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2008 by Taylor & Francis Group, LLC

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Edited by David Tolfree and Mark J. Jackson

Boca Raton London New York

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CRC Press
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2008 by Taylor & Francis Group, LLC
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Library of Congress CataloginginPublication Data

Tolfree, David, 1938

Commercializing micronanotechnology products / David Tolfree and Mark J.
p. cm.
Includes bibliographical references and index.
ISBN 9780849383151 (alk. paper)
1. Nanotechnology. 2. Microtechnology. 3. NanotechnologyEconomic
aspects. 4. MicrotechnologyEconomic aspects. I. Jackson, Mark J. II. Title.

T174.7.T65 2007
620.50688dc22 2007025686

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Contributors.............................................................................................................. xv

Chapter 1 The Path to Commercialization............................................................ 1

David Tolfree and Robert Mehalso

Chapter 2 Entrepreneurships Role in Commercializing Micro-

Nanotechnology Products................................................................... 29
Bruce A. Kirchhoff and Steven T. Walsh

Chapter 3 Roadmapping Nanotechnology........................................................... 51

Steven T. Walsh, Bruce A.Kirchhoff, and David Tolfree

Chapter 4 Technology Transfer of Nanotechnology Products from .

U.S. Universities................................................................................. 71
Mark J. Jackson, G. M. Robinson, and M. D. Whitfield

Chapter 5 Commercialization Strategies for Public Research

Organizations: How to Move from Public Research into the
Market by a Leading Dutch Institute.................................................. 81
Kees Eijkel and Arend Zomer

Chapter 6 Market Analysis and Growth for Micro-Nano Products................... 105

Jean-Christophe Eloy

Chapter 7 Oxonica Plc: A Leading U.K. Nanotechnology Business................. 143

Kevin Matthews

Chapter 8 Zyvex Corporation: Providing Nanotechnology .

Solutions Today........................................................................ 167
James R. Von Ehr II

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vi Commercializing Micro-Nanotechnology Products

Chapter 9 microParts GmbH: The History of the Development of a

Successful German Microsystems-Based Business.......................... 189
Reiner Wechsung

Chapter 10 Shaping the Future............................................................................ 229

David Tolfree

Chapter 11 Glossary............................................................................................. 253

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Now, in the first decade of the twenty-first century, we are witnessing a quiet manu-
facturing revolution resulting from the rapid advances made in science and tech-
nology in the twentieth century. We are now in the information age and the third
industrial revolution based on a knowledge-driven economy. Small technologies, led
by micro-nanotechnology, the products of physics, chemistry and engineering and
more recently biology, are key drivers of this economy. They are already impacting
industries and are having a profound effect on the way people live and work.
The ubiquitous use of computers and mobile telephones in industry and com-
merce, satellite links for communication, improved protective sunscreens, cosmet-
ics, stain-resistant fabrics, composite materials for vehicles and sports equipment,
portable diagnostic medical devices, targeted drug delivery systems, fire and water
resistant coatings and materials for fuel cells are among some of the products cur-
rently on the market or are near-market. There is the promise of many more products
in the foreseeable future. The further application of these technologies to manufac-
ture new products and systems is well underway in the US, Asia and Europe but
their potential disruptive nature, coupled with public concerns about some aspects of
nanotechnology, have raised possible health issues that need to be examined.
The emergence of the global market is producing unparalleled opportunities but
is also forcing up the pace of international competition. Nations that have a strategy
for economic development based on innovation and the exploitation of science and
technology, since they are the key to wealth creation and prosperity, will become
leaders in this market. We can expect a high demand for new products, systems and
services to meet the growing needs of the new economies of Europe and Asia. It is
predicted that the global market for micro-nanoproducts and systems will exceed
$1trillion in the next decade.
Companies create wealth from the commercial exploitation of their intellectual
property. Taking the results of research to full commercialization requires experience
in design, manufacturing and marketing and a suitable infrastructure that encour-
ages innovation and the training of technologists and engineers with an understand-
ing of business. Competitive advantage is gained by deploying such a workforce
for the development and realization of low cost, high quality products and services
that offer at the right time unique advantages to the buyer. Failure to do this will put
delays in the full commercialization cycle.
Most Governments in the industrialized world are funding micro-nanotechnol-
ogy research and development because of the economic benefits they will bring to
their countries. At present the number of companies that have been successful in
markets for micro-nanoproducts is relatively small but this is expected to grow sig-
nificantly in the coming years. There is an urgent need to: raise awareness, encour-
age private investment, establish reliable manufacturing processes and agree on
standards for design.


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viii Commercializing Micro-Nanotechnology Products

The manufacturing of micro-nanotechnology products raises particular chal-

lenges and important fundamental issues related to costs, yields and reproducible
quality and acceptability. It is clear that new manufacturing methodologies and pro-
cesses will have to be developed together with metrology systems, particularly for
nanomanufacturing. These will need to extend across multi-disciplinary domains
(mechanical, electrical, optical, chemical and biological etc.) if a wide range of new
products and systems are to be realized. The challenge facing nations, regions and
companies who embrace micro-nanotechnologies is to understand how to manage
the economic and social changes they will bring about.
The chapters in this book have been written by some of the worlds leading
academics and practitioners. Chapter 1 sets the scene by taking the reader along the
path to product commercialization, detailing the steps that are needed to convert an
idea into a marketable product. Examples are given of products that have success-
fully entered the market. The authors relate their own experiences in developing and
bringing micro-nanoproducts to the market. Chapter 2 is about the importance of
entrepreneurship, what is needed to build a successful start-up business and the steps
that need to be taken to finance and develop a marketing strategy.
Roadmaps are essential tools for planning a future business or helping deci-
sion-makers to develop future strategies. Roadmapping nanotechnology is relatively
new, so in Chapter 3 the authors discuss the various definitions of nanotechnology
and how the issues they raise relate to the production of roadmaps. The various
types of roadmaps and the methods used to collect information and produce them
are described. In Chapter 4, the role of government agencies, private investors and
corporations in expediting technology transfer from universities is covered with par-
ticular reference to the US National Nanotechnology Initiative.
Public research organizations carry out much of the research and development
in micro-nanotechnology. This can raise problems when reaching out into the com-
mercial market place. In Chapter 5, the authors describe their experiences on how
the Dutch Institute of Nanotechnology known as Mesa +, located within the Univer-
sity of Twente, developed a commercialization strategy based on a partnership with
government and industry by applying the Triple Helix concept which is described
in the text. The roles of the partners and the collaboration process at three levels,
the conceptual level, the procedural level and the operational or practical level are
Commercialization is about making products that sell in the market place. First,
there has to be a market and then a knowledge of how to access it. In Chapter 6,
Jean-Christophe Eloy, the Director of Yole Dveloppement, a market research and
strategy consulting company and world leader in the analysis and evaluation of the
MEMS markets, explains how such markets are developed and analyzed. Examples
are given with illustrations of a number of products such as ink-jets and pressure
sensors and the markets they supply.
In. the. remaining. Chapters,. 7,. 8. and. 9,. three. leading. micro-nanotechnology.
development and manufacturing companies in the UK, US and Germany describe
how their businesses started and progressed to become market leaders. They provide
a valuable insight into how they overcame the difficulties of raising finance and
finding the right product to develop for the growing market for micro-nanoproducts.

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Preface ix

Their experiences will be a valuable aid to anybody or any company wishing to

follow a similar path to commercialization.
In the concluding Chapter 10, the author takes an optimistic but realistic view
of how the new technologies will shape the future. Based on current developments,
he makes some guarded predictions up to 2030. Beyond that although predictions
are tainted with speculation they can help readers visualize the shape of things
The book gives an appraisal of the current status of small technologies and their
ability to produce and commercialize new products and systems. An outlook and
future perspective of how micro-nanotechnologies will change the future is given to
help those concerned about economic and social change. It will be of specific interest
to people, companies, and governments wishing to invest in these new technologies
and find out about more about the path to commercialization.
The editors wish to thank all the chapter authors for their valued contributions to
this book and to the many other professionals from whom we sought knowledge and
assistance. We particularly acknowledge the proofreading skills of Valerie Tolfree,
the wife of the lead editor, whose patience and encouragement helped in the writing
of this book.

David Tolfree and Mark J. Jackson


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David Tolfree, MSc., F.Inst.P.,
CPhys., F.IoN. is the co-founder and
Executive Director of Technopreneur
Ltd, a consultancy company for the
exploitation of micro-nanotechnology,
established at Daresbury in Cheshire,
England. He is one of the founders of
MANCEF (Micro and Nanotechnol-
ogy Commercialization Educational
Foundation), an international body
dedicated to commercialization and
education, and is currently its Euro-
pean Vice-President. David is also one
of the founders of the UK Institute of
Nanotechnology and is a member of
its Advisory Board. He is a Chartered
Physicist, a Fellow of the Institute of
Physics and the Institute of Nanotech-
nology and has published over 130
papers, including news articles, chap-
ters for books and conference papers,
and has given interviews on television
and radio. He is internationally recognized as an authority on the exploitation of
micro-nanotechnology and co-authored chapters in the MANCEF International
Microsystems and Top-Down Nanotechnology Roadmap. He is currently the guest
editor and contributor to the International Journal of Nanomanufacturing; and is also
on the advisory boards of a number of international conferences.
David gained over 40 years experience in research, project management and
the marketing of research facilities while employed by the Council for the Central
Laboratory of the Research Councils (CCLRC) at Daresbury in the UK. His earlier
career was spent doing basic research in nuclear particle and accelerator physics,
reactor instrumentation, and nuclear weapons development. In 1994, whilst working
at the Daresbury Laboratory, he was the first to establish non-silicon microfabri-
cation technology in the UK, transferring much of it from Germany. At that time
he was appointed to be the UK coordinator of the first European R&D Network
in Microtechnology involving nine countries. He established the first industry-led
UK network in LIGA technology, known as the LIGA Club, and acquired over
300K of industry funding for prototype microstructure development using deep
X-ray lithography. Afterwards, he created the SMIDGEN (Small Microengineering
Intelligence Design Generation Exploitation Network), a consortium of companies
and universities, to drive the commercial exploitation of microsystems technologies.


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xii Commercializing Micro-Nanotechnology Products

Acknowledged by the UK Governments Foresight Directorate as an example of best

practice, it laid the early foundations to the UK MNT Network, part of Govern-
ments 92 million Micro and Nanotechnology Manufacturing Initiative established
in 2003.
In 2004 David originated a successful proposal to the UK Northwest Devel-
opment Agency to create a National Microsystems Packaging Centre in the North
West of England. Since that time he has been proactive in the exploitation of micro-
nanotechnology, working with Government Departments, Regional Development
Agencies, companies, research institutes and universities worldwide. In 2005 he was
the co-director of the COMS2005 international conference at Baden-Baden in Ger-
many and a session chair at the COMS2006 conference in St Petersburg, Florida.
He was on the Joint Organizing Committee of the COMS2007 conference held in
Melbourne, Australia and is currently co-chair of the International HARMST-LIGA
Commercialization Group.
Mark J. Jackson, Ph.D., M.A., C.Eng.,
M.Eng. is Professor of Mechanical
Engineering at The College of Tech-
nology, Purdue University. He began
his engineering career in 1983 when
he studied for his O.N.C. part I exami-
nations and his first-year apprentice-
ship-training course in mechanical
engineering. After gaining his Ordi-
nary National Diploma in Engineering
with distinctions and I.C.I. prize for
achievement, he read for a degree in
mechanical and manufacturing engi-
neering at Liverpool Polytechnic and
spent periods in industry working for
I.C.I. Pharmaceuticals, Unilever Indus-
tries, and Anglo Blackwells. After
graduating with a Master of Engineer-
ing (M.Eng.) degree with Distinction
under the supervision of Professor Jack
Schofield, M.B.E., Dr Jackson subse-
quently read for a Doctor of Philosophy
(Ph.D.) degree at Liverpool in the field of materials engineering focusing primar-
ily on microstructure-property relationships in vitreous-bonded abrasive materials
under the supervision of Professor Benjamin Mills. He was subsequently employed
by Unicorn Abrasives Central Research & Development Laboratory (Saint-Gobain
Abrasives Group) as materials technologist, then technical manager, responsible for
product and new business development in Europe, and university liaison projects
concerned with abrasive process development. Mark Jackson then became a research
In 2004 he moved to Purdue University as Associate Professor of Mechanical
Engineering in the Department of Mechanical Engineering Technology. Mark is

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Editors xiii

active in research work concerned with understanding the properties of materials in

the field of micro scale metal cutting, micro and nano abrasive machining, and laser
micro machining. He is also involved in developing next generation manufacturing
processes and biomedical engineering.
Mark Jackson has directed, co-directed, and managed research grants funded
by the Engineering and Physical Sciences Research Council, The Royal Society of
London, The Royal Academy of Engineering (London), European Union, Ministry
of Defense (London), Atomic Weapons Research Establishment, National Science
Foundation, N.A.S.A., U. S. Department of Energy (through Oak Ridge National
Laboratory), Y12 National Security Complex at Oak Ridge, Tennessee, and Industrial
Companies, which has generated research income in excess of $15 million. Mark has
organized many conferences and served as the General Chair of the International
Surface Engineering Congress. He has authored and co-authored over 150 publica-
tions in archived journals and refereed conference proceedings, has edited a book on
microfabrication and nanomanufacturing, is guest editor to a number of refereed
journals, and has edited a book on surgical tools and medical devices. He is the
editor of the International Journal of Nanomanufacturing, International Journal
of Molecular Engineering, International Journal of Nanoparticles, International
Journal of Nano and Biomaterials, and is on the editorial board of the International
Journal of Machining and Machinability of Materials and International Journal of
Computational Materials Science and Surface Engineering.

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Kees Eijkel David Tolfree
Kennispark Twente Technopreneur Ltd
Netherlands Denton, Manchester, United Kingdom

Jean-Christophe Eloy James R. Von Ehr II

Yole Dveloppement Zyvex Corporation
Lyon, France Richardson, Texas
Mark J. Jackson
Birk Nanotechnology Centre and Steven T. Walsh
College of Technology Alfred Black Professor of
Purdue University Entrepreneurship and
West Lafayette, Indiana Co-Director of the Technology
USA Management Center
Anderson School of Management
Bruce A. Kirchhoff University of New Mexico
Professor of Entrepreneurship Albuquerque, New Mexico
School of Management USA
New Jersey Institute of Technology
Newark, New Jersey Reiner Wechsung
USA microParts GmbH
Dortmund, Germany
Kevin Matthews
Oxonica Michael D. Whitfield
Yarnton, Oxfordshire, Micromachinists LLC
United Kingdom Purdue University
West Lafayette, Indiana
Robert Mehalso USA
Microtec Associates
Fairport, New York Arend Zomer
USA Centre for Higher Education Policy
Grant M. Robinson University of Twente
Micromachinists LLC Netherlands
Purdue University
West Lafayette, Indiana


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1 The Path to
David Tolfree and Robert Mehalso


Introduction................................................................................................................. 2
Infrastructure for Commercialization......................................................................... 4
Basic Requirements......................................................................................... 4
Disruptive Technologies..................................................................................4
Government Infrastructure Programs............................................................. 5
Clusters and Supply Chain Networks..............................................................6
Intellectual Property and Patents.................................................................... 7
Steps to Commercialization........................................................................................ 9
Meeting the Challenge.....................................................................................9
Ideas and Concepts........................................................................................ 10
Design, Modeling, and Simulation................................................................ 10
Integration...................................................................................................... 11
Standardization.............................................................................................. 12
Manufacturing............................................................................................... 13
Prototyping.................................................................................................... 13
Packaging....................................................................................................... 14
Testing and Reliability................................................................................... 15
Final-Product Realization and Marketing..................................................... 15
Examples of Products that have taken the Commercialization Path........................ 17
The Ink-Jet Printer......................................................................................... 17
A Brief History of the Ink-Jet Printer................................................. 17
Nano Coatings on Textiles............................................................................. 18
A Portable Blood Analyzer............................................................................ 19
Practical Experiences in Commercializing Micro/Nano-Based Products...............20
References................................................................................................................. 27

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 Commercializing Micro-Nanotechnology Products

The ultimate value of any technology to society is its ability to generate useful and
marketable products and systems using available practical knowledge and skills.
Unlike curiosity-driven scientific research, the purpose of technology is to apply
knowledge to facilitate design and manufacture.
New products result from years of research and development. Research gener-
ates new knowledge and therefore intellectual property (IP). Real wealth derives
from the commercialization of that IP. Possession of intellectual property is a neces-
sary beginning of the commercialization process. Creating profit from commercial-
ization is industrys main interest and purpose. This is not the main purpose or first
interest of academia since it derives most of its funding support from government.
Universities are, however, under increasing pressure to raise revenue by exploiting
their IP. Most have set up commercial offices that operate knowledge and technology
transfer schemes to expedite revenue.
This difference of purpose identifies the fundamental cultural gap between
industry and academia. Most government bodies (national and regional) now recog-
nize this cultural gap and are directing their funding strategies more towards projects
that are likely to generate economic value and produce a return on the investment.
Research and development programs are more likely to be funded if there is a clear
path to commercialization and hence wealth generation. Funding bodies now look
for a closer link with industrial priorities than to academic vision. The latter is, and
will always remain, the source from which ideas and new initiatives emerge.
Miniaturization technologies encompassing micro and nanotechnologies are
current leaders in the industrial revolution that is driving the new economy. These
technologies have the potential to provide an unlimited range of new products by
leveraging skills from across many domains. They can be disruptive and thus cre-
ate new product-market paradigms. Disruptive technologies lead to innovations that
have a discontinuous rather than evolutionary nature.1 These discontinuous innova-
tions can create unique products, processes, and services that provide exponential
improvements in value for the customer or end user. But disruptive technologies are
unstructured and have uncertain technological outcomes, making commercializa-
tion difficult to quantify and justify financially.2 They attract risks that have to be
balanced against benefits when planning a development and marketing strategy.
Many products have evolved over the last ten years using established manufac-
turing methodologies developed for the semiconductor industry. These microcom-
ponents and microsystems are embedded in products and systems that are now part
of everyday life. Some examples are mobile telephones, laptop computers, digital
cameras, ink-jet printers, and a huge range of medical diagnostics. However, new
products being produced using nanotechnologies largely depend on an advanced
understanding of the behavior of materials and processes at the molecular level,
where properties are different from operation at the more familiar macroscopic level.
For example, there may be some toxicity issues associated with nanoparticles used in
the formulation of a range of chemicals for consumer products, like sunscreens and
cosmetics. Here, governments generally agree there is a need for further research

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The Path to Commercialization 

Cash-flow Benefits


Market Launch

Time: years


Figure1.1 Time-to-market reduction.

linked to new materials development to determine whether existing regulations for

handling and manufacturing toxic chemicals need to be augmented when particles
reach nano-dimensions.3 The inevitable convergence of bio- and nanotechnologies
will produce unlimited opportunities for manufacturing new materials and products.
In the pharmaceutical and biomedical industries, such products will have to undergo
stringent tests and evaluation before they are accepted. This delays production and
raises costs.
The challenge facing researchers, technologists, and manufacturers is whether
the same well-trodden path taken to commercialize macroproducts can be used for
products based on a combination of micro- and nanotechnologies. This challenge
will be greatest in the life sciences, which include medical diagnostics and surgical
techniques. These new devices and techniques will revolutionize medical practices
and health care.
The challenge for companies is to reduce the time to market for new products as
illustrated in Figure1.1. This is particularly relevant for small companies where cash
flow dominates profitability and survival of the business.
In this chapter, we set out to describe the steps on the ladder that define the com-
mercialization path for new micro-nanoproducts and systems. The complex, multi-
disciplinary and potentially disruptive nature of the processes used to manufacture
micro-nanoproducts and systems makes advances along the path interactive. This
path leads to the market but does not guarantee the product will be globally com-
petitive and create a sustainable business. The issues that need to be addressed and
the pitfalls and barriers that need to be overcome to achieve full commercialization
of an end product from concept to final market penetration will be described. Some
examples of products that have been successfully commercialized will be discussed
at the end of this chapter.

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 Commercializing Micro-Nanotechnology Products

Infrastructure for Commercialization

Basic Requirements
The absence of a suitable infrastructure that supports research, product develop-
ment, and manufacturing of an end product is the main barrier to developing any
commercialization strategy. Ideally, an infrastructure must support and incorporate
a seamless path from concept to end-product realization for the market. The prereq-
uisite for the government of a nation is to understand that success in the global mar-
ket will bring economic benefits that surpass its capital investment. The challenge
facing both public and private investors is to ensure the quality of the management,
particularly relevant to emerging technologies, where there is a greater risk element.
Technology alone will not ensure that products can be manufactured in volume, at
costs a customer is willing to pay, and then delivered to the customers at the right
time. Good management of the technological exploitation process is therefore an
essential element for success.
It is necessary for a nation to link its world-class research with a supporting
exploitation path if it is to succeed in the global economy. Industry can no longer
compete by selling products made with standard processes that can be applied any-
where in the world, particularly with countries with low-cost economies. Traditional
manufacturing is now moving to Asia where labor costs and hence manufacturing
costs are lower, and therefore profitability is higher for those who own the IP. Busi-
nesses must constantly innovate to raise the quality of production, introduce new
product lines or services, and add greater value to their outputs. Those that embrace
the new technologies will survive and prosper. Micro-nanotechnologies (MNTs) are
among those enablers that will lead to the evolution of new products and new indus-
tries. Some of these will be different because they can have a disruptive technol-
ogy base. That may create problems for those unprepared for the changes that such
technologies will bring about. For example, ink-jet revolutionized printing in a very
short time, causing difficulties for manufacturers of typewriters and more conven-
tional forms of printing that had been unaware of the technological developments.
Even if they had been aware, they did not have the technical knowledge or manufac-
turing infrastructure to support this new printing technology.

Disruptive Technologies
A more detailed text on disruptive technologies can be found in Chapter 2, so here
we shall just give a brief summary of what they are, since they influence the type of
infrastructure required to enable companies to maximize commercial benefits.
Disruptive technologies are those that do not support the existing product manu-
facturing linkages within the industries that embrace them. Thus, the companies
that adopt these technologies must essentially revolutionize their manufacturing
practices. This is nearly impossible for small companies as they lack the technology
infrastructure or resources to dedicate to this task. It is also difficult for large com-
panies to make changes and divert resources from what may currently be profitable
endeavors. The innovation process that results from disruptive technologies is called
discontinuous, where progress is made not through the conventional incremental,

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The Path to Commercialization 

Technology Push

State of
Basic Bottlenecks Stable
Research Technological New
Development Technology

Force Fit Modifications to Robust

Prototypes Existing Processes Infrastructure

Nonexistent Initial Market Market New

Market Market Augmentation Markets
Channels Acceptance New markets utilise e.g Inertial sensing
(primarily (one market accepts existing product- devices for multiple
developed for device technology technology, paradigm applications
Internal then industry specific forming product
customers) vehicles emerge) platforms

Market Pull

Figure1.2 Infrastructure model for discontinuous innovations.

continuous, or generational evolutionary processes, but rather through breakthroughs

and significant modifications among a wide array of technologies. For this reason,
to succeed with these technologies, governments must create an environment that
supports discontinuous innovation. An infrastructure model is shown in Figure1.2.
This often requires investment in cutting-edge research, facilities, and equipment.
Many large companies invest in their own research and development because it is
critical for them in order to maintain their economic competitiveness. However,
smaller enterprises need help. It is here where government investment has a pivotal
role to play.

Government Infrastructure Programs

A number of government-supported infrastructure programs now exist in many
countries in Europe, Asia-Pacific, and in the U.S.A. Details of most of these pro-
grams can be found on appropriate Web sites. We shall outline a recent program
established in the United Kingdom.
After accepting a report by the U.K. Advisory Group on Nanotechnology Appli-
cations4 in 2003, the government sanctioned an investment of about 90 million
for a micro-nanotechnology infrastructure development program. This leveraged an
additional 300 million from development agencies and industry, thus encourag-
ing a wider industrial interest, largely absent before 2003. Funds were provided to
enhance some recognized centers of excellence and create new ones and also to sup-
port new industry-related projects. A key element of the infrastructural program was
the formation of a national MNT network5 to bring together all the centers and the
12 regional development agencies into a working partnership. The object of this was
to provide a market-orientated focus for facilities, people, and organizations engaged
in MNT in the U.K.

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 Commercializing Micro-Nanotechnology Products

Global Funding for Nanotechnology R&D Programs

Total World Funding on R&D > $10 Billion in 2005.

(since 1997 $18 billion)
U.S. ~$2.56 billion ($435 million VC funding)
European Union (FP6 + NGovs) ~$2.37 billion
Asia-Pacific ~$4.5 billion
Japan ~$2.28 billion

In the continental U.S., a vast infrastructure connects federal government fund-

ing programs initiated by DARPA (Defence Advanced Research Agency) or NASA
(National Aeronautics and Space Administration) with the private sector. It is worth
noting that the semiconductor industry spawned MEMS (microelectromechanical
systems) technologies. It started as a segment of the semiconductor industry back
in the 1960s, utilizing sensor technologies and later developing its own technology
platforms. In the 1980s, MEMS became a fully established nomenclature. In Europe
the term microsystems technology (MST) was the nomenclature used. MST was
based on a wider and more descriptive definition embracing non-electronics com-
ponents like mechanical, optical, and fluidics systems. Nanotechnology started to
be used in nomenclature in the early 1990s. Today the more comprehensive terms
small technologies or miniaturized systems are used. They embrace micro- and
nanotechnologies. The interpretation of these technologies underpins the type of
commercial infrastructure needed to exploit them. Hence a difference in approach
exists between Europe and the U.S. Governments in all the major industrialized
countries are now adapting their infrastructures to include R&D support for nano-
technologies. The current level of such support is shown in Table1.1 above.
The U.S. and some European infrastructure strengths are linked to the develop-
ment of clusters. These are geographically close groups of interconnected compa-
nies and associated institutions in a particular field, linked by common technologies
and skills. Most states have one or more clusters focused on various technology or
product areas.

Clusters and Supply Chain Networks

Clusters significantly enhance the ability of state and local economies to create
wealth and build prosperity because they can act as the incubators of innovation.
The primary elements they possess needed to transform ideas into inventions are
summarized as follows:

Universities or research centers that generate new knowledge

Companies that transform knowledge into products or new services
Suppliers that provide critical components or equipment
Marketing and distribution firms to deliver the product to customers

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The Path to Commercialization 

Companies in strong industry clusters can innovate more rapidly because they can
draw on the local networks that link technology, resources, information, and talent.
Successful clusters are usually centered on a world-renowned research university.
This model for a cluster has been adapted and used successfully in many regions
and countries for progressing commercialization of MNT-based industries, notably
in Germany and the U.S. According to Grace,6 on a global scale, more than 100
microsystems companies have been created in clusters. No fewer than 35 MEMS,
microsystems, and nano clusters have been formed since the first one was created in
Dortmund, Germany, in 1986. Further examples of industry MNT clusters will be
given in later chapters of this book.
Key elements in building commercialization infrastructures are the establish-
ment of supply chain networks. These provide the support needed to ensure indus-
trial sustainability in particular sectors. It is rare for companies, particularly small
ones, to have all or even some of the experience or expertise required to design,
develop, manufacture, and market products. An MNT-based industry, like any other,
will not mature unless effective supply chains exist. Companies in supply chains do
not necessarily have to be located in the same region but can be outside the country
or region where the manufacturing is taking place. Where this applies, then, well-
structured communication networks are imperative. Having good Internet or person-
alized computer-based communications support is essential to any global business
development. Supply chains give opportunities for growth to very small companies
or start-ups. Being part of a supply chain gives visibility and accessibility to potential
customers. It also reduces risk to the company and increases customer confidence.
Micro-nanotechnology is already stimulating new business opportunities. Esti-
mating the number of companies that are involved in product development and
manufacturing worldwide is difficult. Kaiser7 estimates that currently worldwide
there are more than 4000 companies and research institutes involved in nanotech-
nology, with about 2000 focused on services, 1000 focused on products, and 1000 on
research; these contribute to the global network of suppliers. The leading countries
are the U.S., Japan, China, and Germany. China is growing fastest with more than
600 nanotechnology companies currently registered.
The inclusion of product manufacturers that make use of nanomaterials has
increased in applications areas and redefined the classifications used to describe
such companies.

Intellectual Property and Patents

A MEMS patent review has been given in the latest edition of the Micro and Nano
Technology Commercialization Education Foundation (MANCEF) Roadmap.8 Here
the authors produce an analysis of patents and patent applications based on data from
the U.S. Patent Office. Some of the key issues associated with intellectual property
(IP) protection and patents are given below.
The creation of intellectual property occurs at universities and research institutes
that are generally funded by public monies; acknowledgment usually occurs through
patent filings. Due to financial constraints, universities often do not file patents but
publish papers instead, thus putting information into the public domain and reducing

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 Commercializing Micro-Nanotechnology Products

the commercial value of the IP. In the U.S., however, there is a 12-month allowance
after publishing to file a patent. Publishing by academics often brings earlier awards
and is part of their cultural infrastructure.
Patenting is a mechanism that allows individuals as well as small and large com-
panies to protect their valuable IP. It is the only form of legal protection for assets
from which income or wealth can be derived. A plethora of help exists for those
wishing to patent. It is available through government agencies, private companies,
and consultants. The process of patenting is expensive and takes a significant portion
of budgets, particularly from small companies. Each country has its own system, so
multiple patents are needed to protect IP internationally. Patents and agreements
made in Europe and the U.S. are not always honored in Asia, so at times other pro-
tective measures have to be taken.
Patents only deal with processes or products, not with conceptual ideas. They
can also include modifications to materials and new design software. Multiple own-
ership of software can give problems when modifications made by one owner have
not been agreed to or registered by the others. Nanotechnology is raising many
issues, particularly in the biomedical field in areas like genetic modification and
drug development.
There are three types of patents: utility, design, and plant. The utility patent
covers any new invention or discovery of a useful machine, process, manufacture, or
composition of matter. These are recommended for new small companies like start-
ups owing to their extensive coverage of new products. The design patent covers any
new or nonfunctional design but not structural features. Plant patents are issued for
asexually reproducing plants.
The pathway to commercialization does not stop with the patent filing. Gener-
ally, patents from a number of sources must be compiled and integrated to build a
portfolio to protect the new product or company that may be formed to produce the
product. The new product is then developed around the portfolio of patents, and the
final product will use the patents as protection to maintain a position in the market-
place. IP can be expensive to protect and can be a deterrent to investors. However, if
a technological-based company has no IP, it is unlikely that an investor will invest
without some form of asset to protect that investment.
Micro-nanotechnology companies benefit from licensing patents if they have an
inherent value to the company, since they constitute part of its asset portfolio. Sub-
licensing to manufacturers is often done to build up specific relationships with them
and give protection from competitors.

We can summarize the basic requirements and key elements for a working commer-
cialization infrastructure as follows:

Commercialization strategy with market foresight and awareness

Appropriate level of investment in facilities for research and development
Appropriate level of investment in design and manufacturing facilities
(including prototyping and end-product development)

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The Path to Commercialization 

Trained personnel in MNT design manufacturing technologies and marketing

Knowledge of existing and potential customer base for MNT products
Engagement of stakeholders and society interest to allay fears and concerns
Suitable environment for collaboration, partnerships and network clusters
Appropriate protection for intellectual property

Steps To Commercialization
Meeting the Challenge
The ten major steps in the ladder to take an idea for a new product to the market are
shown in Figure1.3.
Each step can be subdivided into smaller sets of tasks depending on the nature of
the product and state of knowledge that exists. It is not a linear path, because of the
disruptive nature of the technology and because we live in a world where change,
challenge, and risk will always offer barriers to progress. It is not a path for the
faint-hearted or for those without determination, knowledge, and experience. Expe-
rience shows that unless a suitable infrastructure, as described above, is in place,
then it will be difficult, if not impossible, to take the steps on the path to commer-
cialization. If the required infrastructure does not exist, then companies have to seek
prototyping or manufacturing facilities outside their immediate location or country,
Micro-NanoSystem End Product Realisation
concept -design prototype End product manufacture-market


Final Product

Pilot Production

Process Steps Reliability Verification

Pre-production Prototype Manufacture

Inspection and Testing

Integration & Assembly of Micro Components

Microcomponent Fabrication

Package Design
Modeling-simulation Product
Electronics Development
Design for Manufacture

Concept-idea-foresight Test Support Functions

Figure1.3 Steps to commercialization.

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10 Commercializing Micro-Nanotechnology Products

which can substantially add to the development and production costs. Large-scale
production is another hurdle that needs to be considered early on if the product falls
into that category. Increasingly, such production can be done more economically
in countries with low labor costs. Such countries do not always have the sufficient
knowledge required to meet the stringent demands of manufacturing the product. It
is essential to have an understanding of the viability of the market for the final prod-
uct. With the rapid increase in technological development and the shorter lifetimes
of products, the reduction in the time to market has become an important factor.9
Globalization has generated the need for global networks and supply chains.
Manufacturing companies need to be part of these if they wish to have access to
services and markets that may not be attainable in their own countries at competitive
rates. There are many examples of innovative companies in the U.K. that, because
of the lack of local facilities, have had to seek such assistance in Asia, the U.S., and
Europe to manufacture their products.

Ideas and Concepts

Every new product or system, innovation or invention is born from an idea or a
concept produced by an individual or a group of individuals. These are sometimes
driven by need, sometimes by inspiration, sometimes by a desire to make money
but more often by chance. The latter usually results from an association or inter-
connection between existing products or systems.
There is a large gap between an idea and a proven concept. It may be termed a
chasm of death. Most ideas do not make it across this gap. Advancing even to a
point where an idea is conceptually viable takes both research and focused deter-
mination. It follows basically the path of any invention. In the multidisciplinary,
multidimensional fields of MNT, specialized technology knowledge is essential. The
field is relatively new, so there are unlimited applications and opportunities, but the
problem facing the idealist or company who might see such opportunities is that to
realize that vision, enthusiasm is not enough. It has to be backed up with knowing the
best way to proceed, even to advance to the proof-of-concept stage. Most researchers
applying for research grants for development projects are judged on their ability to
make reasoned cases for success, usually based on the production of demonstrators
to prove that the idea or principles used can actually realize a marketable product.
Private investors also require individuals or companies to make convincing argu-
ments or demonstrators to back up their claims. A demonstrator is still a long way
from the manufacture of a reliable end product. Our model for successfully produc-
ing a product is to be sure that each step along the path shown in Figure1.1 can be
taken. We shall outline what is required to take these steps.

Design, Modeling, and Simulation

Once a proof-of-principle has been carried out to test that the science is sound, then
a design study is the next step. With miniaturized components, devices, and systems,
an integrated approach must be taken. The design must satisfy a number of criteria.
The knowledge and tools must be available. Gone are the days of a draftsmans

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The Path to Commercialization 11

sketch design on a drawing board. Microengineering requires a different skill set

and software tools.
Computer-aided design (CAD), modeling, and simulation tools are vital for
finding the best solution to a product development, particularly when many com-
ponents have to be integrated on a single microchip or substrate. Computer sim-
ulations shorten development cycle times, lower costs, and enhance final product
performance. This enables optimization of assembly and component integration,
thus reducing the probability of failure at the prototype stage. Sometimes the first
prototype can be used as a demonstrator to test out the product specification.
Many companies now provide software packages for MEMS-based devices, but
gaps exist down at the nanoscale. Some customized software for drawing nanoscale
patterns for nanolithography is now available. Good design has to take into account
all stages of manufacture and include all aspects of packaging to achieve a success-
ful end product. Commercially available software products available from a vari-
ety of companies like ANSYS Inc. and Coventor are written for the microsystems
environment. In order to simulate complex 3-D geometries, either the Finite Element
Method (FEM) or the Element Boundary Method (EBM) needs to be used.
The accuracy of simulation and modeling is dictated by a knowledge of the
material properties and its behavior at small scale where large surface-to-volume
ratios dominate. At these levels, surface forces such as adhesion, stiction, friction,
wear, surface tension, viscosity and electrostatic charge have to be considered. Reli-
ability becomes a major problem because the lack of understanding of how material
properties age, or the rate at which they change from the original design point when
in different operating environments, is one of the many challenges facing designers.
In aerospace, automotive, and medical applications, reliability and longevity are of
utmost importance. Here, a zero tolerance to failure is required.
As we move into the nanotechnology domain, quantum effects become impor-
tant. New sets of modeling software and design methodologies are required for
atomic and molecular scale processes before any realistic advances can be taken.
Although much progress has been made in modeling and simulation, software for
use at the micro-nanoscale needs more development for accurate simulation.

The rapid growth of microchip and microsytems technology has led the electronics
industry toward integration of more functionality onto a single chip. This decreases
costs and gives increased reliability to products since they contain fewer discreet
components. A number of review articles in a dedicated edition of the International
Newsletter on Micro-Nano Integration (MSTnews)10 outline the importance of the
subject to manufacturers. In particular, the European INTEGRAMplus project11 has
successfully demonstrated the value of integrating micromechnical and microfluidic
systems based on silicon chips. This is predicated on the adoption of a multitechnol-
ogy and multidomain approach with a focus on integrating silicon-based components
with other materials such as polymers as platforms for packaging and interfacing to
the macro-world. It also provides a design methodology in the CAD environment for
the design of components and associate electronics.

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12 Commercializing Micro-Nanotechnology Products

The systems integration approach is now being adopted by most designers and
manufacturers and provides a low-cost option for companies, particularly small- to
medium-sized companies that do not have the necessary in-house experience or
resources to do it alone.
The U.S. National Nanotechnology Initiative (NNI)12 has identified manufac-
turing technology as one of its grand challenges, a key area for investment. It
has a target to establish ten R&D integration facilities or centers for nanoscale and
microscale testing and manufacturing before the end of 2007. Other countries are
pursuing similar initiatives.
Micro-nano integration has been slow owing to different levels of maturity on the
two technologies. Microsystems technology is more mature and serves many mass
markets. In comparison, nanotechnology is still mainly embedded in the research
base of many countries. Most of the current work integrates low-dimensional mate-
rials in microsystem components. The IBM Millipede Project13 is an example of
micro-nano integration. Millipede is an atomic force microscope (AFM)-based
data storage concept. Thousands of nano-sharp tips punch indentations represent-
ing individual bits into a thin plastic film; a data storage density of a trillion bits per
square inch, 20 times higher than the densest magnetic storage currently available, is
achievable. It opens up new horizons in high density data storage. Other applications
that can be envisioned are in large-area, high-speed imaging and high-throughput
nanoscale-lithography as well as atomic and molecular manipulation/modification.
Another example of micro-nano integration is the development of single molecule
biosensors that have microelectronic interfaces. These are packaged to be available as
handheld instruments and give rise to a whole range of portable biomedical devices.

