materials. Please note below many of the costs that are not included in our analysis are listed below.
Total BOM: $62.11
Top Cost Drivers below: $32.89
% of Total BOM 53%
Main Cost Drivers below
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4-Layer - FR4- (Qty: 1)
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236-103, - (Qty: 2)
236-104 - (Qty: 2)
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MELF Type- (Qty: 190)
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Not Included in Analysis
The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.
We do provide an Excel tab 'Overall Costs' where a user can enter their known (or estimated) pre and post production costs to build a per unit cost reflective of theirs actual expenditures.
In the electronics manufacturing space, very few companies build their own hardware anymore. Even very notable companies like Apple, design their own hardware, but most designs are then outsourced to EMS (electronic manufacturing services) providers - such as Foxconn/Hon Hai, and many others - including more regional players who focus on industrial markets like Enics in Europe. All of these EMS providers operate in basically the same way - and typically help manage the purchasing of smaller, common components such as resistors, capacitors, and the like, and will leave the negotiation of key components (integrated circuits and modules) many times to the OEM that designs the product - though all of this can change from provider to provider and depends on the OEM's desires and capabilities. Our analyses always assume a generic EMS provider's involvement, though our standard deliverables do not typically estimate the additional margin that an EMS provider would 'tack on' to their cost. It is possible, using the 'Overall Cost Assumptions' tab in this analysis to account for, based on user assumptions, many of these costs that go beyond the normal scope of teardown analysis.
Country of Origin
For the purposes of this analysis, we are assuming the following country(ies) of origin for each level of assembly, based on a combination of 'Made In' markings, and/or assumptions based on our knowledge of such equipment.
Display - Germany
Main PCB - Germany
Misc PCB Assemblies - Germany
Other - Enclosures / Final Assembly - Germany
Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of 'finished' sub-assemblies (which varies from product to product), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.
Labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. "Auto inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. This calculation is affected by country or region of origin as well.
Component counts by assembly and the number of assembly are indicators of design complexity and efficiency.
Component Qty: 309 - Main PCB
Component Qty: 209 - Misc PCB Assemblies
Component Qty: 54 - Other - Enclosures / Final Assembly
Component Qty: 1 - Display