Technology
Startups working at Flex’s accelerator
annual revenue drop about 9 percent since 2011, to $26.1 billion. Its share of the $409 billion electronic manufacturing services industry has fallen from 8 percent to 6.6 percent in that time, according to researcher IDC. Building stuff for startups and nontech companies is a lot more profitable than trying to satisfy giants such as Apple and Cisco, which have squeezed contract manufacturers’ margins to around 2 percent. That’s one reason San Jose-based Flex aims to become more indispensable with the Internet of Things business, says Jeannine Sargent, Flex’s president of innovation and new ventures. “We touch everything from the connected home to the connected car to connected medical devices,” she says. “Companies in all kinds of industries need to create intelligent, connected devices, but this is an area they just don’t know about.” Flex’s 2,500 product designers have created a library of 130 component designs that can help companies cobble together devices more quickly. Some of its engineers have built a tiny sensor that scans your retina, useful for products that need to log in users without keyboards. Another group focuses on bendable circuit boards that will be used in electronic tattoos to track vital signs, or in sneakermounted wireless chargers that draw power from a wearer’s movement, says Joan Vrtis, who heads that team. “We are trying to be very much in front of what our customers want,” she says. To help customers make use of its components or create new ones, Sargent has opened 23 R&D labs across the country where they can work with designers and use 3D printers and industrial manufacturing equipment to make prototypes. Flex is developing smart shelves with Intel and cropmonitoring sensors with Farm2050, a food production consortium started with Google Executive Chairman Eric Schmidt. Flex also offers startups lab space, equipment, and training at its $50 million Milpitas (Calif.) facility in exchange for undisclosed equity stakes. “We liked that they were committed to being an innovator, not just a manufacturer,” says Ian Campbell, a co-founder of NextInput, one of the startups that joined the accelerator program. His company’s chip makes touchscreens more sensitive to different levels of pressure.
Sargent
Smart jacket
The workspace puts Campbell’s wares faster to avoid getting crushed by huge on display for the thousands of larger Asian manufacturers and stay ahead of companies that visit Flex looking nimbler startups, says Miscoll. More than for manufacturing help. “I wish they would do more,” 60 sensors and components are he says of Flex. “If you aren’t Companies making driverless built in farm equipment or bathroom scales getting 50 percent of your revthat upload your daily weight to the enues outside of traditional electronics, cloud are willing to pay higher rates please contact us, and we’ll help you for engineering help and technological liquidate your assets.” —Peter Burrows shortcuts, says Eric Miscoll, an analyst The bottom line Flex projects a rise in its slim with consultant Charlie Barnhart & margins due to IoT component sales, but that Associates. For Flex to develop steady hasn’t offset slowing revenue. sales, though, it’ll have to pick the right partners—ones whose products can actually be made. In April, Flex canceled a contract with a startup called Central Standard Timing, which was Mobile trying to build a smartwatch that was less than a millimeter thick. In a June post on its Kickstarter page, CST said Flex lacked the specific manufacturing expertise needed for the watches. The The phone maker announces more startup’s chief executive officer, Dave cuts as its market value plummets Vondle, declined to comment for this story, citing possible legal concerns. HTC’s cash “is the only asset “We’ve executed on all of our obligaof value” tions,” says Sargent. It will likely take years for IoT HTC has tried a lot of things to reverse its tumbling smartphone market sales to offset Flex’s slowing PC and share: Since last year, the Taiwanese smartphone businesses, but the company has replaced its marketing company’s profit margins rose from chief, begun selling GoPro-like action 1.6 percent in 2014 to 2.2 percent this cameras and developing virtual-reality year. Analysts predict they’ll reach headgear, bet more heavily on its high2.4 percent in 2016. Flex’s business is end but poor-selling line of phones growing with clients including Ford, called the One, and booted Chief Whirlpool, Johnson & Johnson, and Executive Officer Peter Chou in favor Fitbit. Still, Flex will need to move
Investors Say HTC Ain’t Worth Squat
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