Industry needs agreement on standards before any new manufacturing methodol-
ogy can progress. Manufacturing standards are a continuing issue for the MEMS/
MST/NEMS industries, but progress is being made. Unlike the mass production
associated with the semiconductor industry, where standards for processing are gen-
erally accepted, MEMS and NEMS products do not have the same magnitude of
volume production. It is too early for the adoption of standards in nano-manufac-
turing except in materials production. Additionally, each product is unique, requir-
ing different manufacturing approaches to produce the product. Here health and
safety rules will have to be adopted as more manufacturers come into business. The
setting of internationally acceptable standards is one of the many challenges to be
faced. Setting and agreeing on standards is now a serious issue for manufacturers of
products based on the use of micro-nanotechnologies. Nanotechnology poses special
problems that relate to whether top-down or bottom-up manufacturing methodolo-
gies are required.
There are many standard development organizations worldwide. Inside Europe,
the Network of Excellence in Multifunctional Microsystems (NEXUS) is a lead-
ing body. In America, the Institute of Electrical and Electronic Engineers (IEEE)
and the National Institute of Standards and Technology (NIST) and, in Japan, the
Micromachine Centre (MMC) are key players. The main international bodies are the

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The Path to Commercialization 13

Semiconductor Equipment and Materials International (SEMI) and the International

Organization for Standardisation (ISO). International Organization for Standardiza-
tion (ISO). The latter facilitates the development and communication of standards for
the semiconductor industry. It has been the leading organization in setting standards
for MEMS and nanotechnology. In 2005, an agreement was reached between the
American IEEE and SEMI to foster MEMS and nanotechnology standards.14-15 This
underpins the importance given to the establishment of standards for the new emer-
gent manufacturing industry. In addition to acceptance by the worlds leading coun-
tries, the global community must also agree. Each of the organizations above has
produced or participated in surveys and reports representing the views of their own
members. The European project MEMSTAND16 (standardization for microsystems
technology) established a roadmap to forecast the future trends of standardization.


MEMS (Microelectricalmechanical Systems)

MST (Microsystems Technology)
NEMS (Nano-Electrical-Mechanical-Systems)
RF (Radio Frequency)
CAD (Computer-Aided Design)

There is prototyping, rapid prototyping, and preproduction prototyping. All are
essential prerequisites for volume manufacturing. Modeling and simulation tools
theoretically can make it possible to take the design directly to the preproduction
prototyping stage. In practice, the tools are not mature enough for this to happen.
For this, there has to be integration of these tools with the fabrication processes; they
need to operate across many technology domains to enable designers to produce
systems-based products and services.
The manufacturing of micro-nano structured devices raises challenges. Few
companies currently have the experience or expertise to carry out prototyping
without assistance. Companies often form partnerships or strategic alliances with
foundries or specialist providers for this purpose. As more and more companies are
realizing the importance of the need for integrated solutions, the need for engineer-
ing simulation becomes a major factor to ensure company success.
The fundamental physics and engineering that govern the behavior of micro-
nanoproducts differ from their counterparts in the macro world. Conventional scal-
ing down from the macro level to the micro level and beyond usually does not work.
Prototyping places demands on design and modeling tools. There is an urgent need
for improved tools for specific needs. At the nano level, molecular modeling exists,
but for practical purposes of manufacturing, very few useful packages are available.
A working knowledge of CAD is essential. The type of simulation software used
will depend upon the application and the operational environment. As microsys-
tems increasingly have to work in complex domains, such as RF, optics, and harsh

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14 Commercializing Micro-Nanotechnology Products

environments, many different software suites may be needed to integrate the appli-
cation with a specific functionality. These enable the design engineer to predict the
behavior of microstructures and microsystems under a multitude of physical effects
such as electrostatic loads, stress, heat, and electromagnetism. These CAD products
can, as they mature, replace hardware prototyping and enable the testing of designs,
thus providing an engineering simulation solution that is fast, efficient, and more cost

Packaging is fundamental to product functionality and is required to interconnect,
protect, and provide an interface to the macroworld to facilitate human interaction.
It is the most costly part of the process cycle and can represent up to 80% of the total
product development costs. Packaging is central to the design process and must be
considered at that stage, often beginning at the wafer level. Critical features include
cost, reliability, and accuracy. Most microproduct failures have resulted from designs
that have failed when packaging solutions are added late in the product development.
The same applies for products that have embedded nanocomponents, nanomaterials,
and nanosystems.
Packaging design must relate to the operational environment. In sensor and actu-
ator applications, it must protect and interact with the environment. For other appli-
cations, it may be isolated as in accelerometers or gyroscopes. For medical in vivo
systems, complex packaging is required and can be the most important and most
costly part of the device or product. Good interference-free RF or optical connectiv-
ity is placing increasing demands on packaging when the device or component has
to operate in a harsh chemical or biochemical environment. Packaging also has to
be reliable to work in multidomain technologies that include structural, mechanical,
electrical, optical, thermal, chemical, and radiation environments.
A series of connections and interconnections is required in moving from the
nano-size domain to the micro-size domain where humans communicate with prod-
ucts. Whether it is for optics, fluidics, thermal, mechanical, or electronics, combin-
ing functions in a micro- or nanosystem complicates the interconnection schemes
and will sometimes require a new fabrication and packaging approach.
The packaging of MEMS/MST devices and systems ultimately determines their
commercial success. Each product has its own specific requirements related to the
environment in which it has to operate. MEMS packaging is more challenging than
IC packaging due to the diversity of MEMS devices and the requirement that many
of these devices be in contact with their environment. MEMS devices are more com-
plex, having 3D geometries, often with moving parts that are vulnerable to dust and
moisture, mechanical stress, and vibration; therefore, greater protection is required.
Packaging materials are critical to obtaining the correct protection in a particular
environment. Sealing and bonding of these materials sometimes require special
techniques, particularly for operation at high temperatures.
Most companies find that packaging is the single most expensive and time-
consuming part of the manufacturing process. As for the components themselves,
numerical modeling and simulation tools for MEMS/NEMS packaging are virtually

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The Path to Commercialization 15

nonexistent. Approaches that allow designers to select from a catalog of existing

standardized packages for a new device without compromising performance would
be beneficial. This is essential if large-scale manufacturing is to develop across the
wide product domains.

Testing and Reliability

Long-term reliability is essential for all miniaturized components if they are to be
incorporated or embedded into products. Failure usually means replacement of the
whole product. Production and assembly methods for integrated circuits and MEMS
systems make replacement of individual components or maintenance schemes too
costly. No product will retain its market credibility without total product reliabil-
ity assurance. Design for reliability must understand, identify, and prevent failures
before the manufacturing stage is reached. All possible failure modes in different
environments must be vigorously tested to ensure that failure model predictions are
verified. Lack of knowledge between material properties and process parameters
could lead to failure after manufacture, resulting in expensive recall for the product
and loss of manufacturer and market credibility. Some industries are more sensi-
tive to this than others, notably the automotive and aerospace industries, which are
among the large-scale volume manufacturers.
PATENT-DfMM17 (The European Network of Excellence) provides Euro-
pean industry with support for integration and reliability issues. This ensures that
problems affecting the manufacturing and reliability of micro-nano products can
be addressed before prototyping and manufacture starts. Members of this network
engage with the European Aerospace community to support manufacturers. Failure
modes need to be programmed into the test procedure. Procedures will vary for dif-
ferent types of devices.

Final-Product Realization and Marketing

The reader is referred to Chapter 6 on Market Analysis and Markets in this book, but
we will outline here some of the fundamental issues because they constitute the most
important step that needs to be considered on the path to commercialization. Funda-
mentally, buyers or customers probably do not care how the product was made or have
any interest in the technology used to produce it. Their interest in the product is based
on its performance and cost advantage. Therefore, normal marketing practices are
the same as for any other product. Companies are cautious about this because of any
adverse publicity that may have resulted from other products using the same technol-
ogy where problems have arisen. This is particularly the case for nanotechnology. For
example, new sunscreen product manufacturers often refer only to the advantages not
the technology that gave the advantages. The problems experienced by Monsanto over
genetically modified plants are often related to nanotechnology. Initially this deters
manufacturers of food or healthcare products from using the term.
Success in achieving a marketable final product means the journey is nearly
over, but the final destination of penetration into a competitive market is still to
be reached. In a changing global market where market forces operate and demand
can fluctuate, the ogre of risk lurks. There are no certainties, and success or failure

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16 Commercializing Micro-Nanotechnology Products

hangs on the marketing skills of the company and its agents. Prior to reaching the
end-product stage, the diligent company would have already put in place a marketing
strategy based on all available market intelligence. This will take into account the
sales impact that the new product will have on the competition, if any exists.
Companies often do not pay enough attention to product promotion and publicity,
although it should be inherent in their marketing strategies. This can result in a lack
of awareness of the prospective buyer, thus delaying early sales. Increasingly, buyers
scan the Internet for new products or updates of existing products. This is now an
attractive and cost-effective medium for promotion since changes and updates can
readily be made, particularly for high-tech products. But expectation and demand
must be met; otherwise credibility is quickly lost. This can be a major problem with
high-volume Internet-based sales when demand can exceed availability.
Some examples of new products now on the market are listed below. These were
taken from the Forbes.com website.18

Apple IPod with sub 100 nm elements in its memory chips

Choleterol-reducing nanoencapsulated oil, Shemen Industries Canola Active
Nanocrystals that improve the consistency of chocolate
Zelen Fullerene C-60 Day Cream
Easton Stealth CNT baseball bat
Nanotex textiles
ArcticShield polyester socks from ARC Outdoors with 19 nm silver par-
ticles that kill fungus to reduce odor
NanoGuard developed by Behr Process for improved paint hardness
Pilkingtons self-cleaning Activ Glass
NanoBreeze Air Purifier from NanoTwin Technologies, where the UV light from
a fluorescent tube cleans the air by photochemical reactions with nanoparticles

Between 2006 and 2008, the following key products will be available on

Intel products with 45 nm linewidth transistors (available from 2008)19

Batteries that are increasingly incorporating nanostructures
Flexible, cheaper, or more luminous flat-screen displays

In addition to the products listed above and many others that are likely to be
available in the coming years, we will outline below three product areas that are
having a profound impact on society: ink-jet printers, coated textiles (clothing), and
portable blood analyzers.

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FIgurE. I-stat blood analyzer and cartridge.

5) 0(06
02(06 LQFO '0'





FIgurE. Value of the MEMS markets.

2008 by Taylor & Francis Group, LLC

FIgurE. Airbag module (Bosch) source.

FIgurE. Gyro sensor (Bosch source).

2008 by Taylor & Francis Group, LLC
FIgurE. Zyvex nProber with positioners aligned 250 microns apart from each other,
just a few millimeters above the center stage.

FIgurE. This Easton road bike, created using Zyvexs NanoSolve materials, was given
to President George W. Bush in June 2006.

2008 by Taylor & Francis Group, LLC

FIgurE. Four NanoEffector Probes in a Zyvex nanomanipulator.

2008 by Taylor & Francis Group, LLC

FIgurE. Schematic diagram Respimat brochure.

2008 by Taylor & Francis Group, LLC

FIgurE. (d) Robotic system for mounting and assembling Respimat.

FIgurE. Respimat production line.

2008 by Taylor & Francis Group, LLC

The Path to Commercialization 17

Figure1.4 Ink-jet printers.

Examples of Products that have taken

the Commercialization Path
The Ink-Jet Printer
A Brief History of the Ink-Jet Printer
Some of the following information has been obtained from the Castleink website.20
The four companies that are market leaders in the supply of ink-jet printers are
Hewlett Packard, Epson, Canon, Brother, and Lexmark (see Figure1.4).
In the mid-1970s, printer companies realized the potential of ink-jet technology
that would make dot matrix printers obsolete. The challenge, however, was to develop a
way to create an affordable ink-jet printer that would reliably create high-quality prints
and work with desktop computers. It was the need for a portable, easy-to-use printer to
use with desktop and laptop computers that produced the customer demand.
The quality of the printed page depends largely on the relationship between the
ink, the print head, and the paper. Researchers had to find a way of creating a con-
trolled flow of ink from the print head onto the page and preventing the print head
from becoming clogged with dried ink. In 1976, the ink-jet printer was invented, but
it took until 1988 for it to become a home consumer item with Hewlett-Packards
release of the DeskJet.
Liquid ink-jet printers generally fall into one of two classes continuous and
drop-on-demand. In a continuous ink-jet printer, a continuous spray of ink droplets
is produced, and the unneeded droplets are deflected before they reach the paper and
recirculated for reuse. This technique permits very high-speed drop generation, one
million drops per second or faster, but is expensive to manufacture.
The drop-on-demand ink-jet printers produce ink droplets only when needed.
The two most common technologies to drive the droplets out of the print head are
thermal (used by Hewlett Packard, Lexmark, Canon, Olivetti, and others) and the
piezo-electric effect (used by Epson). The thermal technique has been by far the
most successful because printers can be produced inexpensively.

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18 Commercializing Micro-Nanotechnology Products

The biggest challenge for piezo-electric ink-jet technology is the cost and dif-
ficulty of producing print heads. Today Epson has a very successful line of piezo-
electric color printers, namely the Stylus color and Stylus photo family of printers,
offering photographic quality.

Nano Coatings on Textiles

Numerous fabrics based on nanocoated fibers are now becoming available on the
market. Based on the lotus-leaf principle, whose fine surface structure makes it
impossible for water molecules to stick to its surface, nanoparticles dispersed in
a solvent can be coated onto fabrics. During volatilization, the nanoparticles inde-
pendently start to affix themselves to the substrate surface, align themselves, and
eventually form a network-like structure. This self-structuring process works down-
wards, sideways, and upwards, resulting in a three-dimensionally linked network.
The U.S. company Nano-Tex LLC has developed and licensed a range of fab-
rics under the labels Nano-Care, Nano-Dry, Nano-Pel, and Nano-Touch. The
fibers of these fabrics have been enhanced to make them behave like the lotus leaf
with stain-resistant properties but with their initial material properties remaining
unchanged, i.e., they are machine washable and can be tumbled dried; and they
feel, look, and possess breathability qualities like the original fabric, so they remain
totally unaffected by the treatment.
In the nano-enhanced clothing, the fibers have tiny whiskers aligned by spines
to repel liquids, reduce static, and resist stains. The properties can be summarized
as follows:

Water droplets simply pearl off the fabric

Dirt, grease, and oil spots can be easily removed using a little water
The impregnation is very durable and remains virtually unaffected by wear
and tear or washing
The impregnation can be reactivated at any time by the application of heat
(e.g., from a dryer or iron)

The treatment keeps wearers dry and comfortable by taking moisture away from the
body at least ten times faster than most resin-treated cotton fabrics available today.
A report published in Innovative Products Based on High-Tech Textiles21 states
that the future of the textile and clothing sector lies not in price reduction but in
more intelligent products with additional functionality. It classified intelligent
clothing into five major areas: transfer systems; adaptive systems; smart clothing;
transponder systems; and microtechnology and nanotechnology.
The textile industry is vital to health and competitiveness of many countries
economies. Many U.S. and European companies outsource manufacturing to Asia,
but they retain much of the IP. Nanotechnology offers solutions for keeping the tex-
tile industry competitive through the use of nanotechnology. The wider availability
of Nano-Tex stain-resistant clothing and fabrics is starting to revolutionize the textile
industry. Europe (EU) has identified the use of nanotechnology as the key to the
future competitiveness of its textile industry.22

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The Path to Commercialization 19

Figure1.5 Nano-Tex shirt showing coffee stain removed.

Nano-Tex shirts are some of the early products that are finding their place in
retail outlets. The authors possess products like the ones shown and can verify that
they repel most materials that stain, such as red wine, coffee, blackberry jam, tomato
ketchup, and mustard (see Figure1.5).

A Portable Blood Analyzer

The i-STAT Corporations handheld blood analyzer system, the i-STAT System23 (see
Figure1.6), has the potential to revolutionize the way healthcare is administered. It
developed a low-cost blood analysis instrument that fits in the palm of the hand. The
device is used with one of many different test cartridges to produce accurate results
from just a few drops of blood in about 2 min. The tests include electrolytes, blood
gases, immunoassays, and coagulation measurements. The instrument is completely

Figure1.6 (See.color.insert.following.page.16.).I-stat.blood.analyzer.and.cartridge.

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20 Commercializing Micro-Nanotechnology Products

automated and requires no medical specialist to operate it. Each cartridge is capable
of performing up to eight tests. The portable blood analysis system eliminates the
traditional process of sending a blood sample to a central laboratory for analysis
then waiting for some time before the results come back to the patient. Adopting this
device means major changes to the way hospitals do blood tests. This initially did
raise, and still does, problems of acceptance by the professionals, as it is seen as an
example of a disruptive technology that threatens jobs and traditional practices. This
is a common problem with new medicine and healthcare diagnostics when the limi-
tations are not due to the technology or public acceptance but to hospital laboratory
management adapting to change.
Over the last 5 years, the acceptance problem has been largely overcome, and i-
STAT has doubled its revenues. It hopes to increase its growth rate significantly over
the coming years. Currently 15 million cartridges are being manufactured each year,
but the company has the capacity to produce 40 or 50 million units.

Practical Experiences in Commercializing

Micro/Nano-Based Products
The methodology of commercializing products has remained fundamentally
unchanged since the first Industrial Revolution. Design, prototyping, piloting, and
production processes have become more efficient through new techniques such as
lean manufacturing, as well as computerization and automation. However, most of
this knowledge and commercialization infrastructure is optimized for products at
the macroscale, not the micro- and nanoscale.
In practice, every step in the commercialization pathway for micro- and nano-
based products requires significant new knowledge and new approaches. In this
section, the commercialization pathway will be viewed from the perspectives of
conceptualizing, designing, prototyping, piloting, and manufacturing micro- and
nanosystem-based products in 15 different companies, all of which had manufac-
tured products as a basis for their business model. These companies were focused
on automotive, aerospace, medical, military, telecommunications, or consumer mar-
kets. Each company faced challenges at every step on the commercialization path-
way when trying to adapt an infrastructure based on commercializing macro-based
products to build a micro- or nano-based product. Many micro- and nano-based
products travel the commercialization pathway toward the marketplace, but few are
able to overcome the challenges. Actual company names have not been used to pre-
serve confidentiality.
As with most new technologies, micro- and nanotechnology-based product con-
cepts are primarily developed in research environments at universities and research
institutions. Fundamental intellectual property is developed from that beginning.
Because micro- and nanotechnology are in their infancy, most original patents are
still in effect and must be licensed for product companies to have freedom to oper-
ate. This creates a significant burden, particularly for start-up companies that must
negotiate numerous licenses to insure freedom to operate and produce a product. It is
difficult for a start-up company to know what intellectual property it may need when
the product has not yet been designed. From our sample of start-up companies, each

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The Path to Commercialization 21

had to license intellectual property from more than one source. This is understand-
able since most research in micro- and nanotechnology areas is funded by govern-
ments. Many funded programs focus on similar areas at different universities and in
various countries. Principal university investigators collaborate with one another on
a global basis and move from university to university. This results in a dispersion of
intellectual property that is difficult to aggregate to form the basis for a company.
In one example, at a major United States university, more than 25 microtechnol-
ogy-based patents were accumulated in the university portfolio. When the patents
were analyzed for commercial opportunity, there was not enough intellectual property
for a start-up company to have freedom to operate. However, after extensive searches
to explore the aggregation of patents from other universities, three companies were
formed. Standing alone, none of the universities had hope for a return on their research
investment when considering their individual patent portfolios. However, the aggrega-
tion of patents resulted in all institutions having a return on their investment.
Many of the micro- and nano-based start-up companies considered here did very
little intellectual property analysis some did none at all, even with significant
committed venture funding. When considering a start-up company or a product in
the micro/nanotechnology space, it is important to do an extensive intellectual prop-
erty analysis in the specific area to determine the landscape of the intellectual prop-
erty. As the design matures, the intellectual property landscape should be constantly
reviewed to ensure that paths are taken that allow freedom to operate and to generate
new intellectual property.
As the product concept is developed and as design begins, significant chal-
lenges arise when attempting to use conventional macro-based product design
methodologies. One of the first challenges is human resource related the avail-
ability of engineers who think and design at the micro- and nanoscales. Challenges
begin with universities where researchers and scientists are educated in micro- and
nanoscale domains, each in a very specific area. However, researchers and scientists
are not product design engineers. In developing a product concept, researchers and
scientists address only about 10% of the total pathway to commercialization. Product
design engineers provide a unique capability to successfully move along that path-
way to commercializing a product. They start where the scientist leaves off and take
the concept all the way to the finished product. For the most part, universities teach
design at the macroscale, with little if any education at the micro- and nanoscale. The
typical design engineer develops a specification for a product, deriving its expected
performance, shape and size constraints, electrical requirements, etc. A design engi-
neer in the conventional macroworld uses known standards and metrics for piece
parts and processes. He would use supplier catalogs to find components that meet the
product requirements. If he needed to fabricate parts, he would use readily available
materials with properties that are understood. He would use manufacturing pro-
cesses that are standardized and well understood, such as machining and injection
molding. If the engineer needed a piece of equipment for manufacture or assembly,
he would select a supplier who manufactured the equipment as a standard catalog
item. It would be delivered to the expected specification and perform in an expected
manner. The design engineer would not risk selecting components or equipment that
were unproven.

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22 Commercializing Micro-Nanotechnology Products

At one company that had especially elegant micro/nano product designs, the
design engineer was asked how he developed such elegant designs. He responded,
I go into a trance and shrink myself down (as he contorted himself in his chair and
began to slide under the table) and put myself inside the device I am working on. I
visualize the inside connections and interfaces and design the device from the inside
to the outside. How does one transfer this capability to a university professor teach-
ing design engineering, who most likely has never commercialized a macroproduct
and probably has no idea about micro and Nan design?
Companies that are successful in designing micro- and nano-based products do
not rely on the experienced macrodesigners. They bring baggage from the macro-
world that does not lend itself to success in designing micro- and nano-based prod-
ucts. The successful companies hire recent college graduates who are open-minded,
very bright, creative mechanical engineers who are not indoctrinated in traditional
methods. These engineers have no preconceived ideas of what the limits are. Under-
standing materials is also important. The industrial designer (even one experienced
at the macroscale) who is creative, excellent at visualization, and more of an artist
than an engineer can also be very successful at micro- and nanoproduct design.
In micro- and nano-commercialization, there are few simulation and design tools
and standard manufacturing processes, as well as a lack of metrics, standards, and
specifications. There is no repository of knowledge for the design engineer to refer-
ence. A great deal of knowledge has been generated by companies that have com-
mercialized, or attempted to commercialize, micro- and nano-based products. Since
that knowledge was generated in an industrial environment, most of it has not been
published or disseminated to the public. At one company, nearly $50 million was spent
developing interfaces, packaging, and manufacturing and assembly processes to pro-
duce an ink-jet print head. The processes developed could be applied to other microflu-
idic products; however, they were never published and only disseminated as those who
were involved moved into new jobs at other companies and shared their knowledge.
Progress has been made in simulation and modelling software at the microscale,
but there are significant challenges at the nanoscale. For example, modeling of injec-
tion molding processes at the microscale with nano-tolerances is not possible. One
company making a microfluidic medical diagnostic device had to resort to trial and
error to mold a precision part to nano-tolerances. In developing the tooling to pro-
duce the part to specification, 55 modifications were made to the mold, requiring a
significant amount of time and money.
For silicon-based MEMS devices, reasonable simulation and modelling software
exists to support commercialization. The same is true for microfluidics. The diffi-
culty in modelling and simulation comes at the interfaces and connections between
the micro- or nanoscale and the human interface at the macroscale where the prod-
ucts are used.
As design progresses, the engineer has to consider how he will build the device
to make the first prototype. Engineers, particularly those with experience in mac-
roengineering, would design the prototype to be made in a model or machine shop
using traditional machining and forming equipment. This approach will surely result
in failure of the product to be optimized. It will not meet performance, size, func-
tionality, and cost requirements, if it functions at all.

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The Path to Commercialization 23

A company building an imaging device that was embedded into its customers
imaging product exemplifies the importance of starting out on the right footing to
build the first prototype. Because of time and cost considerations, the company
decided to build the prototype using conventional macro approaches. The imager
was far larger than originally envisioned, its performance was lower than expected,
and the cost was significantly higher. The customer was no longer interested in
embedding the imager into the product; the cost to redesign it to accept the imager
was no longer justifiable considering the now fewer advantages. The imaging device
company could not change its design to reflect the advantages of microtechnology
because it had built an infrastructure of people and equipment from the macrocul-
ture. This company is no longer in business.
The micro/nano product design engineer must work closely with process, equip-
ment, manufacturing, assembly, and facilities engineers. This team approach is nec-
essary to design an optimized product. There is a lack of standard, off-the-shelf
fabrication and measurement equipment, parts, connections, packaging, processes,
and micro-assemblies. Therefore, product design, process development, manufactur-
ing, assembly, and unique facility requirements must be considered together when
designing micro-nanoproducts. All of the companies that produced a successful
product had to practice the integrated team approach, mainly to develop processes
and equipment for manufacturing, assembly, and measurement.
One example was a company developing a page-width (300 mm), ink-jet print
head for precision, high-speed printing. At that time, the semiconductor industry
had developed processes and equipment for 200 mm wafers. To achieve precision
and diameter in the ink-jet nozzle position, submicron lithography was necessary.
However, at the time, no equipment existed that could handle parts that were 300
mm in length, and no equipment existed that was able to handle geometries different
from a silicon wafer. In addition to designing lithography equipment (which included
designing unique energy sources), a totally new process and new equipment were
needed to coat a resist to the thickness specification. No measurement equipment
existed for submicron measurements over a length of 300 mm. This equipment had
to be designed and built. The process to fabricate the ink-jet nozzle structure con-
sisted of 54 variables that had to be precisely controlled. The worlds top statisticians
said it was not possible to control the process and produce a consistent product. Dr.
Taguchi became involved, applied the Taguchi Method for Robust Design (a revo-
lutionary approach at the time), and within 30 days a predictable, consistent, and
repeatable product was delivered.
In another example at a different company producing a thermal ink-jet print head
with a silicon print element, similar experiences with a team approach were neces-
sary. The print element was made by bonding two silicon wafers together one
a fluidic structure for delivering the ink and the other the substrate for the drive
electronics and heating element. After bonding (equipment, process, and adhesive
for bonding had to be developed), the wafer stack was diced to separate the print
elements. Dicing through the wafers to expose the nozzles had to produce a mirror
finish with no chipped edges, as illustrated in Figure 1.7. A chip on the nozzle edge
would change the surface energy condition, causing the ink-jet drop to stray off
course. This would reduce the sharpness of the printed image.

2008 by Taylor & Francis Group, LLC

24 Commercializing Micro-Nanotechnology Products

Silicon Wafer
Microuidic Nozzle Structure

Heater and Electronics Layer

Silicon Wafer

FIGURE 1.7 Microfluidic nozzle on silicon wafer.

Each year, millions of wafers are diced for the electronics industry by specialty
dicing suppliers in the Far East. There were many suppliers who claimed they could
meet the dicing requirements for the ink-jet nozzles. Even when they tried to improve
their processes, they could not come close to meeting the quality requirements nec-
essary for dicing ink-jet nozzle structures.
Because the ink-jet print head performance was dependent upon a chip-free
nozzle edge, the company undertook developing the dicing process. A high-perfor-
mance dicing saw was purchased and modified by dynamic balancing and precision
temperature control of the cutting fluid, as well as other modifications. This achieved
a significant improvement but it was not good enough.
Then dicing blade performance was investigated with suppliers who thought
their experience and expertise produced the best blade possible but it was not
good enough. The company undertook a development effort to select the appropri-
ate material and develop a dicing blade to meet the ink-jet requirements. When the
dicing blade was developed, the process was offered to dicing blade suppliers to
produce dicing blades to meet ink-jet requirements. None of the suppliers were able
to expand their vision and change their manufacturing processes to make blades to
address new markets. It was necessary for the company to build a dicing blade man-
ufacturing operation to meet its quality needs. The new dicing process was able to
produce a high-quality mirror finish, with no chips at the nozzle edges. This dicing
process was accomplished at speeds considerably faster than the speeds at traditional
suppliers and was achieved with a much higher quality output.
With nearly every micro-nanosystem product, suppliers who were considered to
be top quality could not meet the requirements of micro- and nano-based products.
They were boxed in by their past and believed, from their experience and years of
process improvements, that their processes were optimized to be as good as they
could be. A new view from outside the box (a disruptive approach) can produce sig-
nificant improvement to meet the unique requirements of micro- and nanosystems
and is generally necessary for successful product commercialization.

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The Path to Commercialization 25

Companies that were successful in high-volume manufacturing of micro- and

nano-based products integrated fabrication and assembly under one roof. Micro-
nanoproducts require environmentally controlled conditions, are sensitive to rough
handling, and generally require additive processing of one process step onto another.
Success generally requires an integrated approach. For example, a coating on a sub-
strate, followed by a screen-printed layer, followed by an adhesive layer, etc., is an
integrated approach as compared to the conventional macro-approach of piece parts
that arrive at the assembly line individually and are then assembled.
The conventional wisdom of a supply-chain approach is not effective in the
manufacture and assembly of micro- and nano-based products. One company used
the conventional supply-chain approach to attempt to build an ink-jet print head.
Because of the nature of additive processes, the print head traveled more than 1000
miles from supplier to supplier for the fabrication steps to occur. Packaging and ship-
ping costs were high. Cleanliness requirements were impossible to maintain. When
the print head did not function, it was difficult to find the cause of the problem. This
type of supply chain approach is akin to each process step in a CMOS (complimen-
tary metal oxide semiconductors) semiconductor fab being performed at a different
fab in a different location. The company ultimately integrated manufacturing under
one roof. This resulted in significant quality and yield improvement and a large cost
reduction. Most importantly, manufacturing issues were observed and addressed
quickly, and the product was a market success. Figures 1.8a and 1.8b illustrate the
traditional and the integrated approach to manufacturing.
The supply-chain approach cannot be successfully applied to micro/nano-based
products if the full performance, size, and cost advantages of these products are to

FIGURE 1.8A Traditional manufacturing equipment. Layout considering a piece-part


2008 by Taylor & Francis Group, LLC

26 Commercializing Micro-Nanotechnology Products

FIGURE 1.8B Integrated, automated manufacturing layout of equipment for each step in a
process to build and/or assemble a complete ink-jet print head.

be realized. The integrated approach was used in all of the companies that success-
fully commercialized a high-volume micro/nanoproduct. For low-volume products,
the cost for equipment and facilities may not warrant the integrated approach. How-
ever, performance, size, and cost of these products will not be optimized.
Customers may also have great difficulty moving out of their paradigm to envi-
sion new market opportunities with micro- and nano-based products. They often
have trouble communicating in the language of micro- and nanotechnology. Lack of
understanding makes customers reluctant to accept these new technologies as part
of their product offering because they are steeped in traditional engineering and
manufacturing methodologies.
A nano-based process was developed to make fuel injection nozzle structures
for a large automotive company. The vice president of manufacturing, with decades
of traditional manufacturing experience, became increasingly frustrated even as the
program exceeded performance and cost expectations. He retired, abruptly, because
he had no frame of reference at the nanoscale. He could not make decisions on some-
thing he could not see.
At the same company, internal political and organizational issues began to sur-
face. After millions of fuel injection structures had been delivered defect free, one
of the most powerful groups responsible for the product delivery process, the Qual-
ity Department, began to feel threatened. As it became evident that this group was
no longer influential and jobs would be eliminated, roadblocks were put in place
attempting to limit the programs effectiveness. When jobs are threatened, defence
mechanisms are often put in place by both engineers and managers.
Successfully selling a micro/nano-based development or product program
to a traditional customer is a significant challenge. In working with customers,

2008 by Taylor & Francis Group, LLC

The Path to Commercialization 27

particularly those with traditional products and infrastructures, one must be sure
that senior management supports micro/nanotechnology-based products. Gener-
ally, senior management is very interested in high-performance products at a lower
cost. This is not necessarily true for all those in the organization below the senior
management level, where significant change in infrastructure may have to occur to
deliver disruptive new products.
To ensure that customer requirements are understood, it is necessary to find a
champion below the senior management level. This person should know the com-
panys product infrastructure and organization structure. He should be a maverick
who does not play by the corporations book of rules and is not afraid to bypass all
intermediate management and go directly to senior management to get roadblocks
quickly removed. Each organization has a few of these types; they are the change
makers that force a company to consider new products.
These general comments and specific examples and recommendations are the
summation of experience from companies that were commercializing micro-nano-
integrated products. Those products include a variety of ink-jet print heads, optical
switching devices, medical laparoscopes and endoscopes, implantable medical sen-
sors, medical diagnostic point-of-use microfluidic sensors, automotive fuel injection
systems, infrared imagers, vehicle stability management control systems, and energy
power devices. As time moves on, universities continue to provide excellent research
and intellectual property for future micro- and nano-based products. Education
for design engineers continues to be lacking. Simulation and modelling software
continues to evolve, particularly for microsystems and microfluidic systems. Some
dedicated equipment is available for micro- and nanofabrication with continued
evolution. Building prototype, pilot, and production quantities continues to be very
difficult. The micro-nano model shop or machine shop does not exist. Germany, spe-
cifically the Dortmund Cluster, which includes the Microfactory concept, is building
a micro-nano commercialization infrastructure. In Melbourne, Australia, MiniFab
is beginning to evolve to provide a commercialization infrastructure. However, in
general, governments are lacking vision by not investing in and developing a com-
mercialization infrastructure, thus not taking advantage of what will be considered
the greatest economic development opportunity in history.

1. Walsh, S. and Suleiman, M; Models for the commercialisation of disruptive technolo-
gies, International Journal of Technology Transfer and Commercialisation, 3, 187
198, 2004.
2. Walsh, S, MANCEF Roadmap, Sept. 2002. ISBN:0972733302
3. Royal Society Policy Document, Nanoscience and nanotechnologies:opportunities and
uncertainties, July 2004, ISBN 0-85403-604-0.
5. The U.K. MNT Network, http://www.mntnetwork.com/.
4. Taylor, J.M., Report New Dimensions for Manufacturing A UK Strategy for
Nanotechnology; DTI pub 6182, June 2002.
6. Grace, R., Technology cluster development: the MEMS industry report card 2006,
Small Times, January 2007.

2008 by Taylor & Francis Group, LLC

28 Commercializing Micro-Nanotechnology Products

7. Kaiser, H., Report: Summary about the State of Nanotechnology Industry Worldwide
20032015, www.hkc.com/nanomarkets, 2006.
8. The MANCEF Roadmap (2nd edition) ISBN: 0972733302; Chapter 4, 2004.
9. Tolfree, D. and Eijkel, K., Reducing time-to-market for nicrotechnology produced
products, presented at the World-Nano-Economic Congress Europe, London, 6
November 2003. Talk only reference on www.world-nano.com/WNEL-London.
10. Micro-Nan Integration; MST News, No. 4, August 2006.
11. Richardson, A. and Pickering, C., The INTERGRAMplus Access Service, MST News,
No. 4, August 2006.
12. The U.S. National Nanotechnology Initiative, http://www.nano.gov.
13. Eleftheriou et al., Millipede a MEMS-based scanning-probe data-storage system,
IEEE Transactions on Magnetics, 39, 928, 2003.
14. SEMI Standards, www.semi.org/standards, 2004.
15. IEEE Standards, www.ieee.org/standards, 2004.
16. Standardization of microsystems technology European Commission Project July
17. Richardson, A., Design for Micro-Nano Manufacture, PATENT-(DfMM), 2003, www.
18. http://www.forbes.com in 2005.
19. http://www.castleink.com/a-inkjet-printer-history.
20. NewScientist.com, news service, 27 January 2007.
21. Innovative Products Based on High-Tech Textiles, 57, 2004.
22. EuroFutureTex Conference. November 89, 2005, Padua, Italy.
23. http://www.abbottpointofcare.com/istat/products/analzsers.htm.

2008 by Taylor & Francis Group, LLC

2 Entrepreneurships Role
in Commercializing

Bruce A. Kirchhoff and Steven T. Walsh


Introduction............................................................................................................... 30
Folklore.......................................................................................................... 30
Two Classes of Technologies.................................................................................... 31
Evolutionary Technologies............................................................................ 31
Disruptive Technologies................................................................................ 32
Demand Pull and Technology Push Marketing Strategies....................................... 33
Technology Class Matched to Market Strategy........................................................34
Market Strategies for Evolutionary Technologies.........................................34
Market Strategies for Disruptive Technology................................................ 35
Silicon Pulling Industry: Evolutionary Technology...................................... 36
Silicon Pulling Industry: Disruptive Start-Ups............................................. 37
Examples of Disruptive Micro and Nanotechnologies............................................. 38
Micro Technology: Semiconductor Technology22......................................... 38
Nanotechnology: Gene Splicing24................................................................. 39
Sources of Disruptive Technology............................................................................40
Recommendations for Starting a New Technology Business................................... 41
Determining the Nature of Your Technology................................................ 41
Financing Technology Start-Ups................................................................... 41
Selling Your Second First Product................................................................ 43
Distribution is Frequently Complex..............................................................44
Do not Give up Your Original Product Idea.................................................. 45
Create a Team................................................................................................ 45
Do not Write a Business Plan........................................................................ 47
Summary and Conclusions....................................................................................... 48
References................................................................................................................. 48

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30 Commercializing Micro-Nanotechnology Products

The purpose of this chapter is to examine the role of technology in new micro and
nanotechnology business formations so as to debunk some misperceptions in cur-
rent folklore and to suggest guidelines for starting a new technology-intensive firm.
The widely believed folklore is that newly formed technology-intensive firms suc-
ceed using radically new technologies to commercialize disruptive innovations. It is
argued that new technology-intensive firms are best at doing this because they have
no existing customer base to please and no internal bureaucratic organization to
resist change. Much credit for popularizing this concept goes to Christensen in his
book The Innovators Dilemma.1 Although not a new concept in the academic litera-
ture, Christensen successfully brought this information to a much wider audience.
We begin by discussing the current widely believed folklore and demonstrating
why it is an oversimplification of reality. Next we provide descriptions of the two
classes of new technologies and how these should dictate start-up market strategies.
This is followed by a description of two well-known examples of disruptive technol-
ogies, one micro and one nano, that have entered world markets in the last 50 years.
We use this background information to offer some guidelines for starting a micro or
nanotechnology business in todays markets.

Christensens hypothesis does not agree with actual experiences. The precise operat-
ing pattern that the vast majority of new technology firms use to accomplish tech-
nology commercialization is not uniform from business to business, and no clear
patterns exist because each technology firms commercialization effort is unique;
no two are exactly alike. Christensen offers this hypothesis as though most newly
formed technology firms succeed using disruptive innovations. However, this is a
role rarely played by the new firm. More often the invention is based upon a unique
use of existing technology, and entry occurs when new firms create substitute or
replacement products for the established competitive firms existing products/cus-
tomers. This provides a quick way for the new firms to enter existing markets and
achieve relatively quick profitability.
Second, contrary to Christensens general hypothesis, major established firms
competitive responses to new high-tech entries have historically protected the major
established firms while harming the new firms that threatened existing markets.
Often, some established firms respond by simply copying the new technology and
forcing the new firms to sue to enforce patent rights, a procedure that often causes
new firms to fail. In other situations, established firms will defensively guard exist-
ing distribution systems to constrain the new firms access to markets.
A new paradigm has emerged in the last 20 years reducing the economically
vicious competition between large established technology firms and new start-up
firms as envisioned in Christensens hypothesis. Many major corporations are now
acquiring or licensing the intellectual property of new technology firms that have
developed products based on radically different technologies than those possessed by
the major firms.2 This acquisition process appeals to these acquiring firms because
it may be a less expensive way to acquire new technology or simply a speedy way

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 31

to enter new markets or both. This seems to indicate a growing awareness of the
value of innovations brought to the market by new technology firms. This has been
true in the micro and nanotechnology fields.
Thus, new technology firms have discovered new operating procedures that
promise better results. Rather than threatening the existing major firms in a given
market, the ambitious firms seek to partner with or become a part of a major firm
that takes on the marketing of the product. Still, some new firms continue to inde-
pendently struggle and achieve success.
Behind this complex appearance of new technology firm behavior lay some fun-
damental principles based upon technology management theory developed over the
last 30 years that not only describes the role of new technology firms but also pre-
scribes the appropriate methods that lead to their success.
The following sections begin by summarizing the theory of technological inven-
tions as developed by academic authors over the last 30 years. Two classes of inven-
tions have evolved from this theory based primarily on two different science sources.
In addition, we provide an example of successful micro and nanotechnology firms
in both classes. Then, we describe the two major methods of marketing matching
the two classes of technology where each method offers different opportunities and
threats. Lastly, we provide some guidelines for high-tech start-ups that emerge from
an analysis of how these theories can be implemented for survival and profitability.

Two Classes Of Technologies

Herein we use the term innovation as has been widely used in management of tech-
nology literature. An innovation is the commercialization of an invention. An inven-
tion is a new idea or a new combination of existing ideas. In high-tech companies,
the invention embodies one of two classes of technology defined in the last 20 years.
The academic research literature has agreed that there are two classes of technology:
(1) evolutionary, sustaining, incremental or nuts and bolts technologies; or alterna-
tively (2) disruptive, radical, emergent or step-function technologies. For simplicity
in this chapter, we use the terms evolutionary and disruptive.

Evolutionary Technologies
Evolutionary technologies might be described as business as usual with a continu-
ous flow of technical inventions emerging from R&D based upon the suppliers core
technical competencies and/or from customers suggestions or requests. Evolution-
ary technologies, also referred to as incremental, sustaining, competence enhancing
or nuts and bolts technologies, build off of the existing body of knowledge with
respect to production capabilities and manufacturing or processing practices and as
such have known performance levels and forms of application.3,4 Technologies can
originate either inside or outside an industry. Those that originate inside are said
to be based upon core competencies of corporations in the industry as defined
by Prahalad and Hamel.5 The basis for technology is the organizations core com-
petencies that evolve into a stream of continuous innovations that are delivered
to customers as either replacements or substitutes for existing products or as new

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32 Commercializing Micro-Nanotechnology Products

or greatly improved products. These two product categories are driven by different
customer interests and different marketing strategies as discussed below. Replace-
ment or substitute products are those that customers knowingly request to meet their
needs, improve their operations, reduce costs, increase the quality of their prod-
uct, or to produce a competitive advantage in their markets. Major new or greatly
improved products are not knowingly requested by customers and do not meet needs
that are known to the customers. Thus, although one dominant technology underlies
the inventions, the technologys evolution over time offers the opportunity to invent
products for which there are ready buyers or create new inventions that satisfy cus-
tomer needs that are not apparent to the buyer.

Disruptive Technologies
Disruptive technologies frequently find their origins in new science, most of which
emerges from academic or corporate R&D or independent scientific research. Schum-
peter6 observed that innovations with major impact upon economic activity originate
from outside the industry that they affect. Schumpeter also argues that these inno-
vations emerge from and become the reason for the formation of new independent
firms, i.e., entrepreneurship. To the extent that Schumpeterian product innovations
are technology based, he argues that new independent firms are well suited to bring
innovations from outside the existing industry structure and creatively destroy the
market structure therein.7
Schumpeters observations agree with those of more recent theorists. Abernathy
and Utterbach8 state that such technologies are built upon new knowledge and/or
new manufacturing practices and are applied to create entirely new product-mar-
ket paradigms that are often opaque to potential buyers. Further, Anderson, and
Tushman,9 evolve from Abernathy and Clark10 and others discussing an era of fer-
ment when new technology product paradigms are vying to become the industry
dominant design. Bohn11 notes that measuring and managing these technologies is
difficult. Bower and Christensen12 further expand this definition with the statement
that technology is considered disruptive when its utility generates service products
or physical products with different performance attributes that may not be valued
by existing customers. Such technologies are applied to create entirely new product-
market paradigms that are often opaque to potential buyers.13 Commercialization
products derived from disruptive technologies are frequently referred to as radical
or discontinuous innovations.
Academic research that develops new science sometimes results in the academic
researchers starting new companies to invent and commercialize new products and
services. And some new science originates in the R&D departments of major corpo-
rations. These are sometimes not wanted by the founding corporation and are rejected
for development within the major firms and frequently are either licensed or spun off
to new technology firms. The technology founders are sometimes encouraged to or
willingly leave their employers to pursue their new science into a product invention.
As with evolutionary technologies, disruptive technologies can create innova-
tions that provide two categories of products: replacement or substitute. However,
neither category of these is fully recognized by buyers as beneficial to their interests.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 33

Moore14 states that this customer negative evaluation aspect of disruptive tech-
nologies by noting that these technologies generate discontinuous innovations that
require users/adopters to change their behavior in order to make use of the innova-
tion. As such, disruptive technologies often require that buyers change their behavior
or thinking so to be able to use the products to which the innovations are applied
effectively. Inventions that are entirely new products requiring user change behavior
are not initially recognized by buyers as being beneficial at all. Commercializing
these inventions can be very difficult due to this buyer change behavior no matter
how strong the new value proposition is either in a personal or an organizational set-
ting. To overcome buyer/user resistance to adopting disruptive technologies, produc-
ers of such innovations must demonstrate that such technologies provide significant
cost reductions and/or performance improvements. In this way, customers are found
who are willing to take the risks of newness.
These totally new inventions based on new science and disruptive technologies are
what Schumpeter calls creative destroyers. By his definition, such innovations are so
radical that they destroy existing markets and the dominant firms that supply these mar-
kets, replacing them with entirely new markets and firms based on new technology.15

Demand Pull and Technology

Push Marketing Strategies
Along with two classes of technology, there are also two types of marketing strate-
gies for new technology products as frequently noted in the academic literature.
Demand pull marketing is widely recognized and finds its theoretical underpinnings
in the writings of economists over many years. Most recently, economic researchers
have described this type of marketing as opportunity recognition. One definition
of opportunity recognition is that entrepreneurs earn profits as a result of success in
finding and exploiting perceived opportunities in the market.16 This definition has
found reinforcement in the work of Kirzner,17 who suggests that alertness to oppor-
tunities in the marketplace and acting quickly to exploit the void in buyers needs
is the entrepreneurs chance to earn temporary excess profits. Kirzners theory basi-
cally argues that entrepreneurs must discover opportunities where demand exists for
the technological innovations they have. In other words, it is demand by an existing
unsatisfied buyer that creates the opportunity in the market.
Technology push marketing finds its origin in Schumpeter,18 who argues that the
primary driver of the economy is innovation. Innovation comes from an entrepre-
neurs intrinsic drive to innovate. This intrinsic drive results in the introduction of
new products and services different from those in the marketplace. He argues that
unique new products are often created without a well-defined market. Thus, contrary
to demand pull theory, technology push market strategy emerges from the technol-
ogy itself.
This dichotomy of demand pull/technology push is frequently found in the
academic literature. However, few entrepreneurs use purely one or the other. Thus,
although described here as a dichotomy, they are really two ends of a continuum
where reality is somewhere in between. Nonetheless, we will argue herein that a

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34 Commercializing Micro-Nanotechnology Products

technology entrepreneurs choice of market strategy along the continuum should

depend on the type of technology that underlies the product or service invention.

Technology Class Matched to Market Strategy

Market strategies need to be matched to the class of technology present in a product
invention. This matching is shown diagrammatically in Figures2.1 and 2.2. First is
evolutionary technology; second is disruptive technology.

Market Strategies for Evolutionary Technologies

Putting the technology class together with market strategy yields an interesting set
of relationships. Beginning with evolutionary technology, Figure2.1 shows how this
technology based on known science produces a continuous flow of innovations that
can either be buyer pulled or technology pushed. Core competencies are a founda-
tion for developing evolutionary technologies. Evolutionary technologies are used to
create continuous innovations that are then used for replacement/substitute products
or alternatively new or major improvement products. Notice that when buyers needs
are well known, an appropriate technology invention can be created with evolving
technology that can meet the known demand. Thus, the invention can be targeted to
specific buyers and can be buyer pulled into the customers hands. However, when
the buyers needs are identified by the supplier but not well known by the buyer, it
will be necessary to technology push the invention by offering it as a major improve-
ment or a new product that can produce a competitive advantage for the customer,
such as increased quality or decreased costs.
The definition of the uniqueness of the evolutionary technology is essential but
usually easy to determine. Typically, for buyer pull market strategy, the potential
buyer is a well-known customer and approaches a firms sales department requesting
some kind of new product of major improvement associated with an existing product
or service the firm previously provided. Your response is to apply your core compe-
tence technology to produce the desired invention, which the customer then buys.
Identifying an invention that is truly unique will involve somewhat greater
difficulty. Typically, this invention emerges from R&D based on an evolution in
the firms core competency technology. While it shows potential for application to
Technology Technology Innovation Market User Application
Source Focus Type Strategies Type

Market Replacement
Pull or Substitute

Firm Core Technology New or Major

Evolutionary Continuous
Competencies Push Improvement

Figure2.1 Evolutionary technology commercialization model.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 35

existing customers, some market research by your sales personnel will be required to
learn more about your customers and identify their existing need that is not currently
in the forefront of their thinking. Then your sales force is challenged to make the
customers desire to add this invention to his current list of needs and eventually buy
the invention. This invention can be sold on the basis of major improvements in qual-
ity or significant reductions in costs. Either of these results will give your customer
a strategic advantage in competitive markets.
This is the essence of technology push market strategy and should be the major
work of well-trained sales professionals. In the section above, we provide an example
of a start-up business that used well-known science to create a new unique product
that potential buyers needed. Dialogic Corporation started with one scientist and two
experienced technical marketing/managing professionals. The two industry-expe-
rienced team members saw the potential need for a unique invention derived from
known technology, and they teamed with the scientist to create the invention that
became their first product. Subsequently, they were able to create a major company
in their chosen field with significant financial success for all three founders.

Market Strategies for Disruptive Technology

Selecting a radical innovation product and matching it with the appropriate marketing
strategy requires more serious thought. As shown in Figure2.2, much like evolution-
ary technology, the market strategies are technology push and market pull. However,
whenever possible, it is desirable to choose inventions that can appeal to the potential
customers so that buyer pull marketing can be used. The reason is that technology
push for radical innovations is far more complex and time consuming than for contin-
uous innovations. Typically the start-up does not have the established customer rela-
tionships, and the potential customers will recognize that the innovation will require
major behavioral change. And behavioral change of this type is commonly traumatic
and undesirable. Thus, it may take years before the first sale is achieved.
Many start-up technology firms begin with a new technology that will create
radical innovations that will be a hard sell to potential buyers. Unless such firms
have major financial investments or are personally wealthy, they are at great risk
of business failure. For example, Genentech formed the first gene splicing pharma-
ceutical company by embracing a new science. Genentech attempted to find buyer
Technology Technology Innovation Market User Application
Source Focus Type Strategies Type

Technology Creative
New Science Push Destroying

Market Replacement
Disruptive Radical
Pull or Substitute

Figure2.2 Disruptive technology commercialization model.

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36 Commercializing Micro-Nanotechnology Products

acceptance of substitute and replacement products with only modest success. Since
Genentech had raised $35 million with the public sale of stock in 1980, it persevered
and eventually after 12 years finally scored with a truly new innovation that provided
the basis for major growth in its revenues and profits.19
In todays economic environment, it may be possible to identify other suppliers
that already provide products to those buyers who are likely candidates for your dis-
ruptive technology products. One or more of these suppliers may be willing to form
an agreement with a start-up firm that is pursuing a disruptive technology that is
interesting. This has become especially common in the biopharmaceutical industry
where technology sharing among established industry members and new firms is
becoming very common. This is a possible way of gaining financial assistance that
will allow a long-term project to commercialize a disruptive technology.
On the other hand, if you have start-up team members who have established cus-
tomer relationships with potential buyers, then you have an advantage to use your tech-
nology with a buyer pull strategy. The team members with customer contacts become
the major mechanism to identify buyer needs for products that can be substitutes or
replacements for products that these potential buyers already own. Substitutes and
replacements have to demonstrate significant quality improvements or cost reductions
to close the sale. This is the quickest way to assure survival and become profitable.
However, no doubt you would prefer to see a more unique invention that will
take advantage of your technologys major advantages for applications that seem-
ingly need major improvements. It is a long hard pull, however, to bring a disruptive
technology into successful products that provide profitable operations. It is better
to take the quick route to survival and profitability before switching your attention
to your dream product. But keep your dream, for you may be able to afford the
challenge of creating profitable operations with the dream product in the future. It
will take years to bring the dream invention into a profitable product and creatively
destroy the established market structure. It took Intel 10 years from the development
of the 4004 microprocessor in 1971 to the 8086 that became the big product in 1981.
It took another 13 to 14 years for the microprocessor to creatively destroy the estab-
lished computer industry. And this happened only because a large number of other
technologies interacted with the microprocessor software and hardware as it
evolved into a creative destroying product.

Silicon Pulling Industry: Evolutionary Technology

Our research has developed a major example drawn from research on the silicon
pulling industry. Newbert, Kirchhoff, and Walsh completed a study of the indepen-
dent new firms formed in the semiconductor silicon pulling industry worldwide from
1953 through 1989. Semiconductor silicon is well known as a major microtechnol-
ogy raw material.20
Our research looks solely at the newly formed independent firms. Six of the
thirty-two start-up firms in our study of semiconductor silicon pulling were first to
adopt newly marketed technologies and successfully beat the major suppliers to the
market with the new technology. In all cases, these firms were started by individuals
who had existing contacts with one or more of the current buyers in the industry. In

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 37

addition, the newest technology was recently introduced in the industry, and their
entry can be described as early followers. Since these firms knew the industry buy-
ers, and buyers knew the new technology, they used buyer pull with minor technol-
ogy push market strategy. This worked well as they acquired market share quickly
before major firms entered this market. This combination of new technology with
demand pull and minor technology push strategic marketing used by these six start-
up firms resulted in four of them becoming very successful and the other two mod-
estly successful. All survived or were acquired by larger firms at a profit.

Silicon Pulling Industry: Disruptive Start-Ups

On the other hand, firms that introduced the radically new inventions had little
knowledge of the current buyers. Lack of knowledge of the market required that
these companies emphasize technology push with minor buyer pull marketing strat-
egy. Of the seven firms that used this strategy to sell radically new technologies,
one failed with losses after 12 years, another performed poorly and failed after nine
years, three performed modestly, and two performed very well and survive today.
One of these successes remains independent, and one was acquired by a larger cor-
poration. Three of the seven firms initiated the float zone process, a major radical
technology change that received weak acceptance in the market. One of these was
the poor performer that eventually failed, and the two others are still alive and profit-
able but with specialized, niche market products.
The experience of the seven creative, very early entry firms are typical of those
start-ups that bring disruptive technologies into existing industries. On the other
hand, these seven firms entered the market by introducing new evolutionary tech-
nologies that they developed through research and development. They based their
effort on the supposition that the buyers in the industry would want to buy this new
technology. However, new, radical innovations were not widely accepted by the buy-
ers who resisted the turmoil of adopting a new technology that would require major
new investment and operating changes. Thus, these very early entry suppliers found
considerable resistance to their product offerings for several years and were not as
financially successful as the early followers of this new technology. In other words,
these seven firms that created and introduced radical inventions drawn from disrup-
tive technologies were not the major benefactors of the new technologies commer-
cialization. The early followers with the stronger marketing knowledge achieved the
greater benefits.
It appears from this information that the market pull strategy augmented with a
technology push component was more successful than technology push strategy aug-
mented with only a minor market pull emphasis. This finding is true for new, inde-
pendent firm entries into the silicon pulling industry prior to 1990.21 It is important
to note that these findings are presented to make our point about market strategies
and may not apply to other industries in other time periods. Next, we focus on both
evolutionary and disruptive technologies as we look at the past and future of micro
and nanotechnologies.

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38 Commercializing Micro-Nanotechnology Products

Examples of Disruptive Micro and Nanotechnologies

It is relatively easy to identify micro and nanotechnologies that fit the definitions of
disruptive and evolutionary historically they are defined in terms of subsequent
events. Forecasting which technologies will qualify as disruptive with radical inno-
vations is very difficult since the definitions themselves are presented in the form of
an examination of the technologys impact on the buyers and the markets. For exam-
ple, in hindsight, the invention of the transistor and its disruptive nature is clearly
evident now, almost 60 years later. However, it seems obvious that this was not rec-
ognized until after the invention of the integrated circuit and then the programmable
microprocessor. Also, one can say that the nanotechnology discovery of the makeup
of the human genetic code is a disruptive technology. But, this did not become a
reality until the early 1990s and has not reached its full potential for disrupting the
pharmaceutical industry even today. In the following two sections, we explore the
transistor and the human genetic code as two examples of disruptive technology.

Micro Technology: Semiconductor Technology22

Semiconductor technology was invented in 1947 at Bell Laboratories. The funda-
mental technology was a new understanding of the physical properties of silicon
quantum physics. This new science had all the characteristics to become a disrup-
tive innovation. As time passed, its disruptive characteristics became apparent. The
transistor became a production product in 1949 and was used solely for telephone
switching, the purpose for which it was invented. Gradually, the transistor evolved
into a substitute for vacuum tubes in electronic equipment pull out a vacuum tube
and put in a transistor. Radios were first. In 1958, Texas Instruments invented and
patented the integrated circuit, a major improvement on the transistor but still relying
on the physical properties of semiconductor silicon. In 1968, a newly formed firm
Intel Corporation began to manufacture memory chips (integrated circuits).
In 1969, Intel received an order from a Japanese company, Busicom, to make an
integrated circuit chip that could be programmed to do many, many different math
functions. Ted Hoff realized that it would be more interesting and efficient to do this
with a programmable microprocessor. Hoff completed the semiconductor chip in
1971, but Busicom lost interest. Still, the first microprocessor, the Intel 4004, was
made available for sale.
Programmable processors found a small market in mainframe computers that
used them to operate peripheral equipment commanded by the mainframe. Hobbyists
also found them interesting. There was no big profitable business. Still, the micro-
processor technology spread among several new start-up companies, including Zilog.
Then in 1977 (30 years after the invention of the transistor), Apple Computer (a newly
formed independent firm) introduced the mass market to these devices by adding a
keyboard and some additional components to a Zilog Z-80 processor. Most important
of all, Apple established a retail distribution system to sell these computers.
Evolution has taken this science of quantum physics and created the microcom-
puter that has changed the lives of people everywhere and creatively destroyed all
but one of the major computer manufacturers that dominated the computer manu-
facturing industry through the 1990s.23 However it took 40 years for this quantum

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 39

physics, semiconductor technology to be identified as a truly disruptive technology.

And a great deal of evolutionary technology was added over the 40 years to achieve
this. But note the important key roles played by newly formed technology firms:
Fairchild, Intel, Zilog, Apple, Osborne, Compaq, and Gateway, Dell, Microsoft,
Lotus, Novel, etc. Not all survived, but each added a component to the technology
evolutionary process. Some of these were marketing and distribution innovations,
but each was built upon inventions of other start-up technologies developed by firms
that created hard drives, component designs, software, etc.
So we can credit major industry and market changes on the science of quantum
physics that made silicon a special material in 1947. Still, this technology would
have been nothing without the evolutionary technologies most of which origi-
nated from newly formed technology firms.

Nanotechnology: Gene Splicing24

Currently, the healthcare industry is undergoing an explosion of new treatments,
products, and processes based upon gene splicing (now termed biotechnology). This
began with the discovery of the science of gene splicing technology in 1974. A two-
year-old start-up company named Genentech decided to be the first to enter this area
of technology in 1976. With much fanfare, in 1980, it was able to obtain considerable
investment capital based primarily on the development of one biological compound
(with no real market) and speculation about the promise of gene splicing technology.
However, the technology did not produce products that created the majority of its
revenues until 1987. As early as 1980, Genentechs technology yielded products that
were as good as existing products (for example, its first human growth hormone),
but these products did not have the improvement in quality or reduction in price that
made them attractive to the majority of buyers. Genentech relied upon licensing fees
for its first two products and did not begin marketing its own product until 1985. In
1988, Genentech for the first time reported more revenues from product sales than
from contract research and returns on invested capital. Commercialization of gene
splicing became the major contributor to sales in Genetechs 12th year and 14 years
after discovery of gene splicing science.
By the late 1990s, a host of newly founded gene splicing companies appeared.
All of these took advantage of the fundamental research discoveries that evolved
the technology. But interestingly, the major pharmaceutical companies continued
to focus on chemistry and made little attempt to enter the biological field until after
2000. This allowed the gene splicing companies to gain an advantage, especially in
oncology (cancer treatment).
So, by 1996, 22 years after the discovery of gene splicing, the industry begins
to produce products that are superior to those offered by the chemistry-based
pharmaceutical companies. And the path to technology adoption has included and
still does include many newly formed firms. Currently, the new firm phenomenon
continues but now in the form of research organizations with alliances to the major
firms that have established the market distribution systems. Alternatively, new firms
are formed with plans to create a product that will make the firm attractive for acqui-

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40 Commercializing Micro-Nanotechnology Products

sition by a major firm. Now, the chemical pharmaceutical companies are buying
some of these new firms.

Sources of Disruptive Technology

Not all disruptive technologies originate in new start-up firms. Bell Labs and the
transistor is an example of a large firm producing and profiting from a disruptive
technology. Keep in mind that the transistor was invented after 13 years of Bell
Laboratories research for a reliable replacement for the mechanical switching sys-
tem, a system that was widely used to replace telephone operators. Its nearly instant
commercialization is attributed to the anxiously waiting AT&T telephone market.25
New firms have a vital role in the evolution of disruptive technologies into major
markets. Newly formed firms carry out much of the technological evolution from
the transistor to microprocessor. Many of these grew up in Silicon Valley, and many
were at least partially financed by NASA R&D in its effort to find reliable, light-
weight electronics equipment for space travel. Few commercial products emerged
directly from the NASA research, but the research advanced the technology that
became staples of the commercial products a few years later.26
Customer resistance to radical innovations based on new science means that the
sales effort needed to launch a truly disruptive innovation can be very expensive
and time consuming. Genentech, based upon belief of the radical new technology of
gene splicing, raised $35 million in investor capital in 1980. Such large sums early
in the life of a start-up can easily carry a firm through the early product development
process. If you have this kind of venture capital backing, you can also do this with
a disruptive technology. However, few new technology ventures are able to obtain
capital of this magnitude. That is why evolutionary technology is the mainstay of
new technology firms. This approach needs to be emphasized when searching for
venture financing.
New science directed into replacement or substitute products that do not involve
major customer behavior changes are much easier and less costly to sell. Intel did not
capitalize on the microprocessor it invented until Apple demonstrated the value of
the microcomputer. Then, Intel entered with the microprocessor as a better proces-
sor in response to IBMs defined need for building and selling microcomputers in a
market that was five years into its expansion phase. By then, Intel had the advantage
of 11 years of technology evolution to respond to this buyers needs.
Genentechs survival for 11 years without a major successful product is indica-
tive of what a relatively new firm can do with a disruptive technology when it has
plenty of venture capital. However, it did take 12 years for its gene-spliced products
to become its major income generator. Disruptive technologies take time to develop
profitable markets if they are used to market radical innovations using technology
push market strategies.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 41

Recommendations for Starting

a New Technology Business
There are many books and magazines in libraries and elsewhere that explain how to
start a business. Not many are directed to the technology entrepreneur. Here are some
differences that set the high-tech start-up apart from all those books and magazines.
These recommendations emerge directly from the technology discussion above.
And each of these is discussed in the following sections. First, when starting a new
firm, make an effort to determine if your technology is evolutionary or disruptive.
Second, do not expect major financing from outside investors. Third, do not be dis-
mayed if your first product does not receive acceptance from your first few potential
customers. Fourth, find out how similar products are distributed to customers. Fifth,
do not discard your ideas for the eventual use of your disruptive technology. Sixth,
create an entrepreneurial team early in the development of your start-up. Last, do not
bother spending a lot of time writing and rewriting a business plan; this may work
for a coffee shop or a package express company, but it is not for new high-tech busi-
nesses unless you really need someone elses money to begin the business.

Determining the Nature of Your Technology

As evident above, there are significant differences in new firm success determined
by the nature of the technology. Disruptive technologies based on new science meet
substantial customer resistance and require considerable time, effort, and money to
obtain the first sale and enough sales revenue to survive long enough to become prof-
itable. Evolutionary products are usually easy to identify since these are built upon a
known technology, not new science. Often, the evolutionary aspect will be obvious if
you can clearly identify potential customers who will need your product.
Self-assessment of a technology is unlikely to be done without prejudice in favor
of the scientists views of the technology. Technologies become the favorite subject
of the inventor and bias every discussion. It is best to try the invention on some
knowledgeable persons. One way is to find a no-cost source of an assessment of the
invention. Many universities or incubators have technology assessment procedures.
Also, ask technology-savvy friends, relatives, or colleagues. Ideally, you know some-
one who works for one or more potential buyers, and a properly directed inquiry will
gain useful information.

Financing Technology Start-Ups

Obtaining borrowed money from a bank or other lending institutions is impossible
unless (1) personal assets (house, paid-up insurance policy, etc.) can be pledged as
collateral or (2) until the business has at least three to five years of profitable opera-
tion. Many entrepreneurs do not know this when they start. They usually try to
obtain loans from banks and are depressed when they learn that they cannot. The
rejection that is received is not because of the invention idea or the character of the
individual(s) involved in the start-up. The lender simply is a risk-adverse institution
that is lending someone elses (depositors) money in the face of strict government
regulations. And that collateral mentioned abovethat borrowed money obtained as

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42 Commercializing Micro-Nanotechnology Products

proceeds from a second mortgage or other personal assetsis personally borrowed

money. The borrower must repay this money, and the firm has no obligation to pay.
Firm failure or bankruptcy means the borrower must repay the debt.
Contrary to what some law firms advertise, forming a corporation is no pro-
tection from this personal liability to repay borrowed money. Lenders will always
require entrepreneurs to sign personally for borrowed money. Ask an accountant
about this.
Although not as risk adverse, venture capitalists in all but Silicon Valley and,
more recently, Boston are very, very reluctant to invest in a technology start-up that
has no cash sales booked.27 Real booked sales confirm the value of the product and
company. And, few venture capitalists have the enthusiasm for the invented product
until it has passed the test of actually being sold.
Applying for and receiving competitively determined government research
funding can generate interest among venture capitalists. Sometimes, but not often,
investors will carefully examine start-ups that have received research money from
a government agency because the funding suggests that outside experts consider the
technology to be valuable. The primary source of research money from the U.S.
government is the Small Business Innovation Research Program (SBIR).28 The SBIR
program is federal legislation that requires 13 agencies of the U.S. government to
spend 3% of their extramural R&D budget with small businesses. Each agency issues
requests for proposals (RFP) for research that are competitively evaluated on techno-
logical quality. The funding, when received, allows all rights to the intellectual prop-
erty to remain with the small business. In other words, this is investment capital for
which you never issue shares of your firm or pay back. In addition, venture capitalists
prefer to see a firm receive both first- and second-stage SBIR grants for research on a
specific technology. Venture capitalists evaluate this as stronger evidence of the value
of the technology.
Other countries in the European Union have similar programs modeled, to a
degree, upon the SBIR program in the U.S. It is worthwhile to check on the avail-
ability of such programs. Given the risk associated with new technology, start-up
financing is rare for new technology firms. Without major outside financing, per-
sonal resources and those of the start-up team members, friends, or family will be
necessary to start the business. A stream of cash income flow from product sales will
not develop for at least 12 months. Even if the first sales are made quickly, they are
likely to be made on a pay later if you are satisfied with it basis. This can delay
the receipt of cash for as much as 4 or 5 months. In addition, few technology start-
ups develop a product that sells within 6 to 12 months. Many steps are required to
generate the first sale.
Starting a technology firm is an expensive experience. Most successful technol-
ogy entrepreneurs develop the technology, obtain an assessment of the technology,
file a patent application, and create a prototype before they leave their paying jobs.
When the firm is first started, examine the cash that is available to the business and
determine how long it will last. If it is not enough to last at least 12 months, find more
cash investment. Frequently, neither you nor members of your start-up team will
draw a salary from this business until many sales begin and collections are made.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 43

Selling Your Second First Product

Market research is much more complex than it may appear. As suggested above,
potential customers are contacted, the technology is described, and drawings,
sketches, or definitions of the product and its actions will be presented to seek the
potential customers approval of the new venture. The meeting will likely go well,
but little useful information on the potential customers real interest will be obtained.
It is very difficult to obtain accurate information in an interview when the presenter
is enthusiastic about the invention. If the entrepreneur presents a persuasive argu-
ment, the potential customer will undoubtedly agree that this is a great product idea
that should be pursued and offered in finished form when the first product is pro-
duced. What this means is that few people will argue with anyone who persuasively
argues an issue. Most of us are socially conditioned to avoid arguments with other
people of casual acquaintance. Pushing the other person to agree causes agreement
simply to avoid arguing. Furthermore, the potential buyer probably does not fully
understand the technology since it exists as a real, understandable thing only in the
mind of the entrepreneur. Diagrams, equations, sample computer code, and other
technological information will not adequately convey the technology. To understand
a real technological concept, most of us need to see the product that has the technol-
ogy imbedded in it. So a prototype is necessary.
Do not underestimate the complexity of your technology and its inclusion in a
new product. Market research done without a prototype is unlikely to solicit mean-
ingful information. No matter how much market research is conducted, only the
presentation of a prototype will elicit meaningful responses. The prototype gives the
viewer understanding of exactly what the technology is.
So with a prototype, approach one or more potential customers. If the potential
customer simple agrees with your presentation and promises to look into your tech-
nology at another undefined time, the customer does not understand your technology
and does not want to understand. If the potential customers begin to debate about the
claims for the product, it means they are interested.
The lack of the potential customers agreement combined with responses stat-
ing that this is not a product they can use may well lead to their suggestion that this
technology could create a different product that they could use. The reason for this
is that the prototype gives them understanding about the technology and stimulates
their thinking about how it might meet their needs. Thus, if the prototype is success-
ful in demonstrating the technology and if the potential customers understand and
are interested, they can creatively imagine another, different product built from this
technology that could solve some problem they have today. If three or more potential
customers suggest the same product idea, they have defined your saleable product.
That is a good job of market research. Pause and think, but build a new prototype
that meets the specifications that they have described.
This second product experience is so common among the technology start-up
firms we have known that we always discuss it with neophyte technology start-up firms.
This extends to software development firms perhaps more to them than product
firms. We refer to it as How to achieve success with your second first product. We
have never found a way to avoid the second first product problem (or opportunity).

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44 Commercializing Micro-Nanotechnology Products

One way to avoid the second first product problem is to acquire a team member
that has been selling similar products to the same customers you are targeting. Even
though this is one possible way, it does not always work; however, it is worth a try.
For example, in 1983 a Ph.D. physicist joined with two salesmen to form Dialogic,
Inc. The salesmen worked for two different suppliers selling equipment and parts to
telephone switching equipment manufacturers. Telephone answering systems were
becoming more popular and doing more complex functions. The salesmen thought
they knew a major problem with the existing answering systems. The scientist rec-
ognized that a piece of sophisticated hardware could replace some complex software
and provide a faster more responsive answering system. Since they knew the custom-
ers and knew their needs, this should be a snap. They began product development
using existing technology and completed a finished model in one year. But, when
they approached customers, they received the response that this was not exactly
what was wanted. Instead of a single-line answering system, customers wanted a
multi-line system. After 6 more months of R&D, Dialogic introduced its second first
product, and sales took off. It seems that sometimes even the most experienced and
knowledgeable persons still need a second first product. However, they would have
been successful earlier if they had taken a prototype around to their customers first.
Dialogic went public in 1994 and was wholly acquired by Intel in 1999. Needless to
say, the founders benefited financially.

Distribution is Frequently Complex

One question that should be asked of potential customers in early discussions is how
similar products are distributed to the potential customers. Distribution is often more
complex than most technology entrepreneurs are able to imagine. Typically, technol-
ogy products are not sold to consumers. They are sold to other manufacturers who
sell to consumers. For example, computer hard drives are not sold directly to the
vast majority of consumers; instead, they are sold to computer manufacturers. Thus,
all the knowledge you may have acquired about selling consumer products is use-
less. We have experience with several medical device manufactures. The industry is
characterized by devices that are installed by doctors in hospitals or outpatient clin-
ics run like hospitals. One entrepreneur assumed he would be successful by having
salespersons call directly on the doctors, similar to Avon or other house-to-house
sales techniques. But there are thousands of doctors. Think of the cost of creating
such a massive sales force. The entrepreneur thought it would be possible to reach
these doctors by advertising on TV. This is very expensive advertising that is trying
to reach a small and unique population of doctors who watch relatively little TV.
The largest pharmaceutical firms have large sales forces, but these firms are selling
multiple products that only doctors can prescribe.
This type of technology marketing to other firms is quite common, and distribu-
tion systems exist. It is desirable to define the distribution system by which products
similar to yours are delivered to buyers.
For this inventors product, a team of our students began by contacting the pur-
chasing manager of the universitys hospital. By questioning hospital purchasing
personnel and a few doctors, the team discovered a very complex system involving

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 45

individual doctor evaluation and approval, hospital committee evaluation and

approval, and then a purchasing organization that buys this type of product only
from a cooperative distribution organization that services many hospitals. And, the
cooperative distributor buys individual products from other distributors. In other
words, the medical devices these companies made are not bought directly by doc-
tors. Normally, doctors and hospital staffs make the purchase decision, but actual
hospital purchases are made through 2 or 3 levels of distributors. This complex dis-
tribution system is a major barrier (or opportunity) for selling medical devices to
the healthcare industry. In our experience, few medical device start-ups know this
complexity exists. And many of these start-ups have products that are practical, evo-
lutionary technology inventions that could save lives or improve the quality of life
of patients.
Other industries have similar complexities. Knowing the name, telephone num-
ber, and location of the individual who makes the buying decision is very important.
And if that individual is in a large corporation, it can take years of sales visits to
identify the proper processes and people that will buy this type of new product. Any
salesperson who has gone through this process knows the difficulty of finding the
buyer in a large firm.
With new products, the common way to obtain sales is to identify a firm that
already distributes products to those whom you believe will be buyers of your prod-
uct. Then find a salesperson in that distributors organization that knows who, where,
and how your potential customers buy your kind of product. Then negotiate and sign
an agreement with the distributor to handle your product for a percentage of the sales
price. The names of distributors can usually be found in trade journals.
Personal relationships are vital in selling new products. Knowing who, what,
where, and when is of great value. This is why venture capitalists prefer to invest
in companies that can list probable buyers of an entrepreneurs product, including
names, titles, and telephone numbers of these probable buyers. The venture capital-
ist makes a few telephone calls to some of these names and determines if you really
know these people. If you do, your firms stock value is pushed higher.

Do not Give up Your Original Product Idea

These same personal relationships can be used to launch the product of your dreams.
Somewhere after sales of the second first product are progressing well, congenial,
collegial relationships have been established with many customers. Now is the time
to rethink the original radical innovation and build the first prototype updated over
time by the evolution of the technology. Now, since the customers have confidence
in the products and personnel of the firm, one or more may be willing to give the
radical innovation a try especially if it will provide a competitive advantage for
their business. Then your dream product will become a major factor in creatively
destroying the established market structure.

Create a Team
A one-person start-up technology company is a rarity in todays world. Realistically,
starting and managing a technology business is far more complex than a new retail

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46 Commercializing Micro-Nanotechnology Products

store, restaurant, auto repair shop, or a consulting business. It is the rare individual
who has all the specialized knowledge and skills that are required to start a technol-
ogy business. And, money is harder to attain since there are only a limited number
of people who will believe in your technologys promise of future success and prof-
its. The head entrepreneur must assess his/her knowledge, skills, and experience to
determine what specializations are missing. Then, the entrepreneur must find per-
sons who possess those missing specializations. Below is a list of the key people that
should be in the start up team.
R&D: A strong technical specialist who can carry on the R&D work of convert-
ing technology into saleable products is essential.
Marketing: At first glance, distribution systems can appear to be very complex,
but in reality they are not complex if you have a team member who knows the market
and the potential buyers you are targeting. Try to obtain an experienced marketing
professional with knowledge of the industries that you believe are most likely to
contain potential customers.
Manufacturing: Manufacturing a prototype and bringing it to actual produc-
tion-level manufacturing requires special skills, so an experienced manufacturing
manager makes a useful addition to your team.
Human resources: The process of hiring, firing, and compensating employees
is fraught with major issues such as taxes, social security, healthcare benefits, and
antidiscrimination and handicap access laws. And the process of selecting employ-
ees can be very challenging. A team member with experience in human resources
can be worth a lot in avoiding the sinkholes in employee regulations and laws and
selecting the proper employees.
Finance: Private accountants can be hired by the hour, but the complexity of
guiding and operating a business requires much more than an accountant. A finan-
cial specialist is the person who plans and executes the steps necessary for survival
and eventually profitability. You need a team of 3 to 6 competent people to start a
new technology firm.
Chief executive officer/manager: Management is an important skill. A profes-
sional experienced manager is valuable. This is why most venture capitalists install
their own experienced CEO when they invest in a technology firm. This is a very
important part of the team. In fact, the initial team may consist of fewer special-
ists by using outside organizations. Human resources can be acquired by using an
employee leasing firm. Rather than hiring employees (non-ownership participants
are employees), you lease them from the leasing firm. This gives you a zero employee
firm since owners are not employees under U.S. law. This is different in some Euro-
pean Union nations.
In addition, you need a certified public accountant, a patent attorney, and a busi-
ness attorney. Also, there are many accounting firms that will not only keep your
books but also provide management information reports (different than the account-
ing data routinely provided by accountants) and consult about the firms finances.
A manufacturing manager need not be hired if you sub-contract all manufactur-
ing to a reliable manufacturing company. The choice of this manufacturer is critical,
and it may be desirable to hire an experienced manufacturing specialist to assist in
choosing a firm to do your manufacturing.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 47

That leaves the founding team as three persons: a CEO, a technical R&D expert,
and a marketing specialist. The technical expert frequently is the lead entrepreneur
and takes the CEO role. You will notice that Dialogic began with two technical sales
engineers and a Ph.D. physicist. The Ph.D. shared the CEO responsibilities with the
two technical marketing experts. After 3 years of profitability, the team hired an
experienced CEO.

Do not Write a Business Plan

Every book, radio and TV program, and magazine on entrepreneurship states
emphatically that an entrepreneur begins a new business by writing a business plan.
However what is the purpose of a business plan? Most planners will tell you it is
important for a business organization to have clear goals and objectives to know
where it is going and to communicate this to the employees. Only in this way can
the firm be sure that all members of the organization are working toward the same
goals and objectives. Thus, experts conclude that business plans are a necessary part
of starting a business.
This seems logical, but it takes a lot of time and money to create a business plan.
And in the early months, the firm probably does not have employees. Banks and
venture capitalists are not interested in funding the firm, so a plan serves no purpose
in the early development of the business. It is not obvious who will benefit from the
business plan. Some say the entrepreneur will benefit by thinking through the direc-
tions the new firm will take in the future.
It is unlikely, however, that a small technology start-up firm of two or three team
members has communication difficulties experienced by large corporations. More-
over, during the early stages of developing a new technology business and a saleable
product, it is not definite that the first invented product will be saleable. And the
type of product, proposed market for it, cost of producing it, and price may change
quickly as market research reveals a different product and perhaps a different mar-
ket. Also, technology may evolve that suggests a better product. A written business
plan becomes obsolete every month, perhaps every week. With only a few people
involved in the start-up, it is easy to express and agree on a long-term direction for
the firm without having a formal written business plan.
Communication can be achieved by informal conferences with all old and new
team members. These conferences can be spur of the moment with a loose agenda.
The major purpose is to interact to discuss and decide what the company is doing
and what it wants to do as a business. The basic topics are how to survive, generate
revenues, and eventually generate profit. Somewhere along the way, the discussion
includes the subjects of how the shares of founder stock will be distributed and how
all shares of stock will eventually become cash income for the holders. The tech-
nology should not be a major topic since only one or two of the team members are
interested in the details about the state of and future potential of the technology.
A business plan can require a large amount of team members time. Alterna-
tively, the firm can spend a large amount of its limited cash to buy someone to write
the plan. So, when the decision is made to find an outside investor to put money into

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48 Commercializing Micro-Nanotechnology Products

the firm, the time has come to write the business plan. The plans value is to persua-
sively explain the future of the firm to someone outside of the founding team.
Hopefully, a well-developed team exists and sales have been made. Team qual-
ity and sales revenue are the strengths that need to be presented to potential inves-
tors through the business plan. This is the firms plan for the future, including the
opportunity for all investors to take their original investment and profits out of the
company as cash payments when it becomes successful. It is a fact of new businesses
that no investor, nor team member, wants to leave all the hard-earned profit tied up
in the business forever.

Summary and Conclusions

Starting a high-tech company is an exhilarating experience. However, technology
dominates the form and process of technology entrepreneurship. The two types of
technology, evolutionary and disruptive, require that the firm market strategy be cre-
ated to accommodate the technologies unique character. Evolutionary technology
offers the faster route to sales revenue. Disruptive technology offers more long-term
opportunity for profitability but also requires a long time before revenues are seen.
Obviously, the latter also requires much more invested money up front.
Both of these can create products that can be sold with technology push or buyer
pull marketing strategies. The real challenge is to correctly assess the technology
so that a saleable product can be put on the market in the shortest time period.
The sooner sales revenues are collected, the less up-front capital investment will be
required. And, contrary to recent popular theory, it is not a requirement that a dis-
ruptive innovation must be produced.
We have provided 7 guides to follow when starting a high-tech business. Most of
this comes from our own experiences, especially with fellow university colleagues,
clients of our incubators, entrepreneurs that sought us out, those we met at profes-
sional meetings, and businesses we have started ourselves. As you contemplate start-
ing your own technology businesses, keep in mind that the first step is to obtain an
assessment of your technology. Search for a university or government organization
that provides assessment of new technologies. The assessment may not be the final
word on your intentions, but it should give you some additional information to think

1. Christensen, Clayton M., The Innovators Dilemma, Harvard Business School Press,
Boston, 1997.
2. McHugh, J., Forget old-school R&D. These companies purchase their ideas one startup
at a time, Wired, July 6, 2006.
3. Foster, Richard N., Timing technological transitions, in Technology in the Modern Cor-
poration: A Strategic Perspective, M. Horwitch, Ed., Pergammon, New York, 1986.
4. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the
wave, Harvard Business Review, 73, 1995.
5. Prahalad, C.K. and Hamel, G., Corporate imagination and expeditionary marketing,
Harvard Business Review, 69, 8192, 1991.

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Entrepreneurship in Commercializing Micro-Nanotechnology Products 49

6. Schumpeter, Joseph A., Capitalism, Socialism and Democracy, Harper and Brothers,
New York, 1942.
7. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University
Press, Cambridge, 1934.
8. Abernathy, William J. and Utterback, James M., Patterns of industrial innovation, in
Readings in the Management of Innovation, 2nd ed., Tushman, M.L. and Moore, W.,
Eds., Harper Collins, New York, 1988.
9. Anderson, P. and Tushman, M., Technological discontinuities and dominant designs: a
cyclical model of technological change, Administrative Science Quarterly, 35, 604633,
10. Abernathy, W.J. and Clark, K.B., Innovation: mapping the winds of creative destruc-
tion, Research Policy, 14, 322.
11. Bohn, R.E., Measuring and managing technological knowledge, Sloan Management
Review 36:3, 6173.
12. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the
wave, Harvard Business Review, 73, 4353, 1995.
13. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the
wave, Harvard Business Review, 73, 4353, 1995.
14. Moore, Geoffrey A., Crossing the Chasm: Marketing and Selling Technology Products
to Mainstream Customers, Harper Business, New York, 1991.
15. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University
Press, Cambridge, 1934, p. 75.
16. Schmookler, J., The Theory of Economic Development, Harvard University Press,
Cambridge, 1966.
17. Kirzher, Israel M., Perception, Opportunity, and Profit: Studies in the Theory of Entre-
preneurship, Chicago University Press, 1979.
18. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University
Press, Cambridge, 1934.
19. Barker, R., Taking stock of Genentech: are investors overestimating its promise?, Bar-
rons National Business and Financial Weekly, March 4, 1985, p. 67.
20. Newbert, Scott L., Kirchhoff, Bruce A. and Walsh, Steven T., Defining the relationship
among founding resources, strategies, and performance in technology intensive new
ventures: evidence from the semiconductor silicon industry, Journal of Small Business
Management, in press, July, 2006.
21. The cost of a manufacturing plant exceeded $500 million by 1990, and no new firms
were founded thereafter.
22. The information in this section has been taken from various parts of two sources:.
Chandler, Alfred D., Inventing the Electronic Century, The Free Press, 2001..
Kaplan, David A., The Silicon Boys, William Morrow and Company, New York, 1999.
23. IBM is the only major producer of mainframe and minicomputers that survived the
microcomputer revolution.
24. The information in this section was taken from two sources: Barker, R., Taking stock of
Genentech: are investors overestimating its promise?, Barrons National Business and
Financial Weekly, March 4, 1985, p. 67. www.gene.com Genentechs website last
accessed March, 2000.
25. Chandler, Alfred D., Inventing the Electronic Century, The Free Press, 2001.
26. Zhang Junfu, High Tech Start-Ups and Industry Dynamics in Silicon Valley, mimeo,
Public Policy Institute of California, 2003.
27. Junfu Zhang, Easier Access to Venture Capital in Silicon Valley: Some Empirical Evi-
dence, mimeo, Public Policy Institute of California, 2006.
28. Full information can be found at: http://www.sba.gov/sbir/indexsbir-sttr.html.

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3 Roadmapping
Steven T. Walsh, Bruce A.Kirchhoff,
and David Tolfree


Introduction............................................................................................................... 51
What is the Nature of Nanotechnology?........................................................ 53
But what is Nanotechnology?........................................................................ 53
It is often easier to relate the nature of nanotechnology than attempt to
define it................................................................................................ 53
What is Roadmapping?.................................................................................. 54
Background............................................................................................................... 55
The First Law of Small Technology.............................................................. 57
The Second Law of Small Technology.......................................................... 57
The Third Law of Small Technology............................................................ 58
The Fourth Law of Small Technology........................................................... 59
Methodology and Information Gathering................................................................. 61
Background.................................................................................................... 61
Methodology.................................................................................................. 62
Data Collection.............................................................................................. 63
Discussion................................................................................................................. 63

Technology roadmaps are a type of strategic plan that attempts to align the research,
development, and application of technology with business goals. Unlike strategic
plans, however, technology roadmaps often integrate the talents of diverse stakehold-
ers to solve current problems. They help industry, its supply chains, academic and
research groups, and governments come together to jointly identify and prioritize the
technologies needed to support strategic R&D, marketing, and investment decisions.
The various definitions of roadmapping that are used will be discussed with the spe-
cial issues of roadmapping disruptive technologies. Microsystems and nanosystems
are potentially disruptive technologies, so roadmapping them is of special signifi-
cance. Disruptive technologies can redefine the competitive landscape in traditional


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52 Commercializing Micro-Nanotechnology Products

industries and create new ones. Companies and governments that ignore the impact
of such technologies do so at their peril.
Strategic roadmapping for any technology is an enormous task. This task is
made all the more daunting by the newness of a technology, the extent of its useful
industrial breadth, the choice of a firm, industry, or region perspective, and finally
the degree to which the technology either supports or tries to expunge a current
industry technology product paradigm. In this chapter, we will examine the nearly
100 years of efforts that have gone into making technology roadmaps of all types.
We recognize that roadmaps have, over this span, been a primary tool to establish
new technology into companies, nations, and regions. They have helped to give a
focus to strategic vision and policy-making for companies and governments. Numer-
ous elements comprise a roadmap, including the work of many individuals needed
to carry out the task of completing it. As a rule of thumb, the larger the audience
and size of the stakeholder group, the greater the number of participants required to
cover all interests. Furthermore, the nature of the technology under review can add
much complexity to the process.1
Nanotechnology2 is vastly different from semiconductor technology.3 Semicon-
ductor microfabrication technology is a fast-paced high technology base that has
enjoyed the same technology lifecycle curve for nearly 60 years. Nanotechnology, on
the other hand, is an emergent and often disruptive technology that has the potential
to redefine the product technology paradigm in several industries, thus making the
nanotechnology roadmapping task all that more difficult. Nanotechnology is one of
the reasons why the pace of technological change in the world is increasing exponen-
tially,4 making it difficult for strategists and policy makers to fully utilize technolo-
gies for competitive advantage.
In this introduction, we provide a view of the nature of nanotechnologies and
some useful definitions and a discussion on the formational issues of roadmaps.
Roadmapping is now an established tool. Over a number of years, many different
types of roadmaps have been produced covering almost every sector of technology.
Until the publication of the first MANCEF International Roadmap (IMR) in 2002,
there were none that specifically covered the special issues associated with the road-
mapping of disruptive technologies. This roadmap was the result of 4 years work
of more than 325 companies and 400 people from 4 continents, including most of
the major companies that are involved in the development and production of min-
iaturized components and products. Many useful lessons were learned during the
production of this roadmap, from the process of compiling it, to the differing views
and approaches made to the understanding of the technologies. In this chapter, we
shall use the MANCEF roadmap as our example since it will help the reader under-
stand the nature of miniaturized technologies and how the roadmapping process can
bring opportunities and benefits to companies and nations that want to take the path
to commercialization.

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Roadmapping Nanotechnology 53

What is the Nature of Nanotechnology?

Nanotechnology is enabling technology5 in many commercial fields. It is disruptive
to the technical skill base that it requires to produce products. Nanotechnology can
be bifurcated into Top-down and Bottom-up technologies.

But what is Nanotechnology?

It is often easier to relate the nature of
nanotechnology than attempt to define it.

There are actually a number of different definitions of nanotechnology. Those who

work in the field will be reminded of the old adage I will know it when I see it. Any
unifying definition is further complicated by the hype associated with nanotechnol-
ogy since that has created different visions in the minds of non-scientists and tech-
nologists. We will discuss the origins of nanotechnologies and the usage terms.
The definition of nanotechnology has migrated and expanded over time due to a
widening of scientific and public interest in research in this field dating back even
further than Richard P. Feynmans classic presentation, There is Plenty of Room on
the Bottom. 6 The technical definition of nanotechnology is generally attributed to
Taniguchi.7 Initially the field was defined in a purely technological realm, but new
definitions are being produced to include the concerns and interests of wider techni-
cal and social communities.
We start our discussion with Taniguchis definition, which states that nanotech-
nology is the production technology to get extra high accuracy and ultra fine dimen-
sions, i.e., the preciseness and fineness on the order of 1 nm (nanometer, 10 -9 meter in
length). The term nano comes from the Greek word meaning dwarf. The name
of nanotechnology originates from the nanometer. In the processing of materials,
the smallest bit size of stock removal, accretion or flow of materials is probably one
atom or one molecule, namely 0.1 ~ 0.2 nm in length. Therefore, the expected limit
size of fineness would be of the order of 1 nm. Accordingly, nanotechnology mainly
consists of the processing of separation, consolidation, and deformation of materials
by one atom or one molecule.
The definition used by the United States Group, Nanoscale Science, Engineer-
ing and Technology Sub-Committee (NSET) in 2000 states that nanotechnology is
research and technology development at the atomic, molecular, or macromolecular
levels, in the length scale of approximately 1100 nanometer range, to provide a
fundamental understanding of phenomena and materials at the nanoscale and to
create and use structures, devices, and systems that have novel properties and func-
tions because of their small and/or intermediate size. The novel and differentiating
properties and functions are developed at a critical length scale of matter, typically
under 100 nm. Nanotechnology research and development includes manipulation
under control of the nanoscale structures and their integration into larger material
components, systems, and architectures. Within these large-scale assemblies, the
control and construction of their structures and components remain at the nanome-
ter scale. In some particular cases, the critical length scale for novel properties and
phenomena may be under 1 nm (e.g., manipulation of atoms at ~ 0.1 nm) or be larger

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54 Commercializing Micro-Nanotechnology Products

than 100 nm (e.g., nanoparticle reinforced polymers have the unique feature at ~
200300 nm as a function of the local bridges or bonds between the nanoparticles
and the polymer).8
There are many other definitions that are influenced by the geographical region
or technological environment in which they are derived, the community that is pre-
senting the concept, or other factors. The U.S. National Nanotechnology Initiative
definition is one of the most useful and explicative and can be directly related to that
used by NSET. They suggest that a certain technology can be considered a nanotech-
nology only if it involves all of the following three attributes:

Research and technology development at the atomic, molecular, or macromo-

lecular levels, in the length scale of approximately 1100 nanometer range
Creation and use of structures, devices, and systems that have novel proper-
ties and functions because of their small or intermediate size
An ability to control or manipulate on the atomic scale

However, for the purposes of roadmap discussion, it is important to understand the

basis for the definitions used. Nanotechnology is the practical application of nanoscale
science. The British Royal Society has made a clear distinction between these:
Nanoscience is concerned with the study of novel phenomena and properties
of materials that occur at extremely small length scales on the scale of atoms
and molecules.
Nanotechnology is the application of Nanoscale science, engineering, and tech-
nology to produce novel materials and devices, including materials for biological and
medical applications.

What is Roadmapping?
There is no definitive definition of technology roadmaps. A number of people have
expressed their views. Robert Galvin9 states that a roadmap is an extended look at
the future of a chosen field of inquiry composed from the collective knowledge and
imagination of the brightest drivers of change in that field. Others emphasize the
ability of roadmapping to provide a vision of the future.10-15 Distilling from these, the
most useful working definition of technology roadmapping is a needs-driven tech-
nology planning process to help identify, select, and develop technology alternatives
to satisfy a set of product needs.
Expanding this, it brings together a team of experts to develop a framework
for organizing and presenting the critical technology-planning information to make
the appropriate technology investment decisions and to leverage those investments.
Given a set of needs, technology roadmapping process provides a way to develop,
organize, and present information about the critical system requirements and per-
formance targets that must be satisfied by certain timeframes. It also identifies tech-
nologies that need to be developed to meet those targets. Finally, it provides the
information needed to make trade-offs among different technology alternatives.16
Roadmapping is gaining in popularity and importance as academics and practi-
tioners are aware of the increasing importance of technology in the strategic process.17

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Roadmapping Nanotechnology 55

Some strategic theories like competency-based strategies place technology and tech-
nology management as the foundation of a companys search for competitive advan-
tage. They claim unique technologies are a necessary, if not a sufficient, condition for
long-term success.18-19 Yet even as technology is recognized as critical and interdepen-
dent in a companys strategic process, this focus on technology makes the strategic
process more complex. Technology was once thought by strategists as one dimen-
sional and easy to embody in the strategic process.20 It is now recognized as multidi-
mensional and having primal influence on the strategic process. Further, some of the
important managerial aspects of technology, trends in technology development, and
sourcing are changing. For example, embodied technology capital and expense costs,
the importance of technology at the interface of disciplines, technology complexity,
the rate of technology change, global technology sourcing, and many more strategic
aspects of technology are more dynamic than ever. Moreover, the importance of long
waves and disruptive technology to regions and firms is more understood.21-23

Whatever definition of nanotechnology is adopted, technology roadmapping has
become an important tool for placing technology in the management process. Today
corporations like Motorola, Corning, Phillips, and ALCOA24-27 use roadmaps as part
of their strategic process, product development process, R&D efforts, etc. Technology
roadmapping is a powerful process for supporting strategic and tactical management
decisions.28 Governments, companies, and industrial consortia utilize technology
roadmapping to explore and communicate the dynamic linkages between techno-
logical resources, organizational strategies, and the changing environment.29-30
Two aspects define the task of a technology roadmap:31 (1) the nature of the
technology under question and (2) the audience for the intended roadmap. In our
discussion, we will cover the nature of technology, utilizing terms such as enabling
or industry specific technology, disruptive or sustaining.32
Until recently almost all roadmap studies were performed on sustaining (estab-
lished) technologies that are characterized by rapidly changing (high technology)
industries such as those involved in semiconductor microfabrication or aluminum
production. Indeed, semiconductor technology invented in 1947 was disruptive. It
was not until late in the 1970s that an industry roadmap was undertaken.33 Further,
nanotechnology is such a broadly defined technology base that it has expressions,
which in some industries are disruptive, while in others are sustaining in nature.
The roadmap selection process is driven by the commercial nature of the tech-
nology under consideration and modified by the strategic nature and scope of the
roadmap project. The roadmap selection processes that have embraced enabling
technologies logically follow a series of questions that help to bind and define the
task. Questions are:

enabling versus product- or industry-specific technology base?34

potentially disruptive versus sustaining technology?35

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56 Commercializing Micro-Nanotechnology Products

Technology bases are said to be enabling when they form the basis for solutions
that address many product technology paradigms in separate industry settings. The
semiconductor-based transistor is such a solution set. This means that the roadmap-
ping professional will have a variety of competing technologies that are specific to
the application space under investigation.
The terms disruptive and sustaining technologies are ubiquitous in the litera-
ture.36 Here, we see an example of a definition that emphasizes their utility as a con-
struct central to the issue of nanotechnology roadmapping. Disruptive or potentially
disruptive technologies can set up production platforms based on new sets of techno-
logical competencies. They create product technology paradigms that challenge and,
if successful, render useless the currently utilized manufacturing competency base
or the sustaining technology base. A disruptive technology base usually provides
a substantially better value proposition along at least two critical dimensions to be
considered commercially viable. When a disruptive technology becomes an industry
standard, it becomes sustaining in nature. Sustaining technologies are those that
underpin industry standard technology-product platforms. Improvements to these
technologies are focused on making expensive changes.
The roadmap selection process defines the parameters for the roadmap under
question. However, when you have a dichotomy that works, this is exceptionally
useful as described in the MANCEF Roadmap by Elders and Walsh.37 The problem
with nanotechnology is that it is enabling and simultaneously sustaining in some
industries while disruptive in others.38
The nature of a roadmap is further modified and bounded by its strategic pur-
pose. The following sets of constructs help to define those bounds. These constructs
include the following bifurcations:

Corporate versus industrial in nature

Market versus technologically concentric
Regional versus international in scope

Perhaps the biggest strategic modifier of a roadmapping exercise is the purpose

of the roadmap itself.39 The stakeholder group who is developing the roadmap will
determine its strategic focus. An industry-based roadmap, for example, will be dif-
ferent from one carried out by a company. National or regional roadmaps for inter-
national markets have not had a history of success; however, limiting the geographic
scope often provides a focus to a dominant technological pathway for a particu-
lar region. Similarly, a concentric market focus or a concentric technological focus
either by a company or an industry will determine its boundary.
Technological roadmaps are now used for tactical as well as strategic purposes.40
Roadmaps differ between physical and service product planning,41-42 product family
tree development versus single product development, and service and product tech-
nology process planning. Further, technological roadmaps, in practice, are strongly
linked to market forecasting efforts sharing many of the same tools, such as the
Delphi method and others.
Some authors of roadmaps suggest that roadmapping can be performed on two
levels, industry or corporate. Further, these levels necessitate a differing scope of

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Roadmapping Nanotechnology 57

efforts in terms of time, cost, level of effort, and complexity. Moreover, they provide
an overall differing process between a company and an industrial process. Finally,
we suggest that roadmapping processes for disruptive technologies may need to be
different in scope. In many ways, the roadmapping process has become a victim of
its own success. The process provides such value to the strategic planning of compa-
nies and regions that many have sought to apply it to technology foresight, technol-
ogy forecasting, data scanning, etc.
We now consider nanotechnology-based roadmaps. They inherently differ from
the sustaining technology-based roadmaps. Such technologies are the basis for spe-
cific technology product paradigms that set the path for major industries. The Semi-
conductor Microfabrication Roadmap (SMR) benefited greatly by the success of the
semiconductor industry that had a single technology focus. Let us consider some of
the differences between nanotechnology and semiconductor microfabrication.
The following questions raise interesting problems: Why was it so hard for
Small Tech based solution suppliers to use Moores Law43 in the same way that
semiconductor fabricators do? What does that suggest for the Small Tech based
solutions communities? Semiconductor microfabrication benefits from Moores Law.
Does nanotechnology have a Moores Law equivalent?
These problems may result from the lack of a unit cell for nanotechnology, unlike
all electronically driven microsystems that have transistors as units. If it is true that
Small Tech has no transistor-like unit cell, then this leads to a series of laws that
might suggest production space and standardization strategies.

The First Law Of Small Technology

There is no unit cell.
The suggestion that no unit cell exists when considering nanotechnologies pres-
ents a manufacturing production problem. This law eliminates much of the promise
of cross-industrial learning and acts as the basis for many of the next three Small
Tech laws. While the semiconductor industry focuses on the furthering of MOS
technology and, to a smaller extent, bipolar technology, this lack of similar process
technologies simply does not exist in the newer small technology paradigms. Where
it is true that there are groupings of MEMS production processes, which share many
process steps, it is more true to say that there are at least 40 varied routes for manufac-
turing processes in the MEMS industries. The emerging and encompassing nature of
nanotechnology-based applications provides for even more varied based production
pathways. This means that the transference of learning in production of micro and
nano devices will not keep pace with the learning achieved by their semiconductor
cousins in the near future. This leads to the Second Small Tech Law.

The Second Law of Small Technology

Application, One Process.
This law was first presented by Eloy at a meeting in 200444 of Small Tech.
Designers choose production pathways that are application specific. It suggests
serious implications for the roadmapping process. Companies that embrace new
nanotechnology-based products will most likely have to modify an existing process

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58 Commercializing Micro-Nanotechnology Products

radically in order to produce it. Further, even though there exists many ways to pro-
duce a given product, some of these will be much less cost effective and efficient.
In the MANCEF International Roadmap,45 examples are given of many process
variants for top-down and bottom-up nanotechnologies that are often specific to a
certain application area or group of applications. For example, the top 10 to 15 MEMS
companies use many similar process steps but very dissimilar processes. Texas
Instruments, Analog Devices, and Sandia National Laboratories are three leaders in
surface MEMS technologies and have been integrating MEMS and semiconductor
microfabrication for years. Yet the complexity and typology of these processes are
very different. They are different since different end users and product applications
drive them. Other industry leaders, Hewlett Packard, Honeywell, and Kulites, for
example, use other MEMS and NEMS technologies to meet their customer needs
and have not only varied processes from each other but from many of the other top
ten producers.46 Again, technology choices are driven by applications rather than
any unit cell considerations. One implication of this reality is that MEMS or NEMS
based foundries, whether commercial or captive, have a difficult time following the
semiconductor foundry model.47 Micro and nanotechnologies currently do not have
a dominant manufacturing technology as does the semiconductor microfabrication
industrys bipolar or CMOS, ensuring processes in that industry have much more in
common than MEMS and NEMS. Nano-based foundries face many more problems
than their semiconductor-based cousins. Some foundries trying to provide solutions
to a wide variety of applications have had exceptionally high development costs.
Many NEMS foundries have learned to tailor the projects they accept to meet their
existing or planned capabilities. This strategy has been used with success by such
firms as Dalsha and Colybris. Minfab in Australia has taken an islands of compe-
tence approach that has been successful for them.
This describes only the front-end manufacturing reality of Small Tech. There
are also back-end issues for Small Tech commercial solutions. Nano and micro-
based devices interact with the macro world by communicating, sensing, or actu-
ating along many different paths. Many applications require pathways to sense or
actuate in a wide variety of mediums. The importance, cost, value, and problems of
nano- and micro-based packaging are well known. Micro and nano applications that
sense differing properties have radically differing packaging requirements. This is
the base for the second law of Small Tech.

The Third Law of Small Technology

One Application, One Process, One package.
The success of small technologies and their increasing importance over the last
decade have become evident. Yet many of the applications share technologies in
both the front-end and back-end process have little in common except that they are
small. Companies with the highest volume productions enjoy process standardiza-
tion that derives from high-volume processes. However, the lack of a unit cell does
not allow the multiplication effect that comes from the acceptance of common pro-
cesses across applications. Testing is application specific, leading to the Fourth Law
of Small Tech.

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Roadmapping Nanotechnology 59

The Fourth Law of Small Technology

One Application, One Process, One package, One Testing Procedure.
The Fourth Law was derived from MANCEFs First International Top Down
Nanotechnology Roadmap produced in the late 1990s.48 The Fourth Law suggests
that alternatives to the semiconductor foundry model might be necessary. This law
drives many to think that where some applications might follow a semiconductor-
like model, more seem to follow the precision machining, islands of competence, or
shared facilities model.
These four laws provide a basis to understand Small Tech and how it should
be treated in a roadmapping process. These laws suggest that successful technology
product packages and test paradigms will be modified and shifted to other applica-
tion spaces as is being done by Olivetti ink-jet to microfluidics, Bosch bulk automo-
tive sensors to the commercial sensors, and many others. These laws modify greatly
any nanotechnology-based roadmapping. Nanotechnology-based process then dif-
fers greatly from a traditional roadmapping process in many ways:

The breadth of the technology and the types of technologies in its base are
exceptionally varied.
This requires a roadmapper to be selective. For example, the MANCEF pro-
cess49 focuses on a subset of nanotechnology. Another roadmapping study
focused on Atomically Precise Manufacturing (APM). This roadmapping
requires a focus on a new, emerging, enabling and disruptive technology
base, which does not have, for the most part, dominant technology product
architectures within solution sets they provide. The MANCEF roadmap-
ping process utilized these constraints in order to deal with:
the enabling or meta-systemic nature of the markets that nanotechnol-
ogy addresses
the flexibility required of firm-based nanotechnology product platform
that companies need to develop in order to be robust and address the
uncertainties of different markets
The MANCEF roadmap process, unlike traditional ones, did not focus
solely on current or future nanotechnology but applied to a specific market
to replace a technology derived from a particular market application space.
The process also reviewed the traditional technology product paradigm in
the existing space that nanotechnology sought to replace. Finally, MANCEF
selected other competing technologies seeking to replace that same indus-
try-based technology product paradigm.50 The MANCEF roadmap process
addressed the reality of competing technology product paradigms.
The roadmap process must address not only the technological hurdles that
face an emerging industrial solution set but also be a source of confidence for
all in the emerging technology solution set value chain acting, thereby acting
as a bridge to overcome customer fear of change, the essence of the physiolog-
ical hurdles involved in managing solutions based or disruptive technologies.

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60 Commercializing Micro-Nanotechnology Products

Roadmaps were developed in response to the growing recognition of technolo-

gys primal importance in the corporate strategic process. Roadmapping is the oldest
strategic tool utilized to insert technology into the strategic process of a company. It
has morphed over the years and now is designed to have both a strategic and tactical
value. The roadmap, much like a business plan, is a living document. Many find the
roadmapping process every bit as beneficial to a company as the final outcome of the
roadmapping process itself. Developing a living roadmap document in any subset
enabling technology is a daunting task for a strategist or roadmapping team. Many
differing subsets of small technologies can be applied to almost any product arena,
but the roadmapping space can soon exceed the scope of any one group.
Companies that use micro- and nanotechnologies to develop products that seek
to change the manner of technology- product- manufacture- paradigm in a given
application space face great risk. An industrial roadmapping process may not reduce
that risk but often defines that risk more clearly. This process, for example, will
help identify and quantify the nature of the technological, infrastructural, and philo-
sophical barriers to market entry that the companies will face. A huge resistance still
exists to the adoption of any new technology-based solution in our society. Road-
maps can help to overcome that resistance. This was the case with MANCEF RF
MEMS Roadmap50 that created an output that limited uncertainty and therefore risk
for the constituent area. The roadmap noted the RF MEMS-based solutions were not
trying to displace a current technology product paradigm but were trying to provide
the best value solution compared to other technology product paradigms.
Finally, when an emergent enabling technology product solution is trying to
replace an existing technology solution, the roadmap chart should be modified to
include defined and well-understood steps. We must be able to show the market that
there is a great deal of value embodied in our technology product paradigm at all
those levels.
Current technology roadmapping uses computer graphical techniques to convey
information to their users and provide constructs for their developers. These often
link technologies to components, components to products, and products to markets
in visual displays. The focus here is on industrial roadmapping utlizing visual dis-
plays. Figure3.1 provides a general schematic of a multitiered technology roadmap.






Figure3.1 A multitiered visual output of a technology roadmap.

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Roadmapping Nanotechnology 61

Methodology and Information Gathering

Before any roadmap can be produced, the methodology of collecting and analyz-
ing information needs to be established. This is easier to do for a roadmap that is
focused on a specific technology and when the consultation process requires only
small groups of experts. It is very different than that required for developing the
MANCEF international roadmap and others of similar size. They required large
numbers of experts from different countries to provide input at conferences, work-
shops, by email, and other means of communication. Let us now look at the produc-
tion of smaller, more specific roadmaps.
One of the authors, David Tolfree, was involved in setting up a number of expert
technology-focused groups as part of the U.K.s micro-nanotechnology manufactur-
ing initiative and infrastructure development program. The challenge was to find
the best way to identify and bring together experts who could provide the informa-
tion necessary to compile an accurate roadmap for the area of technology selected.
Although a number of consultation workshops on micro-nanotechnologies had been
carried out, none had actually produced strategic data from which a useful roadmap
showing the future directions for the technology could be compiled. The experience
and lessons learned from this exercise, carried out over a year for six areas of tech-
nology, are outlined below.
The motivation for the U.K. work was based on the urgent need to identify and
bring together people from disparate groups, some of which had been working in the
field of micro-nanotechnology for many years. In 2003, the government had allo-
cated about 100 million over six years for developing and enhancing open access
centers for micro-nanotechnology and for creating a national network51 in which
they could operate. In 2006, more than 700 organizations and companies were iden-
tified as working in the field and joined or became associated with the network. Ini-
tially the following four key areas were identified: nanoparticulates; nanomedicine;
nanometrology; and nano-manufacture and integration.52 It was within these general
areas and in the context of the national network that it was decided to form groups
from identified experts whose purpose would be to advise and assist the government
on the future directions of micro-nanotechnology where future funding could best
be focused to expedite commercialization and business growth.
The first step in the process was to decide where the U.K.s technology strengths
were and to bring together key representatives from industry, academia, and appro-
priate government departments following the Triple Helix concept.53 It was decided
to select technology areas where groups or committees already existed since they
would already have the necessary expertise and knowledge. The following six tech-
nology areas in which to form groups were selected: silicon technology; integration
technology; design, simulation, and modeling; gas sensing; polymer manufactur-
ing; and nanoparticle manufacturing. These represented some of the communities
that are growing in strength in the U.K. Each of the communities had a champion,
usually an individual representing his own organization. That person was respon-
sible for developing the field and overseeing its growth. Each was approached, and
all consented to taking part in the study. Everybody agreed that roadmaps were an

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62 Commercializing Micro-Nanotechnology Products

essential tool to identify core needs and to track strategic directions and were there-
fore willing to cooperate in the roadmapping exercise.

The MNT network database and personal knowledge were used to identify and
make contact with key people and invite them to dedicated one-day roadmapping
workshops appropriate to their area of interest. About 2040 people from industry,
research organizations, and academia attended the workshops. A four-stage process
was used as represented in Figure3.2. The participants needed to possess sufficient
knowledge about the technology, the products it could produce, the existing markets
and possible future ones, and the status of business development in the fields. The
first task was to arrive at a consensus on the current status of the technology and
then move on to provide a vision of where they saw future developments and where
they believed it should go in 20 years. The following stages were to determine what
barriers there were to achieving the goals and what decisions were required to over-
come the barriers.


Present Business
Where are we now?
& Activities

Future Aspirations for

Where do we want to be?
Products and Services

Barriers to Progress What is stopping us getting there?

Solutions and the Way What needs to done to overcome

Forward barriers?

Example of
Post-its board
Material Costs

Markets Quality

Figure3.2 Stages of the roadmapping exercise.

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Roadmapping Nanotechnology 63

Data Collection
Small groups numbering four to five people appointed a chairperson and debated
among themselves the key issues and answers to the following questions:

Where are we now?

Where do we want to be?
What is stopping us getting there?
What needs to be done to overcome the barriers?
Within each one of the headings above, participants addressed specific top-
ics such as:
Who are our present customers?
What are the current trends?
What are the main drivers?
What is the status of the current competition?
Who are the present leaders in the field?
What are the technology gaps?
Do we have the right skills?

Color-coded hexagonal-shaped post-its were used at every stage of the process

to gather written statements that were then pasted on a board for all to see and com-
ment upon. Then, using the post-its, people were asked to make choices and select
their priorities.
The data were collated and analyzed by the session chairman,54 who originally
developed the operational technique described above. This exercise proved to be
extremely useful and enjoyable to participants. It provoked positive dialogue, result-
ing in valuable data to be collected and thus enabling useful roadmaps to be produced
with strategic objectives. Roadmaps created using such data help decision-makers to
formulate meaningful strategies and plans for the future.
This type of roadmap is essentially a living document and has a current value. It
is designed to be updated as new information becomes available. Unlike the larger
international roadmaps, these enable more current and near future assessments of
technological trends to be made.

This roadmapping process based on nanotechnology, which is an enabling disrup-
tive technology base,55 needed a new perspective on technology roadmapping. The
MANCEF roadmapping process has undergone continuous development since 1996.
This had to capture both the specific nature of the technology and also the differing
nature of the innovation process on which it is based. This means that the road-
mapping process had to capture the technology impact paradigm that describes a
technology as either disruptive or revolutionary (the manner in which a product is
manufactured radically changes, eliminating the former competencies) or sustaining
(evolutionary), which is supportive of the current technology paradigm.

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64 Commercializing Micro-Nanotechnology Products

Technology Technology Innovation Market User Application

Source Focus Type Strategies Type

Technology Creative or
New Science Push Destroying

Market Replacement
Disruptive Radical Pull or Substitute

Market Replacement
Pull or Substitute

Firm Core Technology New or Major

Evolutionary Continuous Push Improvement

Figure3.3 Technology commercialization model.

Markets Materials Medical Electronics

Building Nano- Nano- Nano-

Blocks Materials Tools Structures

Synthetic, Modeling, Micro &

Technology Nano
Supramolecular, Metrology

Advances in
Science Chemistry Physics Engineering Biology

Figure3.4 Nano markets as extracted from patent search.

A model of innovation based on technology impact and resultant modifications

to user behavior is shown in Figure3.4. We describe as one case resultant user inter-
actions with the resultant product or innovation as requiring a user change paradigm
and therefore is discontinuous (user has to change) or in the other case where the user
does not have to change their behavior continuous or (evolutionary).56 The ultimate
end user, when obtaining a traditional product, does not necessarily know that the
product she is using or that was integrated into her system is made in a nontraditional

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Roadmapping Nanotechnology 65

manner. These final products are often designated as replacement applications and
demonstrate how disruptive technologies can be commercialized.
Successful disruptive technologies over time become high tech sustaining
technologies. This can be seen in nanotechnology-based products such as ferofluidic
bearings for use in hard drives for computers. These were first produced by a com-
pany in the early 1980s57 and are now in use in all personal computers in the world.
One result of the MANCEF Nanotechnology Roadmap process was that no
matter how hard we tried to define what nanotechnologies were, the roadmapping
task remains difficult because at one level nanotechnology could be considered as
nanoscale science. It appears to those involved in the effort that there was more
meaningful commercial discussion at the next level down. There is a better under-
standing today for what is occurring in the domain of nanomaterials versus materi-
als, nanoelectronics versus electronics, and the like. Further review of the patent
literature suggested dominant patents in terms of citations and numbers in the areas
of nanomaterials, nanoelectronics, and nanobiology. The MANCEF Roadmapping
team focused its efforts in the development of roadmaps around disruptive and evo-
lutionary technology-based products developed integrating nanotechnology in mate-
rials, electronics, and biomedicine (see Figure3.4).
The nanoelectronics/nanocomputing industry today is dominated mainly by large
semiconductor firms and their suppliers providing integrated systems. This segment
has focused on active bulk nanotechnology advances, which include some compa-
nies focusing on atomically precise manufacturing for use in positioning and other
subsystems. Nanotechnology application examples include Zyvex partnering with
chip equipment maker FEI to bring atomically precise capabilities to their systems
and Genus with its atomic layer deposition. Further, in areas such as ion implanting,
doping, low and high K dielectric, especially in reference to semiconductor develop-
ment, traditional suppliers that extend these technologies are more likely to be the
dominant suppliers. Materials and equipment suppliers that can utilize nanotech-
nologies to improve their value proposition to the semiconductor marketplace have
annual market sales in the tens of billions of dollars.
The MANCEF group examined atomically precise manufacturing as developed
by Zyvex. The movement towards atomically precise manufacture, which forms the
basis for the utilization of nanotechnology, is being addressed in two fundamentally
differing pathways the top-down and bottom-up nanosciences. The distinctly
separate approaches are moving towards the same ultimate outcome of atomically
precise manufacturing. In the top-down realm, research is performed with an eye
on reducing the scale and feature size of existing processes. For instance, in optical
lithography approaches, used in IC foundries, feature size of less than 100 nm is
being implemented to reduce the power consumption and increase the transistor den-
NEMS assemblers building smaller and smaller systems. In the bottom-up realm, we
see the work of naturally occurring atomic and biological forces being utilized as the
primary manufacturing tool set. The use of ionic charges, atomic lattice holes, cata-
lytic reactions, atomic mobility, and biological selectivity are some of the numerous
forces put to work to fabricate complex atomic structures. It is in this realm that the
carbon nanotube and buckyball configurations of carbon reside (as shown in the

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66 Commercializing Micro-Nanotechnology Products

patent discussion above) to be contributing to numerous products. In the engineer-

ing approaches, the development of atomically thin monolayer self-assembly units
enables unique selectivity for sensing applications. The future of self-assembly is the
selective directed location of the self-assembly sites. As researchers more effectively
control self-assembly, they will be enabling a new form of imaging to the design at
the atomic layer, thereby competing directly with lithographic processes. Whether
top-down or bottom-up techniques are used, nanoscience and nanotechnology will
be the first to achieve atomically precise manufacturing. It is clear that in the first
decade of the twenty-first century, we are embarking on engineering at a level never
before conceived.
Cost effective fabrication of nanoscale electronic devices could be achieved by
combining bottom-up fabrication of silicon nanowires on silicon substrates with top-
down formation of connecting electrodes by optical lithography.
Limitations of conventional lithography and etching to define nanosize struc-
tures are driving up costs of the top-down approach. Bottom-up techniques are not
hindered by these problems but suffer from low productivity and nonuniformity. A
combination of selected bottom-up and top-down methods can bring forth compli-
cated devices and systems at a fraction of the cost presently accrued due to adoption
of only top-down approaches.

We have provided some new thinking on nanotechnology and roadmapping. We
further defined a roadmapping process based on the differing nature of technologies,
covering disruptive technology. This process is developing well, but there is still
further work to be done. What has been learned will be incorporated in the next set
of nanotechnology roadmaps.
All roadmaps seek to link technology to a single market or product or a market
grouping. Due to the nature of nanotechnology, the exact character of any technol-
ogy product paradigm is difficult to predict in advance. MANCEF has added a sig-
nificant step to roadmapping disruptive technologies that embraces market drivers
rather than markets or products.

1. Linton, J.D. and Walsh, S.T., Roadmapping: from sustaining to disruptive technologies,
Technological Forecasting and Social Change, Elsevier Science, 71, 13, 2004.
2. Walsh, S., Giasolli, R. and Elders, J., Eds., The second edition of the International
Micro Nano Roadmap, MANCEF, 674, 2004.
3. Walsh, S., Boylan et al., The semiconductor silicon industry roadmap: epochs driven by
the dynamics between disruptive technologies and core competencies, Technological
Forecasting and Social Change, 72, 213236, 2005.
4. DAveni, R.A., Hypercompetition: managing the dynamics of strategic maneuvering,
The Free Press, New York, 1994.
5. Linton, J.D. and Walsh, S., Acceleration and extension of opportunity recognition for
nanotechnologies and other emerging technologies, (to be published), International
Small Business Journal.

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Roadmapping Nanotechnology 67

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4 Technology Transfer
of Nanotechnology
Products from U.S.
Mark J. Jackson, G. M. Robinson,
and M. D. Whitfield


Introduction............................................................................................................... 71
Investments from Venture Capitalists........................................................... 72
Start-Up Companies in Nanotechnology....................................................... 73
Role of Government in Nanotechnology Commercialization.................................. 73
Role of Academic Research in Commercializing Nanotechnology Products.......... 74
Technology Transfer for Nanotechnology Products................................................. 76
Intellectual Property Impact and Ownership...................................................... 76
Patents............................................................................................................ 77
Trade Secrets................................................................................................. 77
Copyrights..................................................................................................... 77
Role of the Entrepreneur, Major Corporations, and National Laboratories in
Commercialization......................................................................................... 78
Concluding Remarks................................................................................................. 78
Internet resources...................................................................................................... 79

Technology transfer from universities is largely dependent on support from govern-
ment agencies, private investors, and corporations. Investment decisions are a major
force in how nanotechnology develops, and this is dependent upon the support from
government, academia, private investors, and corporations. Nanoscale science and
engineering activities are growing in the U.S. The National Nanotechnology Ini-
tiative (NNI) is a long-term research and development (R&D) program that began
in 2001 and coordinates 25 departments and independent agencies, including the


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72 Commercializing Micro-Nanotechnology Products

National Science Foundation, the Department of Defense, the Department of Energy,

the National Institutes of Health, the National Institute of Standards and Technology,
and the National Aeronautical and Space Administration. The total R&D investment
in 20012005 was over $4 billion, increasing from the annual budget of $270 mil-
lion in 2000 to $1.2 billion including congressionally directed projects in 2005. An
important outcome of the NNI is the formation of an interdisciplinary nanotechnol-
ogy community with about 50,000 contributors. An R&D infrastructure with more
than 60 large centers, networks, and user facilities has been established since 2000.
This expanding industry consists of more than 1500 companies with nanotechnol-
ogy products with a value exceeding $40 billion at an annual rate of growth at about
25%. With such growth and complexity, participation of a coalition of academic
organizations, industry, businesses, civil organizations, and government in nanotech-
nology development becomes essential. The role of government continues in basic
research, but its emphasis is changing, while the private sector becomes increasingly
dominant in funding nanotechnology applications. The promise of nanotechnology
will not be realized by simply supporting research. A specific governing approach
is necessary for emerging nanotechnologies. This chapter explains the roles of each
player and their impact on the technology transfer process.

Investments from Venture Capitalists

Investment in nanotechnology can gain much from venture capitalists (VCs). Venture
capital is money that is invested in unproven companies with the potential to grow into
multibillion dollar industries of the future. Venture capitalists are sources of financial
and business resources that seek to control part of the business. VCs expect to capture
50 to 70% of return on their investments in a four-to-seven-year time period, which
is the time it takes to get the start-up company to reach liquidity in terms of acquisi-
tion, merger, or initial public offering. Nanotechnology start-ups are not particularly
attractive to VCs at the present time because the commercialization horizon is far too
long. Start-up companies are particularly attractive to VCs because:

The company has a particularly innovative product that is disruptive and

has a sustainable business advantage.
The company has a large and growing market that is worth $1 billion and
grows at a rate of 50 to 70% per year.
The company has products with a very short time-to-market horizon (less
than two years).
The company has a successful management structure with experienced
The company has an established customer base with strategic partners that
will provide a strong revenue stream.

Nanotechnology is not a single market but a series of enabling technologies that

provide groundbreaking solutions to high-value problems in every industry. Product
innovations are characterized by the application of nanoscale materials or with process
technology conducted at the nanoscale that changes the functionality of the product.

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Start-Up Companies in Nanotechnology

Start-up companies in nanotechnology should be measured by the same metrics as
other start-up companies in terms of income generating business dynamics and cost-
controlling business issues such as sales strategy, management structure, allocation
of capital, marketing, business models, product introduction, etc. The key differ-
ence of nanotechnology start-ups is that they possess a technology platform that is
composed of intellectual property generated by a team of scientists who are interdis-
ciplinary in nature with no business strategy, focus, or management structure. The
team is composed of highly respected academic scientists who can lever sources of
funding through research contracts. In their initial stages, these companies team
up with established companies to help them validate products, provide a channel
for marketing and selling products, and provide expertise in manufacturing. At this
stage, nanotechnology start-ups are characterized in the following primary catego-
ries: materials; biotechnology; software; electronics; instrumentation; and photon-
ics. The greatest growth is in the area of materials, even though most of the funding
has gone to developing nanophotonics and nanoelectronics products.

Role of Government in Nanotechnology

The role of government in nanotechnology is to support research and development
relevant to national priorities, to support the development of a skilled workforce,
and to support infrastructure such as government laboratories and research centers
to advance nanotechnology. In 2000, the U.S. government announced the National
Nanotechnology Initiative, signed into law in 2003 by President George W. Bush,
that creates a mission enabling the government to establish goals, priorities, and
metrics for the evaluation of federal spending on nanotechnology. The law also pro-
vides for investment in nanotechnology through strategic programs and interagency
cooperation between government departments. The government also supports the
development of workforce education by allowing interested parties to promote the
development of curricula via funds channeled through the National Science Foun-
dation (NSF). NSF funds in workforce development are focused on universities to
establish the fundamental education in nanoscience and technology and on com-
munity colleges that provide training in nanotechnology activities such as manufac-
turing process operations, materials production, etc. Articulation agreements also
provide pathways so that community college graduates can proceed to universi-
ties involved in nanoscience and technology in the form of two-plus-two degree
programs. Government also provides funds to allow the national laboratories to
conduct fundamental research in nanotechnology. The provision of instrumenta-
tion is essential, especially to major corporations and small-to-medium enterprises
that normally cannot afford to purchase such instrumentation. In the U.S., job cre-
ation is down to major corporations and especially SMEs (Small and Medium Size
Enterprises), and it is considered essential that job creators gain unfettered access
to these facilities. Nanotechnology education and outreach has impacted more than
10,000 graduate students and teachers since 2005. Changes are in preparation for

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74 Commercializing Micro-Nanotechnology Products

education, by the introduction of nanoscience at an early age. Nanotechnology edu-

cation has been expanded systematically to earlier education, including the NSFs
Nanotechnology Undergraduate Education programme (NVE) that has awarded
more than 80 awards since 2002, and high schools (since 2003), as well as infor-
mal education, science museums, and public dissemination. All major science and
engineering colleges in the U.S. have introduced courses related to nanoscale sci-
ence and engineering in the last five years. NSF has established recently three other
networks with national outreach addressing education and societal dimensions: (1)
The Nanoscale Center for Learning and Teaching aims to reach 1 million students
in all 50 states in the next five years; (2) The Nanoscale Informal Science Educa-
tion network will develop, among others, about 100 nanoscale science and technol-
ogy museum sites in the next five years; and (3) The Network on Nanotechnology
in Society was established in September 2005 with four nodes at Arizona State
University, University of California at Santa Barbara, University of South Caro-
lina, and Harvard University. The Network will address both short-term and long-
term societal implications of nanotechnology, as well as public engagement. All
15 Nanoscale Science and Engineering Centers sponsored by the NSF have strong
education and outreach activities.

Role of Academic Research in Commercializing

Nanotechnology Products
Under the National Nanotechnology Initiative (NNI), the National Science Foun-
dation plays the largest role in funding nanotechnology research in the U.S. Addi-
tional funding is provided by the Department of Defense, Department of Energy,
National Institute of Health, NASA, Environmental Protection Agency, and the
Department of Agriculture. The NSF has created a tier of funding where one-year
exploratory research is funded in addition to five-to-ten-year center awards. Each tier
creates a different level of maturity of nanotechnological development that is cross-
disciplinary. Nanoscale Science and Engineering Centers (NSEC) are awarded for
five years initially and are used as focal points for developing infrastructure and
providing a basis for further funding from other sources. NNI has been recognized
for creating an interdisciplinary nanotechnology community in the U.S. Two sig-
nificant and enduring results have emerged from this investment: the creation of a
nanoscale science and engineering community, and the fostering of a strong culture
of interdisciplinary research. The following centers have been created under the aus-
pices of the NNI:

Columbia University Center for Electron Transport in Molecular

Cornell University Center for Nanoscale Systems; Rensselaer Polytech-
nic Institute Center for Directed Assembly of Nanostructures
Harvard University Science for Nanoscale Systems and their Device
Northwestern University Institute for Nanotechnology

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Technology Transfer of Nanotechnology Products from U. S. Universities 75

Rice University Center for Biological and Environmental

University of California, Los Angeles Center for Scalable and Integrated
University of Illinois at Urbana-Champaign Center for Nanoscale Chem-
ical, Electrical, Mechanical, and Manufacturing Systems
University of California at Berkeley Center for Integrated Nanomechan-
ical Systems
Northeastern University Center for High Rate Nanomanufacturing
Ohio State University Center for Affordable Nanoengineering
University of Pennsylvania Center for Molecular Function at the
Stanford University Center for Probing the Nanoscale
University of Wisconsin Center for Templated Synthesis and Assembly
at the Nanoscale
Arizona State University, University of California, Santa Barbara, Uni-
versity of Southern California, Harvard University Nanotechnology
in Society Network Centers from the Nanoscale Science and Engineering
Education Solicitation
Northwestern University Nanotechnology Center for Learning and
Teaching. NSF Networks and Centers that complement the NSECs include
Cornell University and 12 other nodes creating the National Nanotechnol-
ogy Infrastructure Network
Purdue University and 6 other nodes creating the Network for Computa-
tional Nanotechnology; Oklahoma University, Oklahoma State University
and the Oklahoma Nano Net
Cornell University STC: The Nanobiotechnology Center.

With about 25% of global government investments in nanotechnology, the U.S.

accounts for about 50% of highly cited papers, ~ 60% of USPTO patents, and about
70% of start-up companies in nanotechnology worldwide. Industry investment in the
U.S. has exceeded the NNI in R&D, and almost all major companies in the traditional
and emerging fields have nanotechnology groups at least to survey the competition.
Small Times magazine reported 1455 U.S. nanotechnology companies in March
2005, with roughly half being small businesses, and 23,000 new jobs were created
in small start-up nano companies. The NNI SBIR investment was about $80 million
in 2005. More than 200 small businesses, with a total budget of approximately $60
million, have received support from NSF alone since 2001. Many of these are among
the 600 nanotechnology companies formed in the U.S. since 2001. All Fortune 500
companies in emerging materials, electronics, and pharmaceutical markets have had
nanotechnology-related activities since 2003. In 2000, only a handful of companies
had corporate interest in nanotechnology (fewer than 1% of the companies). A survey
performed by the National Center for Manufacturing Sciences at the end of 2005
showed that 18% of surveyed companies are already marketing nanoproducts. More

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76 Commercializing Micro-Nanotechnology Products

than 80% of the companies are expected to have nanoproducts by 2010 and 98% in
the longer term. Therefore, the role of academic research will play a significant part
in this growth.

Technology Transfer for Nanotechnology Products

Technology transfer is conducted at research-intensive universities for a number of
reasons. The first is that there is a federal mandate that universities allow discoveries
to be available for commercialization. This is an important means of attracting tal-
ented faculty that would not otherwise be attracted to a teaching environment into
positions within a university. The other reasons include providing equity to faculty
members and providing goodwill that will encourage faculty, alumni, to become
donors to the university and to become engaged with the process of commercializa-
tion at the university.
Technology is usually transferred when the professor responsible for the inven-
tion allows the university to file a provisional patent, thereby allowing the university
to provide a license to the professor to commercialize the technology. The com-
mercialization is dependent upon the knowledge created by the professor, and this
in turn allows the professor to be rewarded with a 25 to 50% share of the royalties
generated by the patent, which is very generous compared to the private sector. The
office of technology transfer at the university is a key gateway to commercializing
such a patent. However, the office of technology transfer has responsibilities such
as protecting the professors intellectual property, finding a market for the inven-
tion, and formulating contracts between the professor, the university, and the private
investor. Thus, the success of commercializing the invention depends on the abilities
of both the technology transfer office and the professor. There are cultural issues that
need to be addressed at universities that are keen on transferring technology to the
market. The ability to share the knowledge with the public must be restricted, and
this is usually at odds with the publish or perish attitude at most academic institu-
tions. However, the type of business relationship will dictate what can and cannot
be revealed. In various forms, the relationship can be based on providing licenses to
commercialize, faculty consultancy, strategic partnerships with university spin-off
companies, special funding schemes for faculty research, and research partnerships
with major corporations.

Intellectual Property Impact and Ownership

During the growth of nanotechnology during the 1990s, the number of papers
containing the word nano increased fourfold according to the ISI Science Cita-
tion Index. By 2004 it had risen to more than 20,000 articles. The U.S. Patent
Office has issued more than 15,000 patents containing the word nano up to the
year 2006. Many companies are now placing a greater emphasis on intellectual
property (IP). Strong IP portfolios decide whether a nanotechnology company can
survive or not.

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Technology Transfer of Nanotechnology Products from U. S. Universities 77

Utility patents offer protection for inventions that can be classified as a novel process
or method, or a piece of apparatus that is useful and nontrivial. The exchange of the
idea for protection seems obvious but may also alert the world of the idea. However,
under U.S. law, the patent is protected for 20 years and prevents others from making
and selling the invention contained within the patent. Once granted, it is essential
that the patent is protected so that maximum returns can be made from the patent.
A strong patent with a solid portfolio can be the foundation of creating wealth from
a nanotechnology patent. Protecting nanotechnology-based patents may be difficult
because not all of the knowledge is known to protect it from being exploited by other
nanotechnology players. Because nanotechnology is interdisciplinary, it is more
difficult to create a novel patent because it may be on a different scale. Therefore,
only partial protection can be guaranteed. Therefore, the decision to protect the idea
using patents must be considered very carefully.

Trade Secrets
A nanotechnology company can also use trade secrets to protect its intellectual prop-
erty through the use of trademarks. As of 2005, approximately 1800 trademarks
containing the word nano have been registered and are pending. Trade secrets can
be indefinite unless publicly disclosed. They can be revealed if the product is reverse
engineered. However, because of the scale involved, it may be difficult to reverse
engineer a nanotechnology product. Hence, trade secrets may work if employees
maintain confidentiality even when they leave the employ of a particular company.
The employment of nondisclosure agreements may also be useful, especially when
employees move from their original employment with the company.

Copyrights protect the idea, which is not the case for patents. Protection under copy-
right protects the idea for up to 100 years for work that is made for hire. This is the
case for nanotechnology industries.
The case for patenting appears to be self-defeating compared to trade secrets
and copyright protection. However, filing a provisional patent as opposed to a utility
patent does indeed show to potential investors that the patent is pending and also
who the inventor is. This last statement is interesting in that in the U.S. the patent
system is based on a first to invent standard rather than first to file standard. This
is unique to the U.S. and does not exist in other countries. The process of filing a
provisional patent is simple, inexpensive, and announces the origin of the invention.
A provisional filing also preserves the right to foreign filings.
The restrictions on innovation may stem from patent filings. This may be due
to the narrow scope of the inventors claims in the patent or to the way that the
research was initially funded. If the patent is borne out of government funding,
then the government can issue a royalty-free license to the inventor of the patent.
This provision was made under the 1980 Bayh-Dole Act and gives universities and
small business entities freedom to commercialize the invention at no cost. However,

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78 Commercializing Micro-Nanotechnology Products

innovations that stem from the invention are still governed by the original license,
which may cause problems if the business is sold to a third party after the patent
and license has been issued. The issue of developing an intellectual property policy
and its impact can take many different forms depending on the short-, medium-,
and long-term goals of a nanotechnology business. However, combinations of using
patents, trade secrets, copyrights, and trademarks can ensure that businesses create
revenue streams over differing time scales.

Role of the Entrepreneur, Major Corporations, and

National Laboratories in Commercialization
It should be noted that entrepreneurs are individuals who commercialize products
with the aim of making money. This does not appear to match that of the require-
ments of a professor or research team employed in a university or a national labora-
tory. Entrepreneurial activity is characterized by the building of a team dedicated to
commercializing nanotechnology products, and this is discussed elsewhere in this
book. The major corporations play a very important role in commercializing nano-
technology. They are particularly interested in using nanotechnology to enhance
and functionalize existing products at all length scales. The corporations are heavily
involved in developing their own technology but do maintain an active interest in
how government is funding nanotechnology programs and do look at the spin-offs
that emerge from nanotechnology-funded programs. The national laboratories are
not charged with commercializing nanotechnology products, but they do provide
access to very expensive equipment that can be used to develop nanotechnology
products. This is particularly so with large equipment such as synchrotron radiation
sources that are used in LiGA applications.

Concluding Remarks
The National Nanotechnology Initiative has done much to fund the research and
development needed in U.S. universities to commercialize nanotechnology prod-
ucts. However, the commercialization of nanotechnologies for U.S. universities is
dependent upon research teams and their relationship with offices of technology
transfer at their home institutions. Although funding is well supported by many
U.S. government departments, commercialization is left in the hands of the busi-
ness relationships made between the research group, offices of technology transfer at
universities, and the private sector. Further strengthening of the commercialization
route may be necessary in the future if nanotechnology products are to become more
widespread in our society. Governments need to address this problem owing to the
amount of resources that need to be provided to fund research and developments in

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Technology Transfer of Nanotechnology Products from U. S. Universities 79

Internet resources

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5 Commercialization
Strategies for Public
Research Organizations:
How to Move from Public
Research into the Market by
a Leading Dutch Institute

Kees Eijkel and Arend Zomer


Introduction............................................................................................................... 82
Mesa+ Institute for Nanotechnology Within the University of Twente.................... 82
Setting the Stage: Micro-Nanotechnology, Commercialization, and Cooperation.. 83
Dynamics in the Field of Micro-Nanotechnology.........................................84
Cooperation in a Triple Helix of Academia, Industry, and Government...... 86
The Role of Public Research Organizations.................................................. 89
Entrepreneurs and Venture Capitalists..........................................................90
The Role of the Regional Government.......................................................... 91
Creating the Right Structures...................................................................................94
Accommodating Your Organization.............................................................94
Creating Facilities with a Common/Shared Interest.....................................97
Inspiring Culture..................................................................................................... 100
Accelerating the Commercialization Process......................................................... 102
Conclusions............................................................................................................. 103
References.............................................................................................................. 103


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82 Commercializing Micro-Nanotechnology Products

In this chapter, we focus on the issues associated with forming and maintaining a
collaborative partnership between three main parties, academia, industry, and gov-
ernment, in the building of a suitable commercialization infrastructure for micro-
nanotechnology. Our experiences are based on the work of the MESA+ Institute, a
research and development center in the Netherlands. First, the work of the institute,
its history, and the importance of its location in the region will be described. We
introduce the Triple Helix1 model as our concept to describe the respective roles of
the partners, their interactions, and the contribution that each makes. This is cen-
tral to the successful implementation of a commercialization strategy. Subsequently,
practical recommendations and experiences from MESA+ will be discussed.

Mesa+ Institute for Nanotechnology

Within The University of Twente
MESA+ was founded in 1999 from a merger between MESA and CMO (the Center
for Materials Research). CMO was the materials research consortium of the former
faculties of Applied Physics and Chemical Technology that existed since 1985. In
later years, CMOs focus expanded towards the development of devices and systems.
This was a domain in which MESA (Microelectronics, Sensors, & Actuators) was
also active. MESA was established in 1990 as the cooperation between different
research groups at the university in the areas of micro electronics, materials engi-
neering, sensors, and actuators. In addition to that, MESAs research agenda also
became more active in the materials research field. Thus, combining the two centers
into MESA+ was a logical step for both CMO and MESA.
Participating research groups in MESA+ come from several different disci-
plines: chemistry, electrical engineering, applied physics, mathematics, and bio-
physics. In 2006, MESA+ employed approximately 450 people. About 300 of these
are scientists, which include more than 200 Ph.D.s and postdocs. The estimated
turnover of the Institute in 2006 will be almost 45 million euros, of which almost
57% was acquired from external sources. These external sources are research grants
from national research councils, European Union research programs, and industry.
MESA+ also receives industry financing directly for contract research or facility
sharing. Commercialization is a key element in the development strategy of MESA+.
It helps to attract industrial funding and encourages the spinning-out of companies
that could become partners in future research activities.
The socioeconomic environment in which the University of Twente and MESA+
operates is an important driver for its entrepreneurial activities. The University of
Twente is a relatively young university, founded in 1961 in the eastern part of the
Netherlands, in a region confronted with unemployment and economic restructur-
ing due to the decline of a dominant textile industry. It is therefore not surpris-
ing that the University of Twente sees itself as an important player, one that can
provide knowledge and skills for companies located in the region. Reacting to the
economic downturn and threats of severe budget cuts in the 1980s, the university
established an entrepreneurial culture and strategy within its departments,2 a culture

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Commercialization Strategies for Public Research Organizations 83

that would not just provide students with an academic education but would also be
able to attract a significant amount of high-tech firms to the region. In line with this,
the University of Twente implemented a number of technology transfer schemes to
support the commercial exploitation of knowledge acquired through industry-related
research projects. Examples of such schemes are the Temporary Entrepreneurial
Positions Programme (TOP), a Business and Science Park, later developed into a
broader Knowledge Park, and the Holding Technopolis Twente, a limited com-
pany that acts as a holding company for university participations. Recently the uni-
versity structured all its internal commercialization processes in the Innovation
Lab Twente. The university is very successful with its TOP program. This scheme
offers an interest-free loan, office space, advice, training, marketing, and financing
strategies to start-ups that are planning to use knowledge produced at the University
of Twente. These and other schemes and institutional arrangements have made the
University of Twente a central partner of the provincial government and regional
development agency.3
The University of Twente and MESA+ play an important role in creating a
regional cluster of companies, academic research communities, and a well-educated
workforce. Since 1980, the university has spun out some 600 new firms, leading to
approximately 6000 direct jobs. During the last 15 years, MESA+ spun out some 35
technology-based companies. The new jobs created by these companies generate an
improved economic climate for the region.
The activities of MESA+ and the University of Twente described above must also
be seen as part of the activities of other players in the region, i.e., the regional, pro-
vincial, and municipal governments whose primary objective is regional economic
development. They hope to accomplish this, among other things, by supporting orga-
nizations and networks dedicated to commercialization. Two examples of regional
network initiatives that have been developed in the region are: TKT (Knowledge
Kring Twente), a network of high-tech companies that exchanges information for
the improvement of high tech businesses in the region. TNKO (Twente Network for
Knowledge-Intensive Entrepreneurship) is a network for knowledge-intensive entre-
preneurs in their starting phase. A list of such initiatives and other organizations
is given by Mensink et al.4 Recently, Kennispark, another initiative, was founded
to specifically improve the economic cluster around the campus of the University
of Twente. Partners that cooperate in Kennispark range from the TKT network to
the regional development agency, i.e., Oost N.V. as well as the college in Enschede
(Saxion Hogeschool) and the business accelerators of the University of Twente. The
Innovation Lab of the university is an integral part of Kennispark. Kennispark is
cooperating with other partners in business, higher education, and government.

Setting the Stage: Micro-Nanotechnology,

Commercialization, and Cooperation
The last paragraph has shown that the University of Twente and the MESA+ research
institute reside within a larger regional ecology of companies and governmental
organizations. It is within this larger ecology or landscape where all the parties have

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84 Commercializing Micro-Nanotechnology Products

to collaborate with each other in order to succeed. In this section, we will explore the
nature of commercialization in the field of micro-nanotechnology.

Dynamics in the Field of Micro-Nanotechnology

An important and much discussed topic is how to be successful in commercializ-
ing micro-nanotechnology following the path described by Walsh or Abernathy &
Clark.5-6 We shall focus on the interorganizational aspects of the commercialization
process. First, we will address the different markets or industrial linkages in which
the new technologies need to position themselves.
New technologies sometimes provide an answer to current innovation needs in
established industry chains. For example, the introduction of new, stronger light-
weight materials will provide innovation steps that will make new and improved
products. Such innovations are at the technological core of the product or its produc-
tion processes. Product platforms within an established industrial infrastructure are
mostly very well developed in all aspects of production, distribution, use, marketing,
recycling, etc., and with that, one identifies a well-established community of suppli-
ers, systems integrators, etc. This is known as the virtuous innovation cycle.
On the other side of the spectrum, we find products and related technologies that
challenge the existing industrial paradigm, either through the fact that such products
and technologies could become competitors of existing solutions (the transistor ver-
sus the vacuum tube in the early 1960s) or create completely new fields of applica-
tions currently not occupied (Internet in the 1980s). Such innovations are not rapidly
taken up by the industrial infrastructure and the market. Existing industry is either
not flexible enough to absorb these innovations or would gatekeep the developments
to protect its position. This is the area of the disruptive innovation cycle.
On the one side of the dichotomy, we see new technologies that are willfully
incorporated into existing technological regimes because they either pose no threat
to the current regime or can be beneficial for the existing regime. On the other side
of the dichotomy, we find the new technologies that have the potential to challenge
the existing regime. So, while the first type will not experience much resistance
because of its beneficial or nonthreatening characteristics for the current regime, the
other type will find resistance in the introduction of new technologies because it they
existing practices and may require long development paths.
In a situation where the industrial environment is well developed (virtuous cycle),
a strategy is prevalent in which there are strong links with the industry leaders and
most important niche players. Between product, market specialists, and enabling
technology specialists, teams work on roadmaps to define the roadblocks for innova-
tion or to open up new market opportunities for the technology-product platform.
clearing research and development it is clear who to talk to and what to protect.
Industry is more likely to identify relevant intellectual property (IP) issues that
require protection before technology transfer and licensing can proceed. Companies
have established supply networks so are able to proceed to production.
People experienced in technology transfer issues need to be available in universi-
ties. It is interesting to note that most of the successful central technology transfer
offices in universities and institutes tend to focus on the pharmaceutics and medical

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Commercialization Strategies for Public Research Organizations 85

sectors. University technology transfer offices therefore employ people with a range
of experience and expertise in areas such as customer relations, IP, legal issues, etc.
In the more chaotic environment of potentially disruptive technologies, with their
uncertain development paths, a completely different approach to technology transfer
is required. First, there is no predictable development path. Roadmaps tend to dis-
cuss potential use of a technology rather than define technological steps to product
evolution. Business development in new or young enterprises therefore is a combina-
tion of business sense, strong networks, and a profound knowledge of the technology
and its development. Technologists have to be aware of the potential impact of their
work; they have to understand the product environments and be aware of the fact that
they provide just a partial solution to someones problem.
If a company is a supplier of a potentially disruptive technology, then it will
probably not be successful in building relations with other companies in the same
market sector. Leaders would not be interested in a development that has a potential
of challenging the current market paradigm. They would tend to use such a company
as a gatekeeper rather than a supplier. Companies that are interested in commercial-
ization tend to be those looking for unique opportunities for growth or sustainability.
Disruptive technologies influence the approach made toward technology transfer:
ideas have to come from the interaction of people focused on applications and mar-
kets with the people focused on technology development. Because there are no clear
roadmaps, ideas and knowledge exchange is not structured. Therefore, it is essential
to create as much interaction as possible between the product and market strategists
and the technologists. Opportunities, solutions, and new fruitful ideas are built on
the combination of the two. With an absence of structured roadmap processes, one
has to rely on intense daily contact (coffee table and lab floor) to maximize the
transfer and the growth of new ideas. Technology transfer becomes a body contact
sport, so maximize the chances for body contact.
The characteristics of the industrial landscape in the micro-nanotechnology
community are related to the above mentioned dynamics. Apart from a number
of large-volume applications taken up by the existing value chains (ink-jet printer
heads, hard drive head systems, micro-mirror devices for image projection, etc.), the
field is a gathering of smaller entrepreneurial companies; therefore, the learning pro-
cess is slow. Many organizations actively support their members in accelerating the
learning process through better understanding of the market and industrial process.
Such organizations are focused on a particular technology field (i.e., the Institute
of Nanotechnology, UK (i.e., MIG, MEMS Industry Group, or IVAM Germany),
and on commercialization, MANCEF (the Micro and Nanotechnology Commercial-
ization Education Foundation). In this system, production infrastructure is either
focused towards one of the larger applications mentioned above or has the difficult
task of integrating various technology platforms and acting as a foundry for different
We expect a further maturing of the field, leading to increased standardization,
but at the same time expect parts of the field to continue to be based on a wider
set of technologies, expressing themselves in different combinations in products.
In that regard, the field of micro-nanotechnology resembles the field of precision

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86 Commercializing Micro-Nanotechnology Products

engineering rather than semiconductors, where a unit cell for design and produc-
tion is established at a very high technological level.
We have tried to show that a commercialization process is not only shaped by its
technological possibilities but also by the players that are present or not present in
the innovation process. Our message is that an optimized commercialization process
takes into account the differences in the role that the technology can play in different
product applications, e.g., chip-technology in an existing microsystem technology
regime or for an application in a laboratory analysis setting. We feel that players who
are linked to the process of commercialization, i.e., research groups, universities,
private industry, and local and national government, should be aware of the needs of
commercialization trajectories and their respective role in the trajectory. Below we
discuss the use of the Triple Helix of university-industry-government concept as a
process for cooperation.

Cooperation in a Triple Helix of Academia, Industry, and Government

The idea of a Triple Helix of university, industry and government has been intro-
duced by Leydesdorff and Etzkowitz.7 The Triple Helix model tries to conceptualize
the interactions among three types of parties in the contemporary knowledge-based
society. The model itself is unclear about how the actual interactions take place
between the parties. The use of the Triple Helix as a heuristic model, however, is use-
ful because it provides a way to show the interrelationships among innovation, the
commercialization processes, and the parties involved. In the contemporary knowl-
edge-based society, the Triple Helix Model8 authors claim the different academic,
industrial, and governmental partners communicate increasingly with each other.
Furthermore, regional governments and municipalities also play an important role
in the co-creation of the regional landscape or cluster. Within this cluster, the suc-
cessful collaboration among the industrial, academic, and governmental partners is
important to success. The Triple Helix model states that the three parties, academia,
industry, and government, have more or
less demarcated roles; the contemporary
Tri-lateral Networks and knowledge-based society operates in a
Hybrid Organizations different way. In contrast with earlier
times, organizations in contemporary
society had overlapping institutional
spheres. Figure5.1 shows a visualization
Academia of the Triple Helix Model.
The authors also see the emergence
of hybrid organizations at the interfaces
of the different parties, such as the Ken-
nispark concept mentioned earlier. Public
State Industry and private activities differ strongly in
nature. Though they may operate in the
same environment, their basic goals and
interests differ strongly. Public activities
Figure5.1 The triple helix model of uni- are put in place to cover a certain need
versity-industry-government relations.

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Commercialization Strategies for Public Research Organizations 87

that is recognized in the public arena. They are task driven and usually receive a basic
budget from a public authority to perform that task. Its management decides on the
basis of many issues, societal issues (setting the right example, stimulating the desired
long-term development, etc.) from to political or financial issues. The stakeholders are
many and are represented in long decision chains with often a strong democratic input.
A private activity receives its income from its activities in the market; its management
decides in line with the desired strategic development of the enterprise in the market,
so decision chains are short. Interestingly, a well-chosen public activity will address a
need. Such a need could be translated into market in a private setting. Indeed, many
public activities could be considered for privatization. As a result of that, the rules for
running that activity will change, and the character of the organization will change.
This usually leads to a larger economic transparency but less societal embedding.
In between the public and the private set of rules, an abundance of minefields and pit-
falls exists. Many public-private partnerships have shown the problems related to the
marriage of the two. Public entities can cooperate with private ones and vice versa,
as long as it does not force one into adopting the rules of the other. If the basic set of
rules for the public or private environment is not damaged or corrupted, the different
parties involved can keep their integrity and strength and work from that into a fruit-
ful cooperation.
In every western country, there are numerous examples of the emergence of
hybrid organizations among the Triple Helix parties, such as university incubators
established to support start-up companies that are based on academic knowledge.
Science parks are founded to create geographical concentrations of industry and
academic research; they do encourage spin-off companies themselves and can be
considered hybrid organizations, i.e., companies with primary interests in wealth
creation but stemming from an organization with a dominating interest in new
knowledge and often partially owned by the universities themselves. It is these types
of organizations that are trying to cross inter-organizational boundaries, stretching
and merging different roles. And these organizations, like spin-offs, science parks,
or mixed industrial-governmental interest groups, are important bridge builders in
the collaboration process.
Intermediate companies or organization are often embedded into a stakeholders
organization, with a task to build relationships with the other partners. Due to the
nature of the industrial community, the host of the intermediate organization is often
a public stakeholder, either a government or a research institution. It is rare for pri-
vate companies to be recognized as intermediate organizations. If so, they act on
the basis of a clearly defined business model. The most successful ones are active in
the intellectual property field; the British Technology Group is one such example.
Where a public research organization has the role of primary player, a number of dif-
ferent forms are found, ranging from a Technology Transfer Office through sharing
of facilities and start-up support programs to forms of active business development.
Examples are many, including the commercialization policies of organizations like
Forschungszentrum Karlsruhe GmbH (FZK), Institute of Microtechnology Mainz
(IMM), Institute of Nanotechnology Exploitation (INEX), and MESA+. In some
cases, we see authorities or mandated bodies taking the role of primary partner to
initiate a commercialization structure. Examples are Centre Suisse dElectronique

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88 Commercializing Micro-Nanotechnology Products

et de Microtechnique (CSEM) and the recently opened Microsytems Technology

(MST) factory in Dortmund.
We see different solutions in which certain organizations are taking up a pri-
mary role in the commercialization process or parts of the process. The power of
each of these initiatives is that the initiatives are supported by all the partners in the
Triple Helix, perhaps not always in terms of funding but at least in terms of strategic
cooperation. We regard this as a condition sine qua non.
As hybrid organizations predominantly stem from one of the parties, they can
be seen as underlining that partners principal role in the commercialization process.
This often leads to the partners pursuing commercialization in that regional environ-
ment viewed as an undesired development. Parties involved in the commercial-
ization process for MNT must be made to be aware of their commitment to other
partners, to acknowledge the role they play in the larger environment or innovation
landscape, and to recognize the crucial contribution that each party delivers to the
shared goal of the cluster. Subsequently, each can, of course, translate this collective
goal to their own.
Industry partners located near a university or research center have access to
knowledge and academic expertise, including technology transfer facilities. Univer-
sities benefit from a good growing local economy because it helps them to procure
funds for research from industry and makes them more aware of industrys needs.
Finally, the governmental partners benefit from the creation of new jobs and hence
increased economic development.
In addition to the emphasis on collaborations between regional players, we wish to
stress the importance of excellence of every respective individual player in the regional
cluster. Excellent commercialization processes need fine-tuned collaborations and fer-
tile boundary conditions, but they also need excellent partners to work with. Mediocre
research and development performance does not create long-term sustainability.
Academic partners need to extend their roles and participation in commercializa-
tion activities. The same applies for excellence in entrepreneurship, which is a condi-
tion sine qua non for commercial success. Maintaining the thrust for excellence in the
core competences of the three Triple Helix parties is paramount. Only from such posi-
tions can strong bridges in the Triple Helix approach to commercialization be built. A
vital economic cluster needs equally excellent entrepreneurs and researchers.
In recent years, universities have been encouraged by national governments to
engage more in commercialization activities. Universities can and should stretch
their boundaries by establishing incubators and commercialization funding schemes,
as well as spin-off companies so long as this does not compromise the core academic
activities of the researchers. Similarly, companies must become involved but not
undermine their need for profitable business. The right balance has to be struck.
The idea of collaboration among different partners, to form a vital regional eco-
nomic cluster based on their own excellence, has to be maintained at a regional eco-
nomic level. The idea can be translated to very tangible structures. In the Twente
region, for instance, a project was started to help beginning enterprises achieve their
growth opportunities by the coaching of experienced entrepreneurs. Another project
aims to combine spin-off ideas from the university with entrepreneurial students from
the Saxion College in Enschede. This combination then should result in business teams

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Commercialization Strategies for Public Research Organizations 89

with strong entrepreneurial skills as well as a thorough understanding of the potentials

of new products and product development. These projects consist of the University
of Twente, the Saxion College in Enschede, the regional development agency (Oost
N.V.), as well as an existing network of entrepreneurs (TKT). The projects illustrate
the potential of collaborations between academic and governmental actors.
The whole process of collaboration should be a process of being excellent in
your own field as well as working together. Not only can the players themselves cre-
ate these linkages, but governmental partners, for instance, can create the structures
(such as incubators, commercialization funding schemes, and science parks) all for
the improvement of commercialization processes and the vitality of the regional eco-
nomic clusters. So far we have mostly stressed the interrelationships of the different
partners and their need for excellence. In the coming paragraphs we will elaborate
on the roles of the respective players in the multi-partner environment during the
commercialization process.

The Role of Public Research Organizations

The traditional nineteenth and twentieth century roles of universities have been edu-
cation and research. In the past decades, these roles have been extended to include
a greater involvement with industry and the regional development organizations.
Universities can benefit from income derived from commercially exploiting their
knowledge base.9-10 This has been helpful in creating closer involvement with orga-
nizations outside of the university. Universities, however, must still retain excellence
in their main role as educators.
The academic system is geared towards academic excellence. The key driver is
being the best in your peer group: discovery of new things and subsequent publica-
tions. Since the timescale between scientific research and its commercial exploita-
tion is about 20 years, a university or an institute should educate young people and
do good research. This is crucial to a universitys success in the competitive arena
of education and R&D. Although universities and institutes disseminate their find-
ings in the scientific arena, a pathway towards commercialization and transfer of
knowledge is less common. In most countries, this role is not made a priority by
universities. There is a large difference among researchers in their understanding of
that issue.
There is a plethora of reasons why universities should be involved in commercial
exploitation, some of which are summarized below:

Attractiveness of the R&D activity for industrial partners

New R&D projects emerging from the high-tech cluster
Sharing of facilities, leading to a broader and healthier equipment base
Political support and visibility
Inspiration, increased relevance of R&D
Interesting jobs for graduates and Ph.Ds
Extra income

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90 Commercializing Micro-Nanotechnology Products

Communicating these advantages, showing best practices, and learning from

experience are the means for promoting a culture that invites researchers to look
beyond their scientific community. If done the right way, commercialization enriches
the research group. MESA+ has added commercialization to its formal mission and
strategy and added a commercialization portfolio to the institutes management. It
turns out that active commitment is a very strong promoter.
MESA+ is a university research institute that has defined commercialization as
one of the key issues in its strategy. In order to achieve the goals set, we use a bottom-
up approach. Focus is put on the internal culture and organization in the direction of
SMEs, on cooperation with the other crucial partners in the region, and on accom-
panying measures such as infrastructure, venture capital, etc. We focus on a cluster
of industrial activities that shows cohesion and covers the most important markets,
technologies, and positions in the chain. The whole system is based on the concept
of seamless microengineering.

Entrepreneurs and Venture Capitalists

As mentioned earlier, the various scattered and often competing interests of the
industrial partners, along with the broad range of miniaturization technologies,
make it hard to initiate coherent and encompassing commercialization activities for
public R&D from the private side. We do find many singular R&D projects where
public R&D and industrial partners engage in a well-defined effort to further develop
an interesting technology platform. Joint strategies from industry associations, how-
ever, are very limited and do not cover the scope of miniaturization technologies.
They often are limited to roadmapping in specific areas or to specific attempts to
define standards. Some individual private entities have positioned themselves as
commercializing IPR (intellectual property) from public R&D. There are a grow-
ing number of IPR brokers that offer their services to public R&D organizations.
On top of that, there is a growing group of business development groups looking
for existing technological solutions they can further develop within certain market
areas. Generally, such organizations have limited success in leveraging the research
population and research funds due to the difference in character and the limited
alignment of interest. We see this as a strong drawback in commercializing public
R&D, since a number of strong existing resources and networks are left unused. The
market focus and business strategy of such organizations, on the other hand, are a
clear advantage.
In the private environment, the existence of a strong business case is the key
element for success. In the past years, we have seen a number of new collaboration
schemes that are set up by or are in cooperation with broader industrial associations.
To give some examples:

Cooperation in facilities, where companies can grow their production facil-

ities while keeping investment needs moderate. Such cooperation schemes
can be found in Dortmund (MST-factory) and recently also in Twente.
Cooperation in a scheme where experienced entrepreneurs coach young
entrepreneurs with an interesting promise for growth. In Twente, this is

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Commercialization Strategies for Public Research Organizations 91

embedded in the so-called Mindshift program run by the Technology Cir-

cle (TKT), 150 technological enterprises with a link to the university. The
Mindshift scheme couples coaching (TKT coaches and third-party coaches)
with a financial participation scheme.
Cooperation in a joint office and lab facility. In Twente this is becoming a
key driver in the environment of the University campus: bringing equipment
and people together to facilitate critical mass and exchange of know-how.

In all of these examples, the relevance to the companys bottom line is clearly visible.
Such schemes tend to be strong and sustainable after a first period of public support.

The Role of the Regional Government

The discussion about the role of government organizations as partners in the innova-
tion system mostly tends to focus on the role as a facilitator. As partners, national,
regional, as well as international governing bodies can play an important facilitating
role by developing support schemes or agencies that facilitate the spinning out of
knowledge and the creation and growth of new firms.
Regional authorities have interest in the creation of an environment that supports
both job and wealth creation. In the Twente region, these interests make the regional
partners (i.e., municipalities and provincial authorities) very influential in relation
to the support schemes underlying the commercialization of academic knowledge
and, more specifically, the creation of new companies. The regional authorities do
not play a central part in the commercialization process itself but are enablers of
the whole process. They are an important vehicle to create a common agenda and
to bond together parties who have in themselves diverging interests. Because they
are interested in jobs and wealth creation, they should not just focus on new jobs
and industrial turnover but rather think of regional success in terms of the economic
cluster we have talked about. This focus automatically creates a broader horizon in
which there is time, and hopefully a sense of urgency as well, that different parties
should be involved in a long-term commitment to create this cluster.
Since neither industrial partners nor public research organizations are very much
inclined to take a proactive approach by individually investing in these schemes,
regional authorities should take these support schemes not only as a chance to
improve the success of certain parts of the innovation trajectory but also to use the
support schemes to create longer lasting bonds among the different parties. Through
this, one might be able to create the sense of a community (in which several parties
are willing to give up their short-term individual goals and in return get a long-term
strategic agenda that can be a basis for a vital economic cluster). The mechanisms
regional authorities can use are plentiful. The investment in physical infrastructure
such as facilities like science parks and cooperative research centers is a good way
to establish collaboration between industrial partners and researchers. Another pos-
sibility is support networks or support schemes co-financed by regional authorities
and public research organizations. One interesting initiative in the Twente region in
this regard is the Regional Innovation Platform. It gathers key people from the Triple
Helix and across the most important economic sectors in the region. Based on the

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92 Commercializing Micro-Nanotechnology Products

joint financial commitment of all parties, a fund of 200 million euro has been made
available (50 from the province, 50 from the municipalities, and 100 from industry)
to support a regional innovation agenda, which was conceived in an intense interac-
tion between the field and the Innovation Platform. The result is an increased com-
mitment, an improved vision on the development of the region, a stronger lobby, and
a joint agenda coupled to relevant funds.
The Twente region, as well as all other regions in the world, has the challenge not
only to create vital economic clusters by intertwining commercialization and inno-
vation activities of the different actors but also to create the boundary conditions for
vital clusters. Creating a density of talent is one of the most important ones besides
a good logistical as well as knowledge infrastructure. This density of talent relies in
large part on the quality of life a region has to offer. Although the Twente region is
not well known for its high-paid and high-vacancy rate of jobs, the region has the
benefit of relatively cheap housing in relation to the more densely populated territory
west of the Netherlands and has an excellent quality of the environment.
A very distinct feature of authorities is their risk aversion mentality. Whereas
risk is an intrinsic part of private enterprise and academic work, public authorities
are pressed by the population not to waste taxes on risky support schemes or other
instruments that have the potential to fail. There is a very moderate incentive for
success but a very large negative incentive for failure.
Considering the interests of regional governments in the creation of wealth and
jobs, miniaturization technologies compete with other technologies and with policies
and initiatives of a very different type, such as roads or business parks. Authorities
will generally be reactive on a given subject: there will have to be a clearly expressed
need or desire, especially including the industrial community, before policies will
be defined. Regional authorities often have a more hands-on approach and can relate
more closely to a certain application field or technology. For the long-term sustain-
ability of an initiative, the continued support of authorities is very important. This
support in time should shift focus from financial support for R&D or for commer-
cialization policies towards general support initiative. For the public research organi-
zations and the industry, this implies that there has to be a visible evolution towards a
mature economic cluster to ensure further support. If there is no visible success on a
relatively short term, say two to three years, governments will become very hesitant
to invest further in innovation in certain areas. One reason for this hesitation to com-
mit to these long-term processes is the nature of these democratic systems that are
more inclined to doubt and subsequently to call off succeeding investment steps or
change directions. Of course industrial partners and public research organizations
have this as well, but the perseverance in certain activities can deteriorate very fast
if no visible progress has been made. And one needs to develop strategies that take
into account these needs of governmental partners if one wants the government to
support certain schemes.
In the text above, we have tried to stress the interrelatedness of commercializa-
tion activities by discussing the importance of collaboration in the commercializa-
tion of micro- and nanotechnology. We feel that parties should be aware of each
others respective roles in the commercialization process and construct long-term
shared strategic goals. Engagement in commercialization activities by every party,

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Commercialization Strategies for Public Research Organizations 93

whether government, industry, or public research organization, means a long-term

commitment process. Investors cannot expect immediate returns or that their invest-
ments will help solve issues on a long-term basis. Instead, it is a long-term commit-
ment to each other, and a constructive attitude in this collaboration process should be
the basis for a shared long-term and strategic goal.
The success and sustainability of a commercialization effort requires an inte-
grated approach that includes the Triple Helix stakeholders. Central in the system
should be a focus on markets and opportunities as a balanced counterweight to the
existing technology-push in the academic environment. A very strong linkage to the
academic system is of crucial importance: the alignment of interest of the commer-
cialization effort and the academic system mitigates risk and increases knowledge
and information flow. It allows some form of leverage of existing public funds in the
very early stages. However, market orientation and business strategy should be the
leading factors.
Figure5.2 below shows a simple indication of pros and cons of the various
approaches we encounter on a number of key success elements related to the key
players involved. Any choice for a commercialization approach should be aware of
its weaknesses and create solutions to have a chance of success.
From these schemes and activities that support and enable successful commer-
cialization, the primary players should work together. The role of the government
can be very productive in this situation as it is able to provide incentives to academic

Ability to Attract Private

Ability to Link-in Public

Buy-in Government
Market Orientation

R&D Funds


University Tech Transfer

Office 0 0 0 0

Spin-off Support Programs + + 0 + 0 ++

Infrastructure Sharing 0 + N/A + ++
Business Development 0 + + 0 0
Incubator (building,
N/A + ++ + +
Primary Actor

Development + 0 ++
R&D and Start-up
Programs N/A + + ++ 0 +
IPR Brokers and Business
+ 0 0 + 0
Primary Actor


Privately Funded
Commercialization Entities ++ 0 +
Private/Public Joint
Ventures + ++ ++ 0 0 +

Figure5.2 Types of commercialization support schemes and key elements of success.

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94 Commercializing Micro-Nanotechnology Products

and industrial parties to overcome individualistic goals and to let the different inter-
ests converge on a collective level. The trick here, however, is to let the partners
build towards these collective agendas, not to bend them in types of ways by forcing
them to do things they would otherwise not do or are not particularly well equipped
to execute.
Below we will take some ideas to a more mundane level by putting forward a
number of observations and suggestions based on experiences from MESA+. These
observations and suggestions deal with structural and cultural aspects in the col-
laboration process as well as some remarks on the acceleration and the smoothening
of the practice of commercialization in the micro-nanotechnology field. Because
the observations and suggestions originate from experiences at MESA+, most of the
mentioned points will put forward MESA+ as a dominant entity in the support of
collaboration among academia, industry, and government. This, however, should not
persuade our readers to think that the academic community should have a dominant
role in the support of collaboration. We once again would like to refer to Figure 5.2,
this time to show that multiple types of partners can have a more or less leading role
in building towards the other partners.

Creating the Right Structures

The creation of support schemes, incentive structures, and all kinds of other schemes
and structures is the most obvious if one wants to improve the commercialization
process. In the past two decades, MESA+ has created, helped with, and witnessed
several initiatives to increase the success of commercialization activities. On a struc-
tural level, there are three types of initiatives that have contributed significantly to
more successful commercialization around MESA+:

Initiatives that pertain to the internal organization of MESA+ to improve the

performance in the commercialization process of the research institute itself
The creation of international, national, and regional networks that aim to
join industrial, academic, and government actors on different levels
Initiatives that focus on facility sharing and more specifically collaboration
through the use of facilities

Accommodating Your Organization

In recent years, the internal organization of MESA+ has undergone several changes
to accommodate a successful commercialization of its knowledge. A set of pro-
cesses and procedures is necessary to support the commercialization process from
within the organization. Over the years, MESA+ has created standard agreements
for knowledge transfer, facility sharing, participation in spin-off equity, and partici-
pation of MESA+ personnel in spin-off companies. Furthermore, the communica-
tion of all of these measures is equally important. For the personnel of MESA+, it
is fairly clear what they can and cannot do when they want to work with or set up a
new company and what the possible prospects are for the company. For the external

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Commercialization Strategies for Public Research Organizations 95

parties, mainly industry, it should be clear as well what can be expected from the
research institute.
Often, a private enterprise wants more than described above. It would like
some exclusive issues and guarantees that support its continuity or limitations for
the research organization with respect to its relationship with other parties. Such
items have a chance of exerting a considerable amount of stress on the relationship.
Therefore, the basis of the relationship, as well as the reasons why the other partner
is engaged in the relation, should be well understood by both sides. If so, the relation-
ship can withstand a considerable amount of stress around these additional items.
We have developed a participation procedure in which the research group takes
a share in the starting company in return for patents, licenses, and other forms of
rights with respect to R&D results in a certain technology-market intersection. Such
an arrangement evens the way for fruitful communication and cooperation without
interfering with the core tasks of each partner. As a basic rule, we make sure that a
financing partner is also involved as a shareholder.
With all this we aim to create a stable environment in the early, vulnerable
stages of a company. It also prevents the so-called transfer barrier, where people are
very willing to assist the young entrepreneur, but from the moment a profit is made,
researchers tend to guard new and interesting ideas and findings. Why should the
company make money with my ideas? MESA+, in this case, uses different combi-
nations of the following:

Transfer of a patent or a license, or the right to patent a certain invention.

Rights on publicly owned IPR on future developments. The private partner
would like to prevent new findings in its core activity field from going to
others, perhaps even to competitors. In this issue, we usually use a right to
bid on any future IPR (patents, licenses) owned by the public research orga-
nization, in the case it decides to sell. The arrangement forbids the organi-
zation to sell to a third party under the price offered by the private partner.
Preventing the public research organization to perform any competing
activities in the development or production phase. In this arrangement, the
public research organization acknowledges the private partner as its pre-
ferred partner in these activities. It will not become active in development
or production itself.
Right to protect new knowledge generated by the public research organi-
zation, if this organization decides not to protect these results itself. This
arrangement is always coupled with a share in the company, or an agree-
ment on royalties, to ensure mutual benefit.
Acknowledging the private partner as the preferred partner for development
and production in research contracts of the organization.
Agreeing on mutual commissions for acquiring customers or projects for
the other party.

In each element, a considerable effort has been made to minimize the possibil-
ity of stress and keep the core of the arrangement in place. Separating low-stress
issues from high-stress issues is the most important aspect of building long-term

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96 Commercializing Micro-Nanotechnology Products

relationships with your industrial partners. This allows both parties to keep a posi-
tion of excellence in their own fields and concentrate on core competencies and pro-
cesses. The new relationship should not constrain the core activities of the research
institute or the industrial partner. Therefore, any combination of the elements men-
tioned above will form a relatively stress-free basis for cooperation. Parties can
respect and assist each other on this basis. Potentially stressful additional items can
be added on top of this basis to fine tune the relationship.
Furthermore, organizations should keep all arrangements limited in time, topic,
and personnel:

Restrict the agreement to an academic chair or a defined number of peo-

ple. Inventions in a certain field can, by chance, pop up at any place in
the research organization. Especially in universities, it is crucial to make
arrangements with the group in question. If other groups come up with
interesting results, these are not included in the deal.
Restrict the agreement to a certain technology field. Try to define, as much
as possible, which technological area is subject to the arrangements.
Restrict the agreement to a certain application or market field.
Restrict the agreement in time.

These basics will prevent proliferation of rights and will allow for restructur-
ing the relationship in time. MESA+ usually uses 3-year periods. This also allows
the public research organization to be a partner in a future financing round.
Alongside the points that are mentioned above, which concern the more process-
related improvements, the aspect of coordination has been very important in accom-
modating the research institute to acquire a more commercialization-aware stance.
As we have emphasized before, low- and high-stress activities should be separated
from each other, and commercialization activities should never compromise the
core activities of researchers in a public research organization, since this will pose a
threat to their excellence. This was a heavy weighing argument in the coordination
of the commercialization activities throughout the MESA+ organization. MESA+
has concentrated the coordination and support around commercialization on a cen-
tral level. The organization employs a technical commercial director who is respon-
sible for commercialization and business venturing activities. Recently, a technology
accelerator has been set up centrally by MESA+ to scout and implement new micro
and nanotechnology business cases. One of its most important goals is to obtain
commitment from governmental, academic, and industrial funding sources. This is
one of the examples where commercialization activities are placed in close coopera-
tion with, but organizationally outside, the core academic process so as not to com-
promise the research process. At the same time, these types of structures enable the
organization to devise a central mission statement and structure that emphasize the
commercialization of knowledge that is produced within the institute.
The actual business development process is run in very close cooperation with the
decentralized level (the work floor). It is the researchers who can see the potentials of
new technologies as well as possible technological hurdles. The central staff (techni-
cal-commercial director, technology accelerator) will support the work floor in their

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Commercialization Strategies for Public Research Organizations 97

ideas and plans to valorize a part of their research. This supports the commitment to
the commercialization process and aligns strongly with the disruptive character of
micro/nanotechnology commercialization processes, which require a strong mutual
involvement of entrepreneurship and technology development (commercialization as
a body contact sport). Through this organizational scheme, the whole chain of tech-
nology development through to commercialization and entrepreneurship remains
strongly linked, from idea generation through to spin-out and growth.
This decentralized approach is powerful, since it allows every single person in
the organization to understand his or her added value and importance to the com-
mercialization process, instead of the universitys technology transfer office alone.
One way to accommodate this understanding is to devise processes and structures
that support commercialization and are carried by the central organization and the
research process. These efforts in turn will provide the organization with a frame-
work to work from and consequently will contribute to a culture in which commer-
cialization will become a more and more obvious part of the research process, not so
much in the daily work of research but as a point of attention that one keeps in the
back of the mind and the development of the skills to cooperate effectively. Cultural
aspects will be discussed in more depth in the next paragraph.

Creating Facilities with a Common/Shared Interest

Facilities are a powerful tool to create links between industry and the academic
community. Since the lab facilities of MESA+ are the pivotal point of its operations,
this has been a natural basis from which to attract industrial partners and help spin-
off companies in their early years. On its own, MESA+ has developed the following
facility sharing structures:

The use of MESA+s existing R&D facilities for development and/or produc-
tion. The user of the facilities pays a full-cost tariff per unit of time used.
It is in the interest of both parties to increase the use of facilities. In their
investment strategy, the public research organization will therefore take the
interests of the private users into account. In normal operation, we will grant
equal rights to a company user compared to a public researcher to prevent a
double standard. In the exceptional situation that conflicts arise (e.g., break-
down of equipment, fully booked equipment), this principle will be main-
tained as long as possible. If this is impossible, the public users will prevail.
The use of technological facilities by company personnel is standardized
and embedded as an integral part of the activities in the central labs of
MESA+. This leads to a turnover in man hours of almost 30% by start-ups
for the clean room labs. This number is still climbing. Also, dedicated clean
room space and offices for the companies themselves have been realized.
This indicates the mutual dependency and trust that has been realized over
the past 15 years.
Co-investment in equipment. This allows the exploitation of a wider equip-
ment basis. We make sure that the equipment is owned by the most relevant

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98 Commercializing Micro-Nanotechnology Products

party and will grant rights of use to the other party for a rent based on integral
cost that takes the co-investment and the strategic cooperation into account.
Sharing of offices and buildings. Being close together and meeting one another
on a daily basis is a very strong catalyst for new ideas and mutual enrichment.
By using the same physical environment, this closeness is supported. We
observe a growth in information exchange and cooperation on different levels
and an increase in new business ideas, to the benefit of both parties.
Keeping the channel of new publicly available knowledge and know-how
open. Companies as well as research organizations have a variety of know-
how and knowledge that is, in principle, open to the public. Opening up
communication on these issues in an early stage will help both sides to
increase their general knowledge base. This process counteracts the com-
petitive shielding of information between companies, or the transfer bar-
rier within the academic workplace, discussed above.

The highly frequent and unplanned encounters of researchers from academia

and industry in the labs and at the coffee machine allow ideas to flow more easily
and problems to be solved faster. What we aim to avoid is a one-way, one-partner
view on commercialization.
Instead, talking to different persons of other types of organizations keeps you
open to new ideas and invokes a joint vision on commercialization. Sharing valu-
able resources creates a common base of operation where people from industry and
researchers can meet each other. From this perhaps mundane level of cooperation
and shared interests, the different partners can build towards each other (e.g., by
the acquisition of new equipment that is too expensive for individual parties). Since
micro- and nanotechnology are mostly characterized by the presence of multiple
technology/application domains, this results in a desired high level of contact, lead-
ing to faster commercialization processes. The creation of places where knowledge
and entrepreneurship meet is relevant in this context. Facility sharing creates a great
center of gravity for these encounters.
Facilities, however, are not merely an issue of luring industry to your own facili-
ties to have them in your proximity. The broader development of an environment in
which industry can take up residence is significant as well, especially with regard to
spin-off firms. It should be the job not only of the public research institute to look
after these issues. Universities and regional authorities can be helpful and instru-
mental in the creation of such facilities. The campus of the University of Twente
is an example where the university in collaboration with municipalities and other
regional authorities has developed several schemes that facilitate the industry in its
settlement in the vicinity around the university campus and the collaboration with
the university. The university campus is being seen more and more as a shared facil-
ity in itself.
This can be seen in the Kennispark concept, where next to joint R&D programs,
a strong emphasis is put on the further development of the area around the univer-
sity campus. One part of that development concerns a masterplan for the campus
and the adjacent Business and Science Park, focusing on an optimized environment
for knowledge transfer. Sections for joint labs, for high added value production, for

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Commercialization Strategies for Public Research Organizations 99

services, etc., are identified and defined for further development. This master plan is
an important guideline for all future building developments and plays a central role
in acquisition of new companies. The Business and Science Park was put in place
25 years ago to foster high-tech economic development around the university. In the
Kennispark concept, it is integrated with the campus, which already houses some
100 small firms.
The second part of that development is a 40,000 m2 joint facility for companies
on the edge of the university campus and directly adjacent to the universitys core
facilities, such as the clean room and the biomedical labs. This joint facility allows
companies to build their joint labs and develop themselves in an optimal environ-
ment. The building is run by external parties and is developed as a project adjacent
to the university, not as part of the university. This building is the core of all future
facility sharing activities.
The Kennispark concept already houses a number of incubator buildings run by
the Business Technology Center (BTC), a private company owned by the regional
development agency, a project developer, a bank, the municipal college Saxion, and
the University of Twente. In its 25 years of existence, it has been extremely success-
ful in fostering new business development.

Networks are another crucial addition to the regional environment. While emphasiz-
ing networks, we will again start with the organization itself and move on towards ini-
tiatives that are more externally structured, i.e., national and international networks.
The networks that MESA+ focuses on are networks of experienced entrepreneurs,
networks for finance, and networks that support crucial information and experience.
In the area of experienced entrepreneurship, Kennispark, joining efforts for all
commercialization activities in the area, has a number of partner networks. First
of all, there are a number of company associations that create a relevant environ-
ment for starting and growing entrepreneurs. The Technology Circle Twente TKT,
for instance, binds together some 150 technology companies that have a relation
with the university, mostly as spin-offs. TKT offers joint interest groups, contact
with experienced entrepreneurs, information on relevant technological fields, sup-
port for acquiring new personnel, etc. A new and interesting effort here is the Mind-
shift program that could be explained as experienced entrepreneurs helping young
On certain relevant technology areas, we find TIMP, a group of biomedical com-
panies that offer a package in the market, or MINACned, the Dutch Micro/Nano
Cluster, founded by MESA+ in the late 1990s. For MESA+, the Dutch National
Nanotechnology Initiative NanoNed and the Microtechnology Initiative MicroNed
are relevant networks that encompass many research groups next to large groups of
active companies in the field of MNT.
All of these networks are linked into the regional system and actively supported.
The network for financing revolves around a number of key organizations and key
persons. The most relevant organization is the Participation Fund East Netherlands,
a public fund with a section, Innofund, devoted to seed financing. This fund links

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100 Commercializing Micro-Nanotechnology Products

into several other financing parties and angel networks. Through some individuals
and especially some of the Technology Accelerators (on-campus business develop-
ers), private persons from the financing community are linked into the system. Ken-
nispark and MESA+ actively support these relations. One of the reasons to do so is
to make the various properties of the Twente system known to the financing com-
munity. This lowers risk perception and increases deal flow. This is done through
various topical meetings and programs.
Finally, MESA+ invests heavily in international networks that support both
research and commercialization. The research network partly is oriented towards
other large institutes that have a strong national role and combine research with com-
mercialization. The most prominent network in this regard is based on the link with
the National Institute for Nano Technology (NINT) in Canada and is linked with
the California Nanosystems Institute, the University of Tokyo, and the Korean Insti-
tute for Machinery and Materials. This network focuses on the research community
and helps define regional and international programs that support multidisciplinary
research and commercialization activities.
A strong relation exists with MANCEF, the Micro and Nanotechnology Com-
mercialization Education Foundation. MESA+ has always been a strong supporter of
this foundation, for a number of reasons: increasing the speed of learning, increas-
ing the value of international networks, and increasing the visibility of the MESA+
commercialization effort.

Inspiring Culture
One of the key ingredients of a strong commercialization community is the internal cul-
ture. The culture should support ambition, risk taking, and cooperation. It should enable
all parties to recognize mutual added value and support respect and trust. These ele-
ments will form the basis of a strong, result-oriented culture for commercialization.
Creating a culture in which parties can see the relevance of commercialization
and can see the relevance of investing in relations that do not produce immediate
yields can be quite challenging. In MESA+ this has been a long-term process in
which developing support structures on a central level has been quite helpful. By
supporting bottom-up initiatives and communicating possibilities of commercializa-
tion top-down, awareness can be created on the shop floor.
Key components in creating such a culture have proven to be the following:

Show and celebrate success. Successful forms of cooperation, of business

development, or of company success are the most convincing arguments
for commercialization efforts. Success should be celebrated. It attracts
attention of researchers, who recognize the success and will become more
interested in creating such success in their own environment. It will also
challenge other entrepreneurs to become focused and sharpen their plans.
Use convincing advocates. MESA+ is lucky to have its key scientists very
active and successful in the area of commercialization. They show that
commercialization is fun and that it can indeed contribute to scientific qual-
ity, if played the right way. Commercialization effort doesnt compromise

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Commercialization Strategies for Public Research Organizations 101

scientific quality. We have used a number of renowned international

scientists to underline that message on the MESA+ yearly symposium
throughout the years. People like George Whitesides, Fraser Stoddart, Jim
Heath, and many others can provide an outside view of how great science
and technology can align with great commercialization.

A long-term relationship is the obvious and ultimate goal if one wants to build
a vital cluster. Trust and courage in this respect play a significant role. Creating
networks and collaboration structures among entrepreneurs, researcher organiza-
tions, and authorities is a question of trust. Without this trust nothing goes. This
trust, however, is a long-term commitment process where small steps in initial stages
lead to more and more trust over time. Only after a while, when trust has been
established, will partners dare to have the courage to take the risk that is needed for
progress. Showing courage within a larger organization also points towards the need
for leadership commitment and the need for strong key persons in the organization.
Entrepreneurs within an organization, backed by long-term and visionary support
from upper management, are needed, especially on the side of academic institutions
and authorities. The above-mentioned risk-averse nature of such organizations often
prohibits such an attitude. The stronger the cooperation and joint vision that is in the
Triple Helix cooperation, the bigger the space will become for entrepreneurship and
courage in the process.
Creating a culture on the university level is something that definitely has played
a role in the story of MESA+. In the 1980s, the term entrepreneurial university
meant to focus more on external funds to create income for education and research,
not commercialization per se. In the 1990s, MESA+ was mostly engaging in facil-
ity sharing as a form of entrepreneurial activity, which occasionally also saw the
emergence of new companies. Facility sharing in these times was mostly seen as
a way to earn some extra money to help carry the heavy load of cleanroom facili-
ties. Around 1995, however, people began to see the importance of facility sharing
beyond this very direct income benefit and saw the other advantages as well: know-
how exchange, inspiration for business cases or research programs, etc. Facility
sharing contracts became increasingly bigger and took the interests of the companies
involved more into account. Furthermore, not only did MESA+ rent equipment to
others, sometimes equipment was hired by MESA+ from others. MESA+ started to
rely on other partys equipment instead of reinvesting itself. In the early 1990s, enter-
prises that were spun-out for the most part were based on creating interfaces between
existing industry and the university for access to techniques and facilities. Twente
MicroProducts for instance was a company that initially started as an interface-like
foundation. By the year 2000, it had developed towards a mature and separate entity
with a distinct business model and separate products. Since the mid 1990s, indepen-
dent new businesses, based on products in growing markets with a solid financing
structure and business model, have become a central point of attention at MESA+.
This step could only be taken after MESA+ found ways to understand the dynam-
ics of such companies and ways to structure its relationship with these companies.
Illustrative for this change in mindset is the European Membrane Institute that was
established in 1995. The Institutes main purpose is to offer industry and public

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102 Commercializing Micro-Nanotechnology Products

organizations a platform where short-term research and development projects in the

field of membrane science and technology can be carried out. In addition to that,
activities also include literature studies and marketing assessments.
So far we have talked about culture only in the university and on the level of the
academic researcher. We would like to conclude this paragraph by addressing the
role of the authorities. This should be a role that includes thinking along with the
universities and industry, acting supportively, and in the process being able to bear
some risk yourself. The most important learning part for the industry is to appreciate
the role of the government and universities and to learn to live with their restraints
and limited ability to act in entrepreneurial fashion. They need to take time to under-
stand the nature of academic and authoritative activities and implement this in their
own business development strategies.
In all, it is clear that focus is put on creating the right environment and culture
to allow things to happen. Opportunities and initiatives arise through a bottom-up
approach of people from R&D and companies meeting in the institute, the labs and
buildings, and at coffee tables and bars. This culture helps people build successful

Accelerating the Commercialization Process

Finally, we would like to make some brief comments on an important practical part
of the commercialization process which thus far has not been addressed on a detailed
level. Active business development is essential to speed up the process and increase
quality of commercialization through existing or spin-out companies. The ways in
which business development can take place are quite diverse and show, once again,
that partners in the innovation process act from different perspectives based on their
strong points but still are able to stretch their roles.
At the University of Twente, every one of the four technological institutes has
its own technical-commercial director, Next to Internal Affairs; these directors are
responsible for business development on a decentralized level. They are the first
contact point for aspiring entrepreneurs in the Institute, for patents, for company
networks, for facility sharing, and for business ideas. The technical-commercial
directors each have a business developer to support this role, especially from a mar-
ket perspective.
The business developer at MESA+ has a role that is optimized towards the spe-
cific nature of the MNT work field. He constantly scans the MESA+ research activi-
ties, from his market networks and experience. Yearly, he defines 1 or 2 out of 50
or more business ideas to meet specific criteria that could support spin-out in a later
stage. He starts maturing the business case in question, making use of the exist-
ing research volume and adding development, IP policy, business model, financing
strategy, and market links. He then carries the business case further to spin-out. A
number of strong private financing parties are linked in to his activity, allowing a
strong further development of the business case after spin-out.
Such a model provides extra strength to the business development activity in
MESA+, not only from the point of view of producing high-potential ventures but
also from the point of increasing the speed of learning in MESA+. Already, the

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Commercialization Strategies for Public Research Organizations 103

business development activity has shown a number of weaknesses in the rest of the
system that could be improved to the benefit of many of the parties involved.
Business developers can play a significant role in the early stages of spinning
out ideas. These initiatives mostly do not rely solely on the proactiveness of indi-
vidual researchers, but scouting new ideas is an important part of the activities. The
MESA+ business developer has set the following goals:

Obtaining commitment from government, academia, and industrial fund-

ing sources.
Selecting candidate technology platforms potential for commercial benefit
at an early stage.
Performing market analyses.
Supporting the development of proof of concept products.
Approaching potential clients and securing the necessary minimal intel-
lectual property rights.
Pursuing non-diluting equity sources that will enable proof of concept
technology platforms to cross the so-called Valley of Death to become
manufacturable products. Thus it tries to offer strong process on financial,
market oriented, and technological feasibility aspects.

Experiences at the MESA+ research institute illustrate that it is important to take
into account the different natures of the three types of parties involved in the collab-
oration process. Different parties have different roles and natures, and other parties
should understand these roles. On the other hand, parties should not indiscriminately
persevere in sticking to their natural roles. Since their interdependence in the com-
mercialization process and in the creation of a vital regional cluster is undeniable,
building shared long-term agendas is, in our view, the most efficient and produc-
tive approach. Public research organizations as well as governmental partners can
nevertheless initiate their own programs and support structures. They should, how-
ever, keep in mind how the next step can be made in the commercialization process
towards viable business cases. The whole commercialization process for all the par-
ties is one big learning experience that takes time, effort, trust, and courage. It is
not only a learning process for the public research organization itself, which tries to
commercialize its knowledge, but also a learning experience for the governmental
bodies and industrial sector partners who can benefit from increasing collaborations
and more optimized tuning of activities among different organizations.

1. Leydesdorff, L. and Etzkowitz, H., Emergence of a triple helix of university-industry-
government relations, Science and Public Policy 23, 279286, 1996.
2. Clark, B.R., Creating Entrepreneurial Universities: Organizational Pathways of
Transformation. International Association of Universities and Elsevier Science, Paris
and Oxford, 1998.

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104 Commercializing Micro-Nanotechnology Products

3. Benneworth, P., Academic Entrepreneurship and Long-Term Business Relationships:

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6 Market Analysis
and Growth for
Micro-Nano Products
Jean-Christophe Eloy


Objectives and Definitions...................................................................................... 106

A $5.6 Billion Market in 2005................................................................................ 107
Evolution of MEMS Markets....................................................................... 109
Mobile Phone and Consumer Applications: The New Target for MEMS
Devices.............................................................................................. 110
New Offers: From Device to Module Business........................................... 112
New Industry Organization.................................................................................... 112
Examples of the Evolution of the MEMS Companies............................................ 114
SiTime: After 25 years of R&D, now MEMS Oscillators are Entering
the Market......................................................................................... 114
SiTime History.................................................................................. 114
SiTime Facts and Figures.................................................................. 115
SiTime Production Activities............................................................ 115
SiTime Competitive Situation........................................................... 117
Bosch: World Leader for MEMS Sensor Manufacturing, Expanding in
Automotive and Consumer Markets................................................. 117
Bosch History................................................................................... 117
Bosch MEMS Business Facts and Figures....................................... 119
Bosch Production Activities............................................................. 123
Bosch Competitive Situation............................................................. 124
Development of Foundries and Contract Manufacturers............................ 125
Japanese Mems Markets......................................................................................... 126
The Market for Equipment and Materials for the Development of Mems
Devices......................................................................................................... 129
Analysis of the MEMS Equipment Market................................................. 129
DRIE: A Key Process for MEMS Manufacturing and IC
Manufacturing.................................................................................. 130
An Overview..................................................................................... 130


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106 Commercializing Micro-Nanotechnology Products

Deep Etching Mostly Used for Inertial MEMS Devices and

Silicon Microphones........................................................... 131
Analysis of the Nanomaterials Markets.................................................................. 137
Applications of the Nanomaterials.............................................................. 139
Business with Nano Materials..................................................................... 140
Long-Term Vision................................................................................................... 141
Reference................................................................................................................ 142

Objectives and Definitions

MEMS devices have different definitions and content in different countries world-
wide; for example:

Microtechnique in Switzerland, Microsystem Technologies in Germany,

MEMS in the U.S., Micromachine in Japan, ink-jet head business in HP
(Hewlett Packard)
Is MEMS an industry, a part of the semiconductor world, a part of the
micromechanical world, or a part of sensor world?

Our goal in this chapter is to make more visible the MEMS/MST business and
provide accurate data on MEMS and MNT markets, business trends, and industrial
strategies. The MEMS field is an industry with its own rules, technologies, road-
maps, equipment, and materials manufacturers.
I am using the following definitions in this chapter:

MEMS (Micro-ElectroMechanical Systems)

Only devices with moving parts in m to mm range and using photolithog-
raphy process for manufacturing.

The methodology used for the market evaluation considers:

Only stand-alone MEMS components, not the global system that includes
the MEMS devices.
Volumes and prices are for a packaged MEMS (including or not electronics
according to the component technology).

Information has been gathered directly from the following:

a. System manufacturer: car equipment manufacturers, IT equipment, and

medical devices manufacturers
b. Devices manufacturers: key MEMS inertial sensor manufacturers worldwide
c. Companies involved in the MEMS business: fabless, equipment manufac-
turers, material manufacturers
d. Face-to-face meetings have been set up with the key persons in these com-
panies in Europe, North America and Asia, which is part of the common,
day-to-day work of YOLE Dveloppement.

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Market Analysis and Growth for Micro-Nano Products 107

First Level
Silicon Sensing Packaging Operations Devices =
Element Asic Component
(hybrid approach)

Integration Wire bonding of the

die to a metal can
Chip + ASIC

SMI (USA) Pressure Sensor

Figure6.1 Definition of the terms used in this report (1).

Second and Third Level Packaging Transducers

With Electronic Without Electronic With Special Housing

SIP Or with Long Distance
Amplication =

Surface Mount Package


Figure6.2 Definition of the terms used in this report (2).

Figures6.1 and 6.2 give an explanation of the words we are using in the rest of this
chapter. All our analyses are based on components (i.e., first-level packaged device).

A $5.6 Billion Market in 2005

The MEMS market reached $5.1 billion in 2005.1 Figure6.3 shows the latest YOLE
Dveloppement forecast on the MEMS market, 20052010, based on silicon; another
strong MEMS market is based on polymer, mainly for drug delivery and in vitro

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108 Commercializing Micro-Nanotechnology Products

-fuel cells
MOEMS (incl. DMD)
8,000 Silicon microphones
Market in $M

Pressure sensors
Inkjet head



2005 2006 2007 2008 2009 2010

Figure6.3 (See.color.insert.following.page.16.).Value.of.the.MEMS.markets.

MEMS Markets 2005-2010
2005 2006 2007 2008 2009 2010

Ink-Jet Head 1,532 1,663 1,660 1,881 2,004 2,015

Pressure sensors 911 1,053 1,150 1,172 1,206 1,254
Silicon Microphones 65 116 172 259 330 398
Accelerometers 394 431 472 571 699 860
Gyroscopes 398 435 506 595 691 801
MOEMS (incl. DMD) 1,292 1,743 2,069 2,348 2,748 3,154
Microfluidics 404 453 508 629 732 849
RF MEMS 105 128 150 199 259 331
-fuel cells 0 0 0 1 26 65
Total 5,101 6,022 6,687 7,655 8,695 9,727

diagnostic, not reported here. We expect that the MEMS markets will reach $9.7 bil-
lion by 2010, representing a compound annual growth rate of almost 15%. The value
of each of the major MEMS market is shown.
Our forecast 2006 was little higher in 2005 (we estimated a 2005 market at
$5.6 billion). The main difference comes from a decrease of Texas Instrument sales
(8%decrease compared to a forecasted 20% growth) and an adjustment of the value
of the industrial pressure sensor market.
In recent years, the MEMS industry has seen several important evolutions:

Continuous growth of markets with applications that are booming (silicon

microphone, TPMS, 2D and 3D accelerometer); > 100% growth since 2004.

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Market Analysis and Growth for Micro-Nano Products 109

Device manufacturers are more and more often proposing modules in order
to add value (for example, TPMS compared to pressure sensor).
Enhanced development of consumer applications.
Strong development of contract manufacturers and foundry business, aver-
aging more than 35% growth.
Strong M&A activities with creation of new important players (acquisi-
tion of BEI Technologies by Schneider Electric, including Systron Donner;
acquisition of First Technology by Honeywell; and a series of acquisitions
by measurement specialties).
Changes in the manufacturing policies of several key players (introduction
of the new permanent ink-jet head by HP, for example).

Evolution of MEMS Markets

In the different MEMS product family, the following trends can be seen:

Ink-jet head markets: growth of the market value will eventually reach sat-
uration around $1.8 to $2 billion. However, the number of devices sold will
decrease strongly due to manufacturing changes at HP with the introduction
of the Scalable Printing Technology (SPT); the HP heads are not disposable,
and the new head is big and helps create faster and more precise prints.
Pressure sensor: the growth of the medical and automotive business is
stable (around 12%). New applications like the Tire Pressure Monitoring
System for cars are boosting this market (and Infineon/Sensonor account
for the majority of this growth).
Silicon Microphones: the market has seen almost 100% growth in volume.
Knowles Acoustics, with 100 M units sold, is the only player producing in
volume at the moment. SinionMems, Memstech in 2005 and Akustica in
2006 now have devices available, and 2006 was a year of price pressure
with another 100% growth in volume.
Accelerometer: the acceleration sensor market has evolved considerably.
The automotive business is increasing rapidly with the growth of the Elec-
tronic Stability Program (ESP) (main players are VTI Technologies and
Bosch). Consumer applications have started to use MEMS sensors in vol-
ume applications, including mobile phones (human machine interface, acti-
vation of logos, etc.), GPS, and pedometers. The number of new systems
using the accelerometer is very important, and we think the market has
great potential. The ability of device manufacturers to make profit out of
these applications is another story as price pressure is very high.
Gyroscopes: here also, there has been strong growth of the overall market,
due to different applications. The ESP market is growing very fast, with
adoption of the system in medium-end cars. Silicon and quartz devices are
competing on this application. GPS is another growth area, both for auto-
motive and autonomous systems (stand alone or within two years included
in a mobile phone). We have also seen a strong development of silicon-based

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110 Commercializing Micro-Nanotechnology Products

military and security applications, with the introduction of new devices

from Honeywell.
Optical MEMS: this area is still dominated by the Texas Instruments DLP.
Although in 2005 there was a small decrease in the DLP market (DLP
business from Texas Instruments decreased by 8%, due to price reduction
and inventory adjustments), 2006 and the following years will see a restart
in growth. Other applications like IR image sensors (micro-bolometers) are
also growing very fast for security applications (the automotive business
will really not start before 2008). The optical telecommunications area is
also restarting at a very low level (less than $70 million) and is expected to
grow by a few percentage points each year. Several new products are close
to commercialization, including bar code readers, head-up displays, and
head-mounted displays.
Microfluidics: the microfluidic field is mainly a nonsilicon business (poly-
mer is the key material for this application). But a few systems are using
silicon to activate fluids or for other specific detection applications. This is
a small business, with 8% growth anticipated.
RF MEMS: despite several announcements, only two products are now
on the market in volume: the FBAR (Agilent and Infineon are the main
producers) for telecommunication applications (replacement of ceramic
duplexer) and the RF switch for automatic test equipment (new devices
launched by Teravicta and Panasonic). We do not see a strong growth of
the RF applications for several reasons MEMS-based RF switches still
remain expensive and are not currently adapted for mobile phones. New
interesting devices have been announced in 2005 for availability in 2006,
including the replacement of quartz oscillator using a MEMS-based oscil-
lator (SiTime).
Micro fuel cell: several companies, including Hitachi, NEC, Fujitsu, and
STM, have announced the launch of micro fuel cells for 2007 and 2008
(using methanol or hydrogen technology). We think that the start of the
market will have a significant impact on MEMS business, starting in 2009
or 2010.

Mobile Phone and Consumer Applications: The

New Target for MEMS Devices
Microelectronics has led to the explosion of consumer electronics sales. The key
challenge for the industry now is to make complexity invisible, to make technology
intuitive, and to make access natural. The drivers for this are wireless functionality
and a need for increased portability. The killer convergence application is the mobile
phone. It started life as a device to make voice calls, but now it is doing a lot more.
The mobile phone is gradually assimilating the functions of the PDA, laptop, and
digital camera. The mobile phone will become the logical consolidator for multime-
dia and gradually increase its broadcast functionality.

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Market Analysis and Growth for Micro-Nano Products 111

Since 2004, a key event has happened. The mobile phone industry is looking at
the use of MEMS devices and linked technologies in order to bring new functions and
solve key problems. The MEMS applications range for mobile phones is quite large:

Silicon microphone: improves the manufacturability of microphones for

similar performance compared to ECM
2D and 3D accelerometers: adds functions for man-machine interface and
silent mode activation
RF MEMS passive and active devices: provides better integration of pas-
sive devices for RF module and better frequency agility
Gyroscope for camera stabilization and GPS: enables real digital imag-
ing and preserves the GPS signal
Microfuel cell: provides longer lifetime for the batteries

The functions to be integrated in the mobile phone are very important, i.e.,
replacement of the ECM microphone, new human machine interface, RF module
with more frequency agility, new optical and image capture functions, positioning
systems, identification, and new long lifetime batteries. At long last, MEMS devices
are now methodically entering into the mobile phone business, offering key devices
in order to leverage these new functions.
The applications of these different devices are quite diverse and are enabling
interesting technology features and, at times, are pure gadget. The applications and
markets for MEMS in mobile phones were close to $2 million in 2004 and will go
up to more than $250 million by 2008. The volume applications in 2005 were the 3D
accelerometer for human-machine interface (volume sales at Analog Devices, MEM-
SIC, VTI Technologies, Freescale, and several other companies in North America,
Europe, and Japan) and silicon microphones.
There are several important considerations that MEMS devices still need to
address in the consumer markets:

Standard package (especially CSP/WLP)

Package size : 1.2 mm 5 mm 5 mm max (to be included in mobile phone)
Small silicon die (less than 2 mm 2 mm) in a 6 wafer (i.e., between 3500
to 5700 dies per 6 wafer)
Price between $1.5 to $2 max (less than $0.4 for Si microphone)
Digital output

One of the key challenges for the mobile phone industry is price pressure. The
price of MEMS devices has to be in the range of a few cents to two dollars maximum
in order to be compatible with mobile phone pricing. One example: the use of gyro-
scopes for mobile phone camera stabilization will be only a solution for a three Mpixel
sensor. Below this size of image sensor, a software solution will be sufficient.
Fortunately, compared to the automotive industry, MEMS manufacturers have
the ability to decrease the specifications of devices (in terms of reliability, lifetime,
and specifications) in order to reach price targets. The price target for MEMS devices
in mobile phones is clearly an issue:

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112 Commercializing Micro-Nanotechnology Products

For microphones, the price of the ECM microphone is $0.3.

For 3D acceleration sensor, the price target is less than $2.
For RF MEMS, the challenge is to be included in SiP/SOC approach, with
an adapted price.

These price targets are very aggressive, and cost effectively manufacturing such
devices will be a challenge. The next months and years will determine if MEMS will
be key devices in mobile phones.
Offering devices at a higher price is possible, but only if the functions of the
new device are enabling the service providers (the wireless communication service
providers) to sell new services to recover that cost, as was the case with the image
sensor. This is one of the biggest challenges for MEMS in mobile phones. Device
manufacturers considering these applications are talking with service providers in
order to understand the potential service to support such as using the sensing
capability of MEMS, extended battery life, etc.

New Offers: From Device to Module Business

One of the key trends of 2005 has been the evolution of several players changing
their offer from MEMS-based devices to a MEMS-based module. We see this trend
in several applications, including the silicon microphone (new product launch by
Knowles Acoustics and SonionMEMS), inertial sensors (with the development of
the Inertial Measurement Unit), chemical sensors (MICS has changed from device
manufacturers to module manufacturers), and more than ten other products. This is
a very strong trend and will impact heavily the way MEMS manufacturers are work-
ing (especially given increased cost pressures).

New Industry Organization

MEMS manufacturing activities have evolved rapidly over the last two years.
MEMS manufacturers worldwide have basically seven different business models
(see Figure6.4). The differences between the different types of MEMS manufactur-
ers are very important and include these different business models:

System manufacturers with internal fab: 200 companies worldwide

use this business model, including world leaders like Bosch, Delphi, and
Hewlett Packard, as well as large companies with small MEMS operations
but sufficient for their business (like Fujikura and Endevco). They have
their own MEMS facilities for the captive market, and several companies
are also serving external customers.
Off-the-shelf device manufacturers: this is the second biggest part of the
MEMS business. Large device suppliers like VTI Technologies, Infineon/
Sensonor, Freescale, and Analog Devices are concentrating on MEMS
devices and selling to all possible companies worldwide.
Fabless companies: this business model is growing. As MEMS foundry
services and contract manufacturers become a real business, fabless

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Market Analysis and Growth for Micro-Nano Products 113

There are currently 7 different

business models for MEMS Business Models

System Manufacturers
Design Companies

Foundries Integrated Fab

(Dalsa, APM, TMT, (HP, Bosch, Olympus,
Neostones) Off-the- Honeywell ...)
Contract shelf MEMS
Manufacturers Components
Colibrys, Micralyne, Fabless
Tronics, Memscap, (Akustica,
Freescale )
Silex Knowles )
External MEMS Fab
with Internal R&D
(bio Mrieux )
Engineering &
Design (Lionix )

Figure6.4 MEMS business models.

companies have been very active over the last three years. Akustica, Dis-
cera, Knowles, and Lightconnect are key examples of such business activi-
ties. The relationship between fabless and contract manufacturers is still
very complex because the management of intellectual property is always a
challenge. The model can lead to months of discussion on who owns what
part of the process, flow, and design. This is currently a key problem for
this MEMS market.
Contract manufacturers: these companies are developing specific pro-
cesses for their customers and then using the developed processes to deliver
devices to the customer. Such agreements are generally made with exclu-
sive rights or at least lead time because the customer of the contract manu-
facturer has financed the process development, paying the NRE cost.
Foundries: MEMS foundries use their available processes to manufacture
MEMS devices for external customers. The design of the customer gen-
erally must be retargeted to the foundry processes in order to take into
account the characteristics of the available process.

Apart from the development of MEMS markets, the industry has entered a new
phase with the recent industry consolidation in the past ten months. In 2002 and
2003, several MEMS companies disappeared due to a lack of business or difficul-
ties with launching real products. The remaining companies (almost 350 MEMS
manufacturers worldwide) are healthier, seeing a strong growth in their revenue and
perhaps becoming profitable like HL Planar, Tronics Microsystems, and Silex. The
important movement that started mid-2004 is industry consolidation Colibrys
(Switzerland) acquired Applied MEMS (U.S.A.), Schneider Electric (F) acquired
Kavlico (U.S.A.), MSI (U.S.A.) acquired more than six companies in 2004, and
Qualcomm (U.S.A.) acquired Iridigm Displays (U.S.A.).

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114 Commercializing Micro-Nanotechnology Products

A few companies like Honeywell, GE, MSI, Schneider Electric, and Meggit Elec-
tronic have clearly announced their intention of important external acquisitions in
order to gain access to key technologies and markets and find growth opportunities
in MEMS-related businesses. We will certainly see a continuation of this trend in
2007 and beyond.
Another key driver in the industry is the opening of vital industrial companies
to external customers such as Honeywell, Bosch, Sony, Olympus, and Omron, which
are now opening their manufacturing facilities for external customers. For example,
two years ago, in order to attract more business, Bosch created an external customers
business unit, able to develop and sell devices for automotive system manufacturers
(sometimes competing with Bosch) and more generally for industrial partners.
New players are also appearing. Thailand now has a public company manufac-
turing MEMS devices (MEMStech, the former EG&G Heimann MEMS activities);
there are more than ten MEMS manufacturers in Taiwan, working as a foundry,
manufacturing ink-jet heads, pressure sensors, and silicon microphones.
Japanese companies have also restarted the investment in MEMS. Yole Dvel-
oppement has identified more than 90 companies developing and manufacturing
MEMS devices. This year ten of them are launching new 3D accelerometers for
consumer applications. The Japanese MEMS industry is characterized by a very
strong presence of fab integrated in system manufacturers such as Olympus, Canon,
or Fujikura, or device manufacturers (like MEW and Oki). On the other hand, there
are few design houses; this function in the industrial food chain is mainly realized
by R&D organizations and universities.

Examples of the Evolution of the MEMS Companies

I will take two examples of companies showing the evolution of the MEMS industry:
Bosch, the world leader for MEMS sensor, and SiTime, one of the new MEMS start-
ups with strong potential.

SiTime: After 25 years of R&D, now MEMS

Oscillators are Entering the Market
SiTime History
SiTime was founded in December 2004 in order to industrialize and commercialize
MEMS resonators. The technology has been licensed from Robert Bosch, using a
specific process developed by Bosch (Episeal and MEMS First process). The man-
agement of the company is led by Kurt Petersen, a MEMS pioneer and very suc-
cessful founder of more than five companies. Markus Lutz and Aaron Partridge,
who invented the process at Bosch, have joined the company with Petersen in order
to bring their technical and industrial expertise. Now the company has 50 full-time
employees developing the business and the technology of the company.
Some data on the quartz market are important. The Quartz resonator market is a
ten billion unit business per year, with an average price of $0.35 per unit. The market
is very fragmented, with 18 companies sharing 80% of the market and the remain-
ing 20% in the hands of dozen of other companies, either involved in high-end or

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Market Analysis and Growth for Micro-Nano Products 115

very low-end applications. In addition, the IC timing market is worth $2 billion and
involves different companies, like Texas Instruments and Cypress.

SiTime Facts and Figures

SiTime generated $11.5 million in a first venture round in 2004. The second venture
round of $12 million was closed in April 2006 and a third round took place in May
2007, but the amount and the investors involved is confidential. The most interesting
point of SiTime activity is its different business models. The company is providing
the following offers:

For system designers, the company is selling MEMS oscillators, which are
replacing quartz devices. This business is supported by a distribution net-
work like Future Electronics in Europe. SiTime now has distributors in
every industrialized country. The target here is to compete directly with
quartz devices.
For IC manufacturers, SiTime is selling the resonator only, so the IC cus-
tomer is able to develop its own PPL/ASIC in order to integrate the resona-
tor and the MEMS resonator in its application, taking full benefit of the
small size of the resonator. The market target here is system-in-package
(SIP) and also multi-chip module solutions.
For quartz manufacturers, SiTime is proposing specific projects in order to
develop specific resonators, assemble the MEMS resonator with the exist-
ing products of the quartz manufacturers. Here is the area of custom proj-
ects, with direct work with quartz manufacturers

So SiTime is able to work with any kind of customer, including standard quartz
customers and IC timing and quartz manufacturers, which were initially competi-
tors. Therefore, the business models of the company are very smart.
SiTime has already signed two agreements: one with Ecliptek (U.S.) and the
other one with Micro Crystal (CH), the quartz crystal manufacturer of the Swatch
Group. Ecliptek has already announced several products, included in the EMOtm
family. The pricing in volume is announced at $0.7 per device. The main feature
of the device proposed by Ecliptek is the QFN package of the device, using plastic
injection molded packaging, allowing ultra-miniature footprint and low cost (see
For this agreement, according to our analysis, SiTime is selling to Ecliptek a
MEMS oscillator so that Ecliptek can build on top of it its own product. The agree-
ment between Micro Crystal was made in the first half of 2006. The details of the
agreement have not been disclosed, but we can imagine that SiTime will also deliver
the resonator to Micro Crystal. SiTime already has 5.5 million units that are ready to
be shipped, and they expect to sell more than 1 million units before the end of 2007.

SiTime Production Activities

SiTime is a fabless company and uses the vast infrastructure of the semiconduc-
tor fabless model. In fact, SiTime has developed the design of its resonator and the

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116 Commercializing Micro-Nanotechnology Products

Standard QFN
Programmable PLL and Lead Frame
Compensation Die


Figure6.5 SiTime packaged device.

linked IC, but the company has also developed the process used to manufacture the
Programmable PLL and compensation circuit.
The resonator was developed with the understanding made at Bosch, with a col-
laboration from Stanford University and also the support of SVTC, and 8-inch 65
nanometer private facility.
This work was transferred to Jazz Semiconductor, where the technology is in
high volume production, and the ASIC is manufactured by TSMC, both on an eight-
inch line.
SiTime has introduced in October 2006 a first product of its type, the SiTO1OO,
a MEMS resonator that is the smallest in the world. This new device is shipped in the
die format and provides a square wave signal in the megahertz range. It could be flip
chipped on a substrate or another device or wire bonded on an MCM. The device is
so small that 25 8-inch wafers are enough to produce 1,000,000 devices.

Infrared and Phase Contrast

Visible Light Microscope Photos

Figure6.6 SiTime resonator structure.

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Market Analysis and Growth for Micro-Nano Products 117

The first applications targeted by SiTime are notebooks, cell phones, and DSC.
The automotive market will be serviced by the end of 2008. The MEMS resonator
technology does not allow the company to target high-end quartz at this time, but
this will come later.

SiTime Competitive Situation

SiTime has in front of its activities the following three types of competitors:

Quartz manufacturers like NDK, Epson, Kyocera, KDS, Vectron etc.,

which are directly competing with the MEMS oscillator of SiTime (the first
device of SiTime available is also compatible pin to pin with Epson and
other device manufacturers).
Silicon oscillator manufacturers, like Linear Technology, Cypress, etc.
Other MEMS oscillator manufacturers like Discera, Silicon Clocks, and
VTI Technologies; but here these different companies have a common tar-
get: make the MEMS oscillator credible in order to compete with quartz.
SiTime is the most advanced company at the moment.

So the competitive landscape is completely crowded, but, like Knowles Acoustics

with the launch of the silicon microphone, the competitive advantage of a MEMS-
based device is big enough to hit heavily the market. For SiTime, the business mod-
els are very smart.

Bosch: World Leader for MEMS Sensor Manufacturing,

Expanding in Automotive and Consumer Markets
Bosch History
Robert Bosch GmbH was created in 1886 and now employs more than 240,000
people. Sales reached 41,461 billion euros in 2005, with R&D expenditures of
3073 million euros. The Bosch group is active in the automotive equipment market
(world leader and 63% of the sales group in 2005), in industrial technologies (mobile
hydraulics, etc.), and consumer goods (washing machines, etc.).
MEMS activity at Bosch started in 1987 as a research area. The steps in the
development of MEMS activity at Bosch can be analyzed in two different ways:
product development and process development. Boschs development of both spe-
cific processes and devices demonstrates its strategic approach and originality. Both
steps are analyzed in the following timeline:
Product development:

1987: Start of MEMS R&D activity

1989: Creation of a MEMS development department

 The text on this page has been updated from the original by Mr. Joe Brown the Co-founder of

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118 Commercializing Micro-Nanotechnology Products

1993: Introduction of the first MEMS product in volume production

(pressure sensor)
1995: SOP micromachined mass flow sensor
1997: SOP micromachined accelerometer
1998: Silicon gyro in volume production, first generation
2002: Market introduction of second generation accelerometer
2004: Market introduction of second generation gyro (surface micro-
machined sensor)
2005: More than 100 million MEMS devices produced in one year

Process development:

1992: DRIE process developed (named the Bosch process)

1995: Release of silicon surface micromachining design rules
1996: First Multi-Project Wafer run
1999: Invention of the EpiPoly encapsulation enabling MEMS in
standard low-cost IC packages
2002: Release of bulk micromachining design rules
2003: Invention of the EpiSeal process, enabling sealing of cavities
within a MEMS process, avoiding the use of seal glass for iner-
tial sensors, for example
2004: Development of a new process using porous silicon in order
to create cavities inside a device, without using wafer bonders
and enabling all silicon processes (APSM, Advanced Porous
Silicon Membrane)

The last two processes have and will have an important impact on price reduc-
tion for pressure and inertial sensors.
In parallel with the history of the R&D and product introduction schedule at
Bosch, we can define several steps in the Bosch involvement in MEMS fields:

1987 to 1993: Development of a key MEMS process and of several products

(pressure sensors, acceleration sensors mainly)
1993 to 1998: Introduction of the silicon accelerometer and gyro families
1995: Start of foundry activity
1997: Start of component sales to external customers in the automotive fields
2005: Creation of Bosch Sensortec in order to address nonautomotive busi-
ness and the need for foundry services

The organization of the Bosch group is quite complex. The MEMS activities are
shared among different organizations within the group:

Corporate R&D is involved in new concepts and new sensor development. All
the sensor activities are coordinated with the group in order to reuse products
and development and maintain the leadership of Bosch in sensor markets.

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Market Analysis and Growth for Micro-Nano Products 119

Evolution of Sensor Size (Source Bosch)
First Generation Second Generation Third Generation

1 axis accelerometer 6.6 mm 4.2 mm 2 mm

2 axis accelerometer 8 mm 6.5 mm 5 mm

R&D activities are located in the Stuttgart and Reutlingen (Germany) area,
but Bosch also has a Research and Technology Center in Palo Alto (Cali-
fornia, U.S., founded in 1999). Bosch is also a long-term industry member
of BSAC (Berkeley Sensor and Actuator Center).
MEMS design, development, and manufacturing is embedded in the Auto-
motive Electronics Division of the Automotive Technology business section
and is in charge of the development and manufacturing of MEMS devices
for the group. Manufacturing activities are based in Reutlingen, Germany,
for the front end. Back-end manufacturing is carried out in several Bosch
plants (Germany, Spain, etc.) but also uses external subcontractors (organi-
zations like Amkor, ASE, etc.).
Bosch subsidiary Bosch Sensortec is dedicated to the nonautomotive busi-
ness (mainly for consumer applications) and is working as a fabless orga-
nization, developing MEMS devices that are manufactured in the Bosch
manufacturing facility in Reutlingen.
Bosch is also involved with other MEMS companies. It is a key investor in
SiTime (linked to a technology transfer).

Bosch MEMS Business Facts and Figures

The family of Bosch products includes the following devices:
Inertial sensors:

Accelerometers for airbag and ESP (see Figure6.7)

Gyroscopes for airbag, electronic stability program (ESP), and naviga-
tion systems

Pressure sensors:
Manifold air pressure
Barometric air pressure (engine management and airbag)
Engine monitoring (high pressure)
Fuel tank pressure
Diesel particle filter pressure sensor
Side airbag pressure sensor

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120 Commercializing Micro-Nanotechnology Products

Chemical sensors:

Climate control sensors

Bosch does not publish individual device sales, but according to our estimates,
cumulative volume production since the beginning of Bosch production is as follows:

Figure6.7 (See.color.insert.following.page.16.).Airbag.module.(Bosch.source).

Figure6.8 (See.color.insert.following.page.16.).Gyro.sensor.(Bosch.source).

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Market Analysis and Growth for Micro-Nano Products 121

Acceleration sensor: 250 million sensors for the accelerometer structure

(see Figure6.10)
Pressure sensor: 170 million sensors
Gyroscope: 27 million sensors (see Figure6.11 for the gyroscope
Mass flow sensor: 60 million sensors

Figure6.9 shows the evolution of Boschs sensor size. The number of units pro-
duced is increasing every year, but, in parallel, Bosch is decreasing the size of the
device. Table6.2 indicates decrease of die size from generation to generation.
The decrease in dimension is a result of significant price pressure. There is no
Moores law in the MEMS field, but there is clearly a year-to-year size reduction due to
customer price pressure. Several methodologies are used in order to decrease price:

Figure6.9 Evolution of sensor size (Bosch source).

730 m

813 m

668 m

Figure6.10 Example of accelerometer structure (Chipworks source).

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122 Commercializing Micro-Nanotechnology Products

300 100 m 3.00 kV 5 mm


Figure6.11 Example of gyro structure (Bosch source).

Evolution of Sensor Manufacturing and Sales
1999 2000 2001 2002 2003 2004 2005

Number of MEMS devices 25 50 60 67 81 93 105

manufactured, in M units
(Bosch data)
Sales in MEuro (YOLE data) 80 140 150 160 210 260 325

Decrease in the size of the active element

Change in the sensing element structures (for example, for the gyroscope)
Integration of the electronic circuit very close to the MEMS device
Development of new process steps in order to decrease the manufacturing
price (for example, the porous silicon process)
Development of low-cost packaging in order to avoid ceramic packaging
for inertial sensors

For example, the manifold air pressure (MAP) sensor price has declined by more
than 60% between 1994, the first design, and 2004. The major price decrease can be
attributed to the evolution of the packaging: Bosch was using metal can packaging at
the beginning and then moved to hybrid substrate and finally, for the last generation,
to premold packages.

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Market Analysis and Growth for Micro-Nano Products 123

With the gyroscope, Bosch started with a ring comb drive structure, but the new
generation uses a new coupled rectangular structure in order to obtain a better signal.
From the first macro mechanical design in 1995 to the last surface micromachin-
ing device in 2005, the price has decreased by more than 70%.
Table6.3 provides a YOLE evaluation of the MEMS business at Bosch. The
leveraged effect of Bosch MEMS activity on Bosch business is very important; the
electronic sales generated by the MEMS devices are multiplying MEMS sales by a
minimum factor of four. So the MEMS business has always been considered a stra-
tegic field at Bosch.
Key growth applications for Bosch are ESP and engine management systems
(especially diesel injection). Overall business is growing, but these two applications
are by far the fastest growing ones.
It is important to note that Bosch has changed its business model from that of
internal fab for a system manufacturer to that of a sensor supplier for the automo-
tive equipment manufacturers (a change made in 1997) and to the model of sensor
manufacturer for consumer applications (a change made in 2005). We analyze these
changes in more detail later in this chapter.
We estimate at YOLE that in 2005 sales of Bosch devices outside the Bosch
group accounted for approximately 17 to 20% of overall business. The nonautomo-
tive business was just starting in 2005 and will be more significant in 2006 and in
the coming years.
The list of Bosch customers outside the Bosch group is clearly confidential, and no
official data are available on the companies that are using Bosch as a sensor supplier.
The applications where Bosch does external business are related to navigation
systems (supplying gyroscopes), airbag systems (acceleration sensors, gyroscopes
and pressure sensors), and engine control sensors (pressure sensors).
These fields are also areas where Bosch is competing at the system level with its
customers from the device level. This situation is accepted by the customers because
of the performance, price, quality of Bosch products, and the fact that they value
Bosch as a stable and reliable supplier. Competition with Bosch at equipment level
could be an issue for several customers.
Another important evolution in Bosch MEMS activity is the development of the
cluster concept. Car manufacturers are increasingly interested in having a few sen-
sor clusters that diffuse the information to the different pieces of equipment inside
the car. Bosch has developed several sensor clusters, mainly for chassis control.
Such clusters (like the MM3) integrate a gyroscope, acceleration sensors (used
as premold sub modules), full digital processing, CAN interface, and more. The
price impact of clusters is significant by enabling less wiring, centralized electronics,
and sensing. Also, the signal can be reused by other equipment within the car.

Bosch Production Activities

The Bosch manufacturing facility, based in Reutlingen, operates with the follow-
ing specifications:

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124 Commercializing Micro-Nanotechnology Products

6 manufacturing line
4000 m of CMOS fab, where the MEMS front-end manufacturing is done
3000 m of MEMS back-end fab, where specific MEMS processes are used
and a 1200 m of clean room expansion just opened in 2006
45,000 wafer starts per month
100 million MEMS units produced in 2005
Test center and assembly line for packaged MEMS products
300 employees in MEMS production
250 employees in MEMS R&D

In addition to the Reutlingen fab, Bosch has a back-end facility in Madrid (mainly
for accelerometers). But all silicon parts are manufactured in Reutlingen. Bosch only
uses silicon wafers (no SOI production as far as we know).
The manufacturing line is today a six-inch line. Bosch has announced it is invest-
ing in a new eight-inch line, both for IC and the MEMS manufacturing. The new fab
will be operational in 2008 and will require an investment of 550 million euro. This
investment is linked to semiconductor manufacturing, but it will heavily impact the
MEMS business at Bosch. The unit production capacity will be multiplied by 2.5,
also enabling cost savings in manufacturing (due to the effect on batch processing)
and preparing Bosch in the development of consumer markets. As far as we know,
the six-inch line will stay in Reutlingen.

Bosch Competitive Situation

Bosch is involved in a complex competitive situation. Competitors of Bosch are at
different levels:

a. System manufacturers: Conti Teves is the main competitor for ESP; Del-
phi, TRW, and Siemens VDO are all competing in one way or the other
with Bosch. Several of these companies have internal MEMS fabs (like
Delphi), and the others use sensor suppliers, including Bosch, to obtain
MEMS devices.
b. Automotive sensor manufacturers: VTI Technologies, Analog Devices,
etc., for acceleration sensors; Systron Donner, Panasonic, Infineon/Sensonor,
etc., for gyroscopes; and GE Novasensor, Freescale, etc., for pressure sen-
sors are all competing with Bosch at the device level.
c. Consumer sensor applications: MEW, Kionix, Analog Devices, etc., are
also the main competitors for the consumer markets. Until now, Bosch Sen-
sortec was only visible in the acceleration sensor market (with 2 axis and 3
axis sensors).

The Bosch group is the world leader in automotive electronics, and the MEMS
group at Bosch is by far the world leader in sensor manufacturing, with the broad-
est product range. The closest competitor is 35% smaller in size and has a limited
growth rate.

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Market Analysis and Growth for Micro-Nano Products 125

MEMS Foundries and Contract

Manufacturer Revenue







2003 2004 2005 2006 2007 2008 2009 2010

Figure6.12 MEMS contract manufacturers and foundries market estimation.

Development of Foundries and Contract Manufacturers

In 2004, the MEMS foundry and contract manufacturing business was $130 million,
according to Yole Dveloppement, with an anticipated 40% growth rate for at least
the next three years. Compared to MEMS markets, the foundry and contract manu-
facturers market is roughly 3% of the total MEMS business very low compared
to the semiconductor industry. Today, most of the contract manufacturers have a full
plate, both for development projects and production. We anticipate that the MEMS
foundry and contract manufacturer markets will reach total revenues of more than
$500 million by 2010 (a 3 market increase over a six-year period).
We can see that most MEMS foundries have grown 35% or more. This growth
is due to two primary factors: a continuous increase in activity for existing com-
panies like DALSA Semiconductor, IMT, Silex, Tronics, SMI and Micralyne, and
increased activity of Taiwanese MEMS foundry activities, mainly linked to Taiwan-
ese markets. New players are entering the market, targeting high-volume applica-
tions like silicon microphones, inertial sensors, and ink-jet heads.
New players like Dai Nippon Printing (inertial sensors) and Sony (silicon micro-
phones) are now producing large volumes of MEMS devices on an eight-inch line.
The example of Sony is significant; in 2005 Sony produced 100 million units for
Knowles Acoustics with a significant growth rate (more than 100% per year). A
majority of the more traditional MEMS foundries and contract manufacturers have
moved or are now moving from four-inch to six-inch manufacturing.
In 2004, the MEMS foundries and contract manufacturers secured most of the
top ten places for the highest growth companies. We forecast a two-phase evolution
over the next five years:

Strong growth of at least 35% between 2005 and 2008, due to new production of
key growth applications linked to mobile phones and consumer applications.
Growth after 2009 will drop back to 15 to 20% per year.

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126 Commercializing Micro-Nanotechnology Products

In addition to the introduction of new products, we will see over the next few
years that todays system manufacturers who have integrated manufacturing facilities
will increasingly subcontract manufacturing to MEMS foundries/contract manufac-
turers. HP and Lexmark are clear examples of system manufacturers with internal
facilities that also use external foundries in order to have access to extra capacity
with strategic partners. Several other major companies with internal MEMS manu-
facturing are following the same model.

Japanese Mems Markets

The Micromachine Center (MMC) has published during the Micromachine exhibi-
tion its evaluation of the MEMS markets in Japan. MMC estimated MEMS market
volume in 2002 and in 2010 expectations in Japan. According to MMC, the MEMS
market in 2005 was 420 billion yen, or approximately 2.9 billion euro. The large
volume applications were the following:

a. Information processing and communication equipment, for 150 billion yen

(or 1 billion euro): the main applications are linked to the hard disk drive
industry and mobile phones
b. Automotive, for 135 billion yen (or 900 million euro): it is mainly sensors
for the automotive industry
c. Precision equipment, for 91 billion yen (or 600 million euro): this part
includes sensors for industrial applications but also small metal and plastic

Those different fields are strong industry in Japan. The market size estimated
by MMC is larger than the estimation done by YOLE Dveloppement. It is mainly a
matter of definition. The YOLE Dveloppement figures only include MEMS silicon
and quartz devices (we are reviewing the metal and polymer parts in different ways)
compared to the MMC estimation, which includes all type of microdevices.
According the MMC, the next fields where the growth will be important are bio-
technology, medical/social services, and society and culture. Those fields represent
attractive markets expected to be high growth markets in response to future changes
in society.
MMC estimated that the market volume will be 1.36 trillion yen in 2010, or
roughly 9 billion euro. According to their analysis, the large volume sectors (in the
range of 200400 billion yen) will be information and communications equipment,
automotive applications, and culture (including sports). The MEMS market in these
areas will expand and grow steadily. Development of low-cost MEMS sensors and
RF MEMS enables significant growth in the society and culture sector because
MEMS devices will be adopted in large numbers both in information-enabled home
appliances and amusement products. The new game console WII from Nintendo is
a good example of this trend.
New markets for MEMS (in the 100 billion yen range) are new energy/energy
saving, medical and social services, biotechnology, and aerospace. For realizing
those applications, both new functions, enhanced precision and reliability will be

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Market Analysis and Growth for Micro-Nano Products 127

MEMS Market in Japan

1,600 ($16B) Agriculture, forestry, and fisheries

1360B yen Urban environment and infrastructure

Society and culture

1,000 ($10B) Environment
Billion Yen


600 Medical and social services and facilities

426B yen Maintenance

400 Microfactories

Measurement equipment
Precision equipment

0 Information processing and

2002 2010 communication equipment

Figure6.13 Evolution of the MEMS markets in Japan (source: MMC).

required. The key to the development of these markets will be the development of
MEMS technologies based on new materials and new structures.
Figure6.13 shows the Japanese MEMS market trends according to MMC. Fig-
ure6.14 presents the analysis of the evolution of the MEMS applications in Japan,
according to MMC.
The MEMS technologies and markets have been established in Japan as an
industrial market since the mid-80s with the availability of silicon pressure sensors
for medical, industrial, and automotive applications.
Several Japanese companies have been involved in the MEMS fields since
almost the beginning Matsushita Electric Works (pressure sensors in the mid-
90s), Denso (pressure and acceleration sensors), and Mitshibishi Electric (pressure
sensors), just to mention a few.
Today MEMS activities in Japan are very strong: Yole Dveloppement has iden-
tified more than 70 Japanese companies involved in MEMS development and manu-
facturing, with their own clean rooms and production facilities.
The Japanese MEMS industry is characterized by a very strong presence of fab
integrated in a system manufacturer (like Olympus, Canon, or Fujikura) or device
manufacturers (like MEW, Oki, etc.). On the other hand, there are very few design
houses and fabless companies: this function in the industrial food chain is mainly
realized by R&D organizations and universities. The foundries have been established
for 2 years in a network of ten industrial and R&D organizations, under the manage-
ment of the MicroMachine Centre. These different companies are proposing sev-
eral services, from full development and production to CAD tools and engineering
services. This initiative (including Oki Electric, Omron, Olympus Optical, Hitachi,
Fujikura, Matsushita Electric Works, Fuji Research Institute Corp., Nano Device
and System Research Institute, ULVAC, and Nihon Unisys Excelutions) is important

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128 Commercializing Micro-Nanotechnology Products

MEMS Industrialization Strategy & Scenario

1.36 Trillion Yen, 10
(Domestic Market)
The evolution of MEMS enables us Ecology
to solve various kind of social needs Medical
Evolution of MEMS

2nd Stage: Automobile

Multifunction devices Eco IT
-Miniaturization Energy
-High Performance
-High Reliability Information
Technology Medical Care
Evolution of MEMS
430 billion Yen, 02 by Three Dimensional Fabrication Technology
Combined with Nano-related Functions
1st Stage:
Single-function MEMS devices: MEMS devices being developed
Pressure Sensor, Accelerometer, by utilizing micromachining

and semiconductor process


Scanner, Inkjet Head


Bulk-micro machining, Surface micromachining


2005 2010 2015 2020

Figure6.14 Scenario analysis of the MEMS markets (source: MMC).

in order to bridge the gap of MEMS development and manufacturing for companies
having specific needs and no ability to make their own development. What is miss-
ing at the moment in Japan is mainly contact manufacturers, i.e., companies able to
develop specific process and manufacture devices on this process. It will certainly
happen in the next two to three years.
Another very important point is the presence in Japan of capital equipment and
material manufacturers, with strong involvement in MEMS. Some of the leading
ones include the following:

a. Capital equipment manufacturer: Sumitomo Precision Products, TEL,

Samco, Ushio, Ulvac, Hitachi
b. Materials manufacturer: Shin Etsu, Nippon Steel
c. Packaging: Kyocera (strong leadership for MEMS packages)

The Japanese companies are very active in all areas:

Automotive applications: Denso, Silicon Sensing Systems (joint venture

between SPP and BAe), Mitsubishi Electric, etc.
Ink-jet head manufacturers: Canon, Seiko, Epson, etc.
Biochip and microfluidics: Olympus, Enplas, Takara Bio, etc.
Instrumentation in industrial and medical applications: Omron,
Terumo, Yokogawa, etc.

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Market Analysis and Growth for Micro-Nano Products 129

New innovative devices: Sony (micro mirror arrays), Olympus (AFM tips),
Nippon Signal (bare code reader), etc.

The Japanese companies are less involved in new areas like RF MEMS, tire
pressure monitoring, silicon microphones, IR image sensors, etc., but the industrial
involvement in key devices for consumer applications is very impressive with the
growing position of Oki, Hitachi Metals, and MEW.
Several Japanese companies, such as Silicon Sensing Systems for gyroscopes
and Epson and Canon for ink-jet heads, are world leaders in their activities. In the top
30 world MEMS manufacturers, 7 companies are involved in the ranking. Foreign
companies like Freescale (former Motorola Semiconductor) also have manufactur-
ing facilities in Japan. Tohoku Semiconductor, for example, is manufacturing the
entire silicon acceleration sensor for Freescale and is on the way to industrializing a
new product based on SOI.
All the ingredients are present in Japan in order to make available the key MEMS
devices for system manufacturers. This R&D and industrial infrastructure is used
and will be key for the development of innovative modules and systems. The evalua-
tion of the MMC is just showing the healthy MEMS activities in Japan.

The Market for Equipment and Materials

for the Development of Mems Devices.
Analysis of the MEMS Equipment Market
The MEMS equipment market was $631 million worldwide in 2005 and is expected
to expand to $758 million in 2008 and $861 million in 2010. The 5-year CAGR fore-
cast for MEMS equipment is 6%.
MEMS materials can be divided into substrates and chemicals and other materi-
als. Together these markets totalled $385 million in 2005 and are forecast to be $771
million in 2010. MEMS materials are expected to grow at a five-year CAGR of 15%
through 2010.
The total worldwide MEMS equipment market is estimated at $631 million in
2005, of which $332 million is equipment used in front-end processing (52%), $199
million for back-end processing (assembly, packaging, and testing) (32%) and about
$100 million is R&D tools (16%).
The front-end equipment segment is expected to grow to more than $450 million
by 2010, with a five-year CAGR of nearly 7%. This category of MEMS equipment will
represent about 58% of the total equipment market at the end of the forecast period.
Assembly/Packaging and test equipment is forecast to reach more than $275 mil-
lion in 2010, which is about one third of the total equipment market. The assembly/
packaging and test tool segment will grow at about a 7% CAGR through 2010.
The global market for MEMS R&D tools is expected to reach $125 million in
2010, with a CAGR of 5% over the forecast period. At that time, R&D tools will
represent about one seventh of the total MEMS equipment market.
Within the front-end tool category, nearly one quarter of global sales are for
etching equipment, including deep etching techniques (DRIE). Etching is a key

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130 Commercializing Micro-Nanotechnology Products

R&D equipment
800 Assembly & Packaging
Other front-end
700 Wafer cleaning
Inspection & Meas.
600 Thermal processing
Market in $M

500 Deep etching
400 Lithography
2005 2006 2007 2008 2009 2010

Figure6.15 MEMS equipment markets.

process technology for forming/releasing mechanical structures in MEMS devices.

A detailed analysis of the DRIE market is provided later in this chapter.
Another rapidly growing MEMS tool segment is wafer bonding. The bonding
equipment market is forecast to experience 10% CAGR, growing from $26 million
in 2005 to $43 million in 2010. The development of advanced WLP technology is
driving this market.
As new MEMS devices are becoming more sophisticated in their design, the
equipment used to test, assemble, and package those devices also becomes more
sophisticated. Back-end equipment for MEMS applications is expected to grow at
about 7% CAGR through 2010. Proliferation of MEMS devices and therefore
increasing unit sales is another key driver of the back-end equipment market.
Relative to the MEMS device market, which is expected to grow at a CAGR of about
14% through 2010, and the MEMS materials market, which is expected to enjoy
a five-year CAGR of 15%, the MEMS equipment market is forecast to grow more
slowly, with a CAGR of 6% through 2010. There is a strong market for retrofitted or
refurbished equipment in the MEMS space; about 30% of the equipment market is
for used equipment.
We now focus our analysis on the deep reactive ion etching applications (DRIE),
which provide a key example of the introduction of MEMS production equipment
on the market.

DRIE: A Key Process for MEMS Manufacturing and IC Manufacturing

An Overview
In 2010, equipment for MEMS manufacturing will be an $860 million market. Although
this market is large enough to be shared by well-established players (STS, Alcatel
MMS, EVG, Suss microTEC, etc.), the specific requirements of some MEMS process
steps (deep etching, thick coatings, sacrificial release, wafer bonding, etc.) could open
opportunities for newcomers. This article reviews the technologies and market trends
for specific MEMS front-end equipment, deep reactive ion etching (DRIE).

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Market Analysis and Growth for Micro-Nano Products 131

Chemical Dry Etching (CDE) Deep Reactive Ion Etching (DRIE)

Isotropic (non-directional) Anisotropic (directional)
Lack of dimensional control Improved dimensional control

Fully Isotropic Etching Anisotropic Etching

Figure6.16 Comparison of DRIE process and wet processes.

Deep reactive ion etching was developed more than 14 years ago. The process
was invented at Bosch in 1992 by F. Laermer. The first company that bought the
process license from Bosch was STS in 1994. The first equipment release occurred
in 1995 with the introduction of the Anisotopic Silicon Etching (ASE) process.
DRIE is an anisotropic (directional) process, replacing the wet chemical pro-
cess and enabling etching independent of crystal orientation structure, vertical
etched structures and high aspect ratio structures. Figure6.16 presents a comparison
between wet etching and DRIE. Figure6.17 shows a typical device made with DRIE
equipment. According to YOLE Dveloppement analysis, the installed base of DRIE
equipment worldwide was about 700 at the end of 2006.

Deep Etching Mostly Used for Inertial MEMS

Devices and Silicon Microphones
The main market today for deep etching equipment for MEMS is for inertial MEMS
devices. Figure6.18 shows the main applications for DRIE in MEMS but also in
other areas of the semiconductor industry, including advanced packaging.
We can identify two interests in the use of DRIE for MEMS manufacturing:

High accuracy etching for accelerometers, gyroscopes, RF MEMS, micro-

mirrors, etc.
A high etch rate for microphones, ink-jet heads

Today 70% of total accelerometer production is comb-drive accelerometers

(which represented more than 170 million units in 2005). Some of the companies
manufacturing comb-drive accelerometers are Delphi, Denso, Bosch, Analog
Devices, Motorola, Panasonic, and Tronics Microsystems. For gyroscopes, we

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132 Commercializing Micro-Nanotechnology Products

Inertial Sensors

Figure6.17 Typical structures made with DRIE (source: Alcatel MMS).

estimate that more than 60% are silicon or quartz surface micromachined. The users
of such equipment include Bosch and Panasonic.
There are two competing DRIE process technologies: the Bosch process and the
cryo process. A summary of both processes can be seen in Table 6.4. Although the
cryo process has slightly better selectivity, it requires lower temperature baking. The
Bosch process is the most widely used worldwide, and Bosch has licensed its pro-
cess to the major equipment manufacturers. Figure6.19 presents the evolution of the
DRIE process at STS in MEMS manufacturing, with a visible evolution of the etch
rate. The cryo process is well suited to large wafer sizes: this process helps provide
better uniformity. The challenge here is to have temperature uniformity on the wafer

>85% Si -Phones

>70% Accelerometers
% of DRIE Use

~50% Gyroscopes


P Sensors Inkjet Heads MOEMS


<2003 2006 >2008 Time to market

for large scale

Figure6.18 DRIE applications (source Yole Developpement).

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Market Analysis and Growth for Micro-Nano Products 133

Comparison between Bosch and Cryo Processes
Bosch Cryo

Etch process in small steps, followed by a Substrate cooled down 100C to 150C.
cleaning step. Formation of SiOxFy on the sidewall, preventing
During etching, a polymer is formed on the sideways etching.

Evolution of the DRIE Process for MEMS


Pegasus - 4th generation

25 m/min

Improved ASEHRM*
18.7 m/min

ASEHRM - 3rd generation

14.6 m/min

ASEHR - 2nd generation

5.6 m/min

ASESR - 1st generation

3.3 m/min

Figure6.19 Continuous improvement of DRIE process (source: STS).

surface. As to the companies involved in the DRIE market, the Japanese and the rest
of the world market are quite different.
Outside the Japanese markets, the key players are STS, Alcatel MMS, Lam
Research, Oxford Instruments, Aviza Technologies, and Oerlikon Balzers (formerly
Unaxis). STS was the first company to license the Bosch process in 1994 and has devel-
oped four different generations of equipment since that time (see Figure6.20). STS has
also announced the development of a new 300 mm platform for the pure semiconduc-
tor business. Figure6.21 presents the evolution of the Alcatel equipment family.
In the Japanese market, the companies involved are Sumitomo Precision Prod-
ucts (SPP, mother company of STS), Samco, Tokyo Electron, Shinko Seiki, Pan-
asonic, and Ulvac. Non-Japanese companies involved in the Japanese market are
mainly Alcatel MMS, working with Canon.
The total worldwide market for DRIE for MEMS manufacturing and develop-
ment includes around 30 pieces of equipment in 2005 and will jump to more than

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134 Commercializing Micro-Nanotechnology Products

50 units in 2010. The world leader is STS, followed by Alcatel MMS. According to
YOLE Dveloppement analysis, in 2005 these two companies together had world-
wide more than a 75% market share. In addition to MEMS sales, DRIE has been
increasingly adopted by semiconductor companies for applications in advanced
packaging, power devices etc., which are building more sales for MEMS-related use
of DRIE equipment.

Validation: ASE HRM Improvements


SOI Etch

Parameter Ramping

ASE-HR System

SOI etch
Increased Passivation 2 Step Approach
ASE Process
ASE-SR System

94 95 96 97 98 99 00 01 02 03 04 05 Year
1st Generation 2nd Generation 3rd Generation 4th Generation

Figure6.20 Equipment and process roadmap (source: STS).

Patented ICP plasma source for Si etching

A 601E : System for R&D and Pilot Production 1994

Bosch Process License Agreement 1996

I-Speeder project 1998



I-Productivity project

Figure6.21 Alcatel equipment roadmap (source: Alcatel MMS).

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Market Analysis and Growth for Micro-Nano Products 135

The growth of the DRIE business can be analyzed in the following way:

1991-1994: process and equipment development at Bosch and STS.

1994-1997: first sales made to the R&D market.
1997: beginning of DRIE use for high-volume production; inertial sensors
were the first application.
1997-2005: development of volume production with different generations
of equipment, etch rate improvement, and adaptation of the equipment for
volume manufacturing (development of cluster tools, implementation of
production software, development of etch monitoring equipment).
After 2006: DRIE will target the mainstream semiconductor industry, with
development of 300 mm tools and equipment that will implement SEMI

In parallel to business growth, the process has also been further developed, with
a very significant increase in the etch rate. Figure6.22 presents the evolution of the
etch speed (in proportion to the open area) with Alcatel MMS equipment.
Figure6.23 provides a look at the evolution of the sales of DRIE equipment
since 1994, based on YOLE Dveloppement estimates. YOLEs model in detail can
be used and adapted for new processes in the MEMS industry, like wafer bonding
and double-side mask aligners as well as for new processes under development like
supercritical gas cleaning and xenon difluoride etching. This model was built by
YOLE Dveloppement, and we are using it in our strategic and market analysis for
equipment manufacturers.
Sales in 2000 and 2001 were very high due to the optical MEMS bubble (which
was linked to the optical telecommunication bubble). In 2002, 2003, and 2004, the
equipment market was adversely affected by the supply of secondhand equipment,



Etch Rate (um/min)



100 80 60 40 20 0
Open Area (%)

Figure6.22 Etch rate function of open area in 2002, 2006, and 2007 (source: Alcatel).

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136 Commercializing Micro-Nanotechnology Products

R&D and production
equipment for non
Nb of Equipment Sold

MEMS applications
Production equipment for

60 R&D equipment for












Figure6.23 Evolution of DRIE sales (source: YOLE Dveloppement).

which according to our analysis accounted for more than 30% of the total market (in
addition to the data mentioned in Figure6.23). Since 2005, this secondhand market
business has stood at below 20% of the annual market.
Several trends are influencing this market. The production of MEMS is moving
into high volume. Thus, different suppliers must provide robust high-volume manu-
facturing equipment. STS, SPP, Alcatel, Lam Research, etc., are now proposing such
equipment, which consists mainly of a cluster tool with several chambers. Up to
2005, the equipment was mono-chamber.
The second trend is that new markets are reusing the DRIE process: companies
involved in power devices (for deep trench etching for integrated power modules),
3D stacking of IC devices (for via etching for memory stacking, for example), and
advanced packaging are all at the moment testing DRIE as a key new process for
future development. These applications are being tested by the existing suppliers, but
they will need full production equipment that implements SEMI standards that are
still under development.
As a consequence of these two trends, equipment manufacturers with strong
involvement in etching business and those who come from the mainstream semi-
conductor fields (like Lam Research, Tokyo Electron, and Applied Materials) are all
either developing or proposing such equipment, targeting the volume markets. This
trend is reinforced by the interest of semiconductor companies in MEMS. All the top
50 semiconductor companies worldwide (including Intel, Samsung, Freescale, Infi-
neon, STMicroelectronics, and Renesas) are either manufacturing MEMS devices or
developing such processes. They all need DRIE equipment, and they are generally
working with large equipment manufacturers. The added value of the companies
involved in this field for years is the engineering capability and the long experience
in process development and adaptation to specific needs. The MEMS law (for each
device you need a specific manufacturing process, different from device to device)
has been a key enabler of the engineering capabilities of such companies as STS,
SPP, and Alcatel.
New product offerings are appearing from semiconductor equipment ven-
dors with a strong background in volume production (like Lam Research). System

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Market Analysis and Growth for Micro-Nano Products 137



Nanoobjects &


Figure6.24 Range of Nanomaterials technology.

reliability, process repeatability, process performance across the wafer, and strong
customer support are the key focuses for the semiconductor equipment compa-
nies and are as important as the increase of etch rate in order to increase the yield
and maximize the wafer output. With a different price structure, the semiconduc-
tor equipment manufacturers are proposing equipment that includes all the lessons
learned from the semiconductor industry.
These trends may change radically the way the market is established today. The
market growth is significant, and the reuse of MEMS processes for other devices
will certainly change the way the industry is organized.

Analysis of the Nanomaterials Markets

The nanotechnology fields have been investigated in R&D for many years, and a
large part of the business potential linked to nanotechnologies is still to come.
First several definitions: The nanotechnology fields are covering a great variety
of topics, from chemistry to drug discovery and surface treatment. The nano mate-
rials specifically relate to the development and production of new materials made
using nano particles and nanotubes.
We focus our analysis on nano materials because the production business is there
and is very active. As a matter of fact, the industrial business of nanotechnologies
today is exclusively linked to nanomaterials like carbon nanotubes, colloidal silica,
and nanoclay. We have three types of applications of these nano materials:

Integration of the nano materials in liquid matrix in order to make chemi-

cal mechanical processing (CMP) in the semiconductor business or cos-
metic products

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138 Commercializing Micro-Nanotechnology Products

Integration of nano composites in bulky plastic or composites matrix in

order to have materials containing nano particles

Integration of nano particles in coating applications

A common way to obtain a nanomaterial is to add nano objects into a matrix.
When this matrix is a polymer, the material is called a nano composite. Most innova-
tive nano objects with a large availability are:

Nanoparticles: nanoclays, colloidal silica, and other inorganic nanoparti-

cles (alumina, zinc oxide, etc.). These products have been commercialized
sometimes for more than 10 years now.

Carbon nanotubes: these more recent products discovered in 1991 will have
an important commercial potential based on the very specific properties
they bring, such as high mechanical strength and high conductivity.

Figure6.25 shows these three applications.

The industry organization is rather different compared to the MEMS business.
The nanoparticles manufacturers are generally small companies, mainly start-ups,
which have a limited impact in the industry. The key added value is linked to the
integration of these nanoparticles in industrial process.
This is the key aspect of the nano materials business: being able to produce kg
or tons of carbon nanotubes is complex but does not generate that much added value.
The key knowledge is the integration of this material in matrix, solutions, complex
compounds, etc., in order to be integrated in existing chemical process.

There are 3 main applications elds depending on the matrix surrounding

the nano-objects:

Liquid Matrix Bulk Plastics or Coating

Applications Composites Applications Applications

CMP Cosmetics Sport Goods Packaging Automotive Body Coat


Figure6.25 Nano particles application fields.

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Market Analysis and Growth for Micro-Nano Products 139

Slurries, Cream
Final Users:
Liquid Matrix

Nano-objects Aeronautics,
Manufacturers Bulk Plastics
Solid Polymer Construction,
Matrix =
Nanocomposites Consumer
Coatings Goods...

Resin Polymers
Manufacturers Manufacturers

Peripheric Players Manufacturers

Figure6.26 Added chain value of nanomaterials.

No chemist or industrial company will change its manufacturing process in order

to use nanomaterials. The nanomaterials manufacturer or the integrator has to do the
adaptation work in order to propose a product that can be used directly in a factory.
Figure6.26 presents this added value chain.

Applications of the Nanomaterials

Nano objects specific properties can improve existing functions (scratch resistance,
reinforcement, etc.) or even make new functions possible (such as antimicrobial,
easy to clean) by their integration into a final material. The main advantage of this
integration is the combination of several functions that sometimes were previously
incompatible: ESD (electrostatic discharge) effect and a relative transparency, hard-
ness and flexibility These functions can generally be obtained with a very low
concentration of nano objects (about 5%). This low concentration balances the rela-
tive high cost of the particles that ranges from $5 to $1000 /kg and even higher for
some carbon nanotubes.
There is already a wide range of commercial applications that can be segmented
in three fields, depending on the final surrounding matrix of the nano objects:

Liquid matrix: sunscreen, slurries for wafer polishing, medical dyes, etc.
Bulk plastics or composites: automotive plastic parts, tennis balls and rack-
ets, cables, beverage packaging, etc.
Organic coatings: automotive body coats, wood flooring, outdoor wood
coatings, etc.

Figure6.27 presents the different functions that are available for the three types
of nano materials: scratch resistance, reinforcement, and barrier coatings.

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140 Commercializing Micro-Nanotechnology Products


Other Inorganic
Colloidal Silica


Market Polishing
Penetration Ex: CMP

Large Volume Polishing

Applications Ex: CMP

Scratch Resistance Reinforcement

Ex : Wood Flooring Ex: Automotive Parts UV Protection
Ex: Sunscreens
Scratch Resistance Barrier
Several Ex : Wood Flooring Ex: Packaging
Niches UV Protection
Applications Ex : Wood Coating Conductivity - ESD
Ex: Auto Electrostatic
painted parts
Easy to Clean
Ex : Textile
Anti Microbial
Easy to Clean Ex: White Goods
Ex : Textile
Reinforcement Catalyst
Anti Microbial Ex: Automotive Fuel
Few Early Ex : HVAC Coating Ex: Sportive Goods
Niches Corrosion Protection Rheological Agent
Ex : Outdoor Metals Ex: Toothpaste Thickener

Self Cleaning
Ex : Architectural Coating Fire Retardant
R&D Ex: Cables & Wires Field Emission
Refractive Index Ex: Display
Ex : Display

Coating Bulk Plastics Liquid Matrix

Figure6.27 Main functions and applications of nanomaterials.

Today volume applications are linked to the CMP business. Apart from this appli-
cation, a lot of niche markets are now using nanomaterials, like the reinforcement of
sports goods and antimicrobial protection for HVAC, but each of these niche appli-
cations is using only kilogram of materials every year.
Figure6.28 presents the evaluation of the nanomaterials markets. We at YOLE
Dveloppement estimate that the nanomaterials markets reached $1.1 billion in 2006,
mainly linked to CMP applications, and we expect a market of $2.6 billion in 2010.
An overall 23% growth rate per year is expected, with market segment (like carbon
nanotube) growing by more than 60% per year. The business opportunities linked to
nanomaterials are clearly very important and could change the way of working for
various industries.

Business with Nano Materials

New nanomaterials increase their market penetration thanks to their wide range of
possible functions, easier integration, and more affordable pricing. And this is just
the beginning.
Nano objects manufacturing is today the most dynamic and emerging activ-
ity directly linked to nanomaterials: more than 150 start-up companies have been
formed worldwide in the past ten years. Nanogate, a German company, is one of the
most famous and well developed in Europe. Large chemical companies are arriving

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Market Analysis and Growth for Micro-Nano Products 141

Markets for new nanoparticles and CNT


Forecasted Annual Sales (M$)


1500 Other Inorganic Nanoparticles

(Al2O3, TiO2, Ag, ZnO)
Nanoparticles Colloidal Silica Nanoparticles


2005 2006 2007 2008 2009 2010
CAGR of 23% is expected for both materials. CNT is the most
growing nano-object with 60% growth in volume expected.
Nanoparticles are forecast to exhibit a growth of 24%.

Figure6.28 Nanomaterials and market evaluation.

on the market (Bayer, Arkema, and Rhodia, for example), which is also a sign that
this sector is becoming really attractive.
Integrators (i.e., polymer and coating manufacturers) are arriving more and more
in the field with nanocomposites offers (PPG, Honeywell, PolyOne, Basell, Becker
Acroma, etc.). It is expected that those integrators will be increasingly involved in
nanomaterials as the nano objects integration is becoming simpler than in the past.
Finally, final users in automotive, construction, sports, and textiles realize the
potential differentiation that could be brought by nanomaterials to their final prod-
ucts. As already explained, world market demand for nanoparticles and carbon
nanotubes is estimated to be higher than $1 billion in 2006. Nanomaterials diffusion
was up to now limited to high-value niche markets: a lot of new applications will
emerge and be developed in the coming years thanks to the price reduction of the
nano objects. It is therefore expected that the nanomaterial market will grow about
30% each year.

Long-Term Vision
What could happen in the MEMS industry? What are the key business trends? We at
YOLE Dveloppement believe that the market will move in the following ways:
2005 markets:

The market is very fragmented, and its value has reached $5.1 billion. More
than 400 companies are developing or producing MEMS devices.
Few products have reached high volume: accelerometers, gyroscopes, opti-
cal MEMS, pressure sensors.

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142 Commercializing Micro-Nanotechnology Products

New products have been introduced, like RF switches and silicon micro-
phones, which are starting to impact the market.
The top 30 MEMS manufacturers are together producing more than 70%
of the MEMS devices.
The production infrastructure is in place, and all the new companies are fabless
organizations, using the existing MEMS foundries or the ASIC foundries.

The main evolutions we are forecasting for the next ten years are the following:
2010 markets:

$9.7 billion worldwide.

MEMS foundries and contract manufacturers are representing at least 8%
of the world market, and several are public companies.
More than 50% of current systems companies with integrated fab will be
using external manufacturers.
Several large integrated companies have created independent MEMS
IC manufacturers will be deeply involved in MEMS manufacturing.

2015 markets:

The market could be as big as $18 billion worldwide.

We can forecast that the majority of the system manufacturers with inter-
nal manufacturing facilities will be using external foundries, perhaps all
of them.
70% of the total market will be in the hands of semiconductor manufac-
turers; that means $7 billion will still be in the hands of specific MEMS
manufacturers for sensor applications (automotive, medical, instrumenta-
tion, etc.). The semiconductor companies will be using MEMS devices and
technologies for consumer applications mainly.

These long-term trends are open for discussion, but the key signs of the evolution
of the MEMS markets are here. The future will certainly show strong evolution of
the MEMS markets, both in the industry infrastructure and also in the development
of the MEMS markets and applications.

1. All market evaluation from Yole Dveloppement is based on the first level packaged
sensor. For example, for the evaluation of the ink-jet head business, we are including
only the packaged head, instead of counting the complete cartridge (including housing
and ink). It clearly decreases the total volume of the market but provides a more realistic
vision of the component-based systems. Figure6.1 includes only silicon-based devices.
An important part of the MEMS markets is related to polymers. Key European players
like Microparts in Germany are involved in the development and manufacturing of
polymer microdevices. This part of the MEMS market is not analyzed in this chapter.

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7 Oxonica Plc:
A Leading U.K.
Nanotechnology Business

Kevin Matthews


Building the Company from a University Spin-Out and Developing a Market..... 143
Origins Pre1999.................................................................................................... 145
Spinning Out In the Wrong Direction 19992000....................................... 145
A Change at the Helm (20002001)....................................................................... 148
Raising VC Money 20012002............................................................................... 151
Go to Market 2002-2005........................................................................................ 153
Business Model............................................................................................ 153
Partnerships and Intellectual Property........................................................ 154
Envirox Fuel Borne Catalyst for Greater Fuel Efficiency....................................... 155
Optisol Photostable UV Absorber...................................................................... 157
Corporate Development 20022004....................................................................... 159
Floating On Aim..................................................................................................... 160
Pipeline Development............................................................................................. 161
Nanoplex Technology............................................................................................. 161
Other Pipeline Technology..................................................................................... 163
Solacor UV protection for plastics and coatings..................................... 163
Security Markers......................................................................................... 163
The Total Pipeline................................................................................................... 163
The Nanotechnology Debate.................................................................................. 164
The Future............................................................................................................... 165
A Personal Perspective........................................................................................... 165

Building the Company from a University

Spin-Out and Developing a Market
By agreeing to write this short history of Oxonica, I hope to share the real story of
a technology start-up, the trials and tribulations and the successes, with other entre-


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144 Commercializing Micro-Nanotechnology Products

preneurs who may either be actively engaged in a similar challenge or contemplating

taking the plunge.

Figure7.1 Professor Peter Dobson.

Figure7.2 Dr. Gareth Wakefield.

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Oxonica Plc 145

Origins Pre1999
The company originated in the University of Oxfords Engineering School or, more
specifically, the Department of Materials Science. The academic founders were Pro-
fessor Peter Dobson, who was Professor of Engineering, and Dr. Gareth Wakefield,
a Post-Doctoral Research Fellow working with Dobson. Professor Dobsons back-
ground had included industrial research at Phillips, and in the 1990s this had evolved
into a specific interest in nanomaterials, including phosphors, metal oxides, quantum
dots, and the optical properties of such materials. Gareth Wakefields Ph.D. was in
electron microscopy, and this interest developed into the preparation of nanomateri-
als, driven by the need to secure good samples to study under the microscope.
Nanomaterials are advanced materials that are engineered at the nanoscale (i.e.,
less than 100 nanometers (nm) that have size-specific chemical or physical proper-
ties). For instance, as particles are decreased in size, the surface area to volume ratio
increases dramatically, with a commensurate increase in chemical or catalytic activ-
ity. Nanomaterials are typically fabricated by reacting molecules together in a care-
fully controlled process to yield the particular size and composition required. There
is a popular perception that nanoscience is about making things smaller; in fact, most
of the chemicals we use in our daily lives (e.g., detergents, drugs, and cosmetics) are
single molecules with a size of around 12 nm. Nanoscience is about assembling
these single molecules to give a new material form. I liken this to childrens con-
struction toys; the individual pieces are the building blocks (molecules), and when
children tip them out of a box, they form a natural random mound of pieces. How-
ever, with careful assembly, these can be converted into cars, cranes, houses it is
the equivalent careful construction of molecules that results in advanced functional
or even multifunctional nanomaterials.
Together Peter Dobson and Gareth Wakefield formed the creative force that
developed the ideas and technology that Isis Innovation subsequently patented and
elected to commercialize through the formation of a spin-out company. At Oxford,
the university owns the technology developed by its academics and researchers, and
Isis Innovation, Ltd. is the technology transfer arm of the university specifically
charged with commercializing this intellectual property. In 1998, Dr. Wakefield was
asked if he would found and join the fledgling organization and rapidly became
immersed in filing patents and dealing with the administrative challenges of setting
up a company. A marketing study was completed, and the business plan was set with
the main focus on nanoparticle phosphors that could be used for low voltage field
emission displays. The company was established in 1998 and was spun out from the
university on August 15, 1999, as Nanox Limited.

Spinning Out In the Wrong Direction 19992000

When Nanox was spun out of the university, the company raised a total of about
750,000 from the private investor (now of Dragons Den fame) Richard Farleigh
and a private investment company, Seighford Investment, led by Charles Eld. The
shareholdings were 20% for each of the founding investors, 30% for the University
of Oxford, and 15% each for the two academic founders.

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146 Commercializing Micro-Nanotechnology Products

Figure7.3 Source of Innovation; The University of Oxford.

Figure7.4 Richard Farleigh.

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Oxonica Plc 147

Figure7.5 Charles Eld.

The original employees of Nanox were a mix of experience and young blood. Dr.
Wakefield joined the company to lead the research. The ex-head of R&D of a large
corporate was hired as part-time CEO and Chairman. In addition, Oxonica hired a
business development director, process manager, and administrator. Nanox funded
a post-doctoral worker at the University of Oxford to continue to develop field emis-
sion display technology. The new company had five employees.
The board consisted of the two founding investors, with Charles Eld acting as
finance director, a representative from Isis, the two academic founders, CEO and
business development director. This appears to be a fairly typical board composition
of an early stage spin-out, which also tends to be very operationally focused. In the
early days, this focus on operations is paramount in ensuring that the basic tasks of
setting up and running a business are managed.
Nanox was founded with an exclusive licence to two areas of intellectual prop-
erty: nanoparticle phosphors and doped metal oxides for improved UV absorbers.
The small spin-out team focused on the development and marketing of the phosphor
technology for field emission displays to allow the use of lower voltages. The key
challenges facing the team were:

Developing a reproducible manufacturing process to scale up production

Demonstrating the application low voltage performance of the phos-
phors across larger screens
Improving the formulation/dispersion of the materials
Securing commercial partners

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148 Commercializing Micro-Nanotechnology Products

These themes became the common challenges for all the subsequent projects
undertaken by Nanox/Oxonica, with the only difference being the application.
After about 12 months, commercial realities became clear. The phosphor market
was largely controlled in the Far East, and the displays market had too many compet-
ing technologies. Field emission display had significant technical challenges and was
not the leading technology. Indeed, no companys field emission systems are being
marketed at present.
The board reviewed its options and concluded that there was a need to diversify
the product potentials and initiated a period of research activity to achieve this.

A Change at the Helm (20002001)

As part of the strategic review, the board concluded that a full-time CEO was
required to focus the business on new commercial opportunities and to drive rapidly
the execution of these opportunities. The part-time CEO was asked to step into this
expanded role. At the same time, he was also being asked to increase his commitment
to another company in his portfolio, which had established revenues and profits and
hence a greater degree of security. After careful consideration, the CEO elected to
step down from an executive role at Nanox, although he stayed on the board as a
nonexecutive director.
This was a critical time for Nanox, with no clear direction, no day-to-day leader,
and the company beginning to run short of cash. Despite this background, the board
persuaded Edward (Ted) Mott to join as Chairman of Nanox, with the clear remit
of refocusing the company and hiring some commercially-oriented executive man-
agement. Mott came to the company with a strong background in finance and the
development of business as well as considerable experience of Asia.
Mott faced a major task to begin the transition from a research culture to a prod-
uct-focused business. The key challenges were to secure additional funding to keep
the company alive while a clear business plan was pulled together and a management
team was hired. He successfully raised around 200k in angel financing by October
2000, including an investment from his own fledgling fund, Oxford Capital Partners.
Mott started to change the company culture, shifting out of the comfort zone and
investing a lot of time in trying to identify and analyze the opportunities. This was
a difficult time for the company and many of the individuals. In December 2000, he
hired Dr. Barry Park (currently Oxonicas Chief Operating Officer) to commercialize
the sunscreen technology in-licensed from the University of Oxford and brought in a
finance person to strengthen the business planning and financial controls. In January
2001, Mott hired me as full-time CEO.
Soon afterward, Mott left the board to focus more on building a leading Oxford-
based venture fund in Oxford Capital Partners. He has subsequently remained close
to the company as an investor and supporter.
At the same time, the company sold the Nanox name to Elementis plc (a U.K.
Specialty Chemical company) and renamed itself Oxonica. This name change coin-
cided with my joining the company in April 2001 and the subsequent crystalliza-
tion of the model and focus that has carried Oxonica through to being a leading

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Oxonica Plc 149

Figure7.6 Dr. Kevin Matthews, CEO, focused on new materials.

Figure7.7 Oxonica Logo.

international, publicly listed nanotechnology company. I believe this period was an

important landmark for the company and the culture.
My background had allowed me to build a range of operational experience that
subsequently proved critical in my role at Oxonica. I had studied chemistry at Oxford,
gaining a D.Phil. in organic chemistry, and had then moved into the chemical indus-
try, working for ICI, Albright & Wilson, and Rhodia S.A., where I held management
roles in technical, financial, and business areas. My role prior to joining Oxonica was
as a global business director for a fast-growing, innovation-led specialty chemicals
business. One of the product areas within this business was based on surface tech-
nologies, where I had my first exposure to nanotechnology. I started to appreciate
the technology and commercial opportunities that a greater understanding of how
materials function at the nanoscale could provide. As a direct consequence of this,

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150 Commercializing Micro-Nanotechnology Products

I began to seek opportunities more specifically in the nanotechnology space that

would also bring with them the additional experience of financing growing busi-
nesses, and I found Oxonica.
My immediate priorities as the new CEO were to build and expand on the reform
started by Mott. The key actions facing me were to change:

An operational board into a strategic body focused on ensuring the com-

pany remained funded, with a clear direction and with the appropriate poli-
cies and reporting in place
A business with patents and research skills into a commercial product-
focused operation that was responsive to customer need
A business with eight weeks money left in the bank into a properly funded
operation with the capital resources to achieve its vision

It is worth highlighting the key contribution that Charles Eld made at this time.
Eld is one of the original angel investors and characterizes many of the key attributes
that an angel can bring to the table to help an early-stage company develop. He is a
pragmatic, hands-on investor I am sure a proportion of the executives reading this
will groan at the statement. Another interfering busybody investor who rings me up
everyday to check on progress? Wrong! Eld was acting finance director, and when
Mott resigned, he stepped into the role of chairman. He actively engaged and pushed
forward the preparation of a draft business plan and initiated a number of investor
meetings to take place on my arrival. On the day I joined, Eld made it clear to me
that I was the CEO and that he would not interfere and undermine my authority but
would be available if I needed advice and would help whenever requested. He then
handed over the reins of Oxonica. He stuck by this philosophy, even when times
were difficult. In addition, he backed the business with cash, which helped to build
confidence with other investors when it was hard to secure funding in early 2001 and
allowed us to raise 480k in the summer of 2001.
From my own experience, I conclude that early-stage technology companies
have specific challenges:

Finding suitable investors with balls who will back the management
and the vision even when ultimate success looks difficult. There are few
companies that drive forward at the edge of technology innovation that do
not have setbacks or delays. Therefore, it is important for early-stage com-
panies to find investors who recognize the risks and are investing in the
fundamentals. The focus can migrate to the business plan, revenues, profits,
etc., as the business development stage matures.
Persuading individuals who have relevant business experience to join the
board and the management team. This issue often comes down to the cred-
ibility of the start-up will it survive? The fact is that many of the most
desirable individuals for such a company are in secure, well-paid roles with
major multinationals. Luring them into a high-risk venture with no market
presence, little support infrastructure, and a questionable cash position is
nontrivial but critical to success.

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Oxonica Plc 151

Not spending enough time on marketing. This is especially true I believe

for science-based companies where the natural desire is to sort out the tech-
nology before engaging the market.
Securing the first deals. Start-ups have no history and no brand value and
hence very little credibility (even if originated from a university with a brand
respected all over the world). Therefore, customers are extremely skeptical
of the products, the company, the benefits being offered, the ability to sup-
ply, etc. The onus is on the start-up to be even more professional than the
blue-chip, to deliver above expectations on every interaction, and to be open
about issues in order to overcome the not invented here syndrome.
Managing the evolution of the board and the senior management team in
line with the growth and development of the business.

My immediate focus was to define what Oxonica was trying to be. This trans-
lated into an intense activity on the strategic plan to define the mission and target
markets. This resulted in a business plan underpinned by a clear portfolio rationale
that was focused on risk, reward, and resource. The business was early stage and had
a number of opportunities it could pursue. The pipeline analysis clearly highlighted
the need for the immediate focus to be on shorter time-to-market opportunities,
which would be both attractive to investors and build capability within the company
to commercialize products and become self-sustaining. Hence product develop-
ment was focused on a fuel-saving technology for diesel vehicles and a UV absorber
technology for cosmetics. The opportunity pipeline was maintained with a minimal
investment in clinical diagnostics and externally funded early-stage research in the
areas of solar cells and security labels.
The projects were managed through a gate process that is represented in
Figure7.8. Analysis of the pipeline at the time clearly demonstrated that all the proj-
ects were early stage but with some significant market opportunities. Therefore, the
next challenge was funding. It was clear that to be successful the company needed
to raise a significant amount of money to move from having concepts to introducing
tangible products that could be commercialized. The assessment was that we would
require 4 m. It seemed unlikely that the company could sensibly raise this amount
of money from private individuals in 2001. The cracks in the dotcom boom were
starting to emerge, so we focused on securing enough financing to carry us through
to a venture capital (VC) funding round targeted for the end of 2001. So, from having
eight weeks money when I joined the company in April, we closed a private inves-
tors round that raised 480,000 in July/August. Our burn rate at that time was about
80,000 per month, and we calculated that we would end the year with 40,000 in
the bank.

Raising VC Money 20012002

During the summer of 2001, Oxonica raised sufficient funds from high net worth
individuals to allow the company to begin to develop its core products. To be suc-
cessful in the longer term, however, the company still needed to raise significant
funds from the venture capital market. We recognized that we had little expertise

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152 Commercializing Micro-Nanotechnology Products

Product Pipeline

Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Idea Feasibility Proof of Scale-up Pre-commercial Commercial

Solar Cells

Fuel Emission


Figure7.8 Oxonica pipeline in 2001.

in securing VC money within the organization and appointed First Capital as our
corporate finance advisers.
We prepared the business plan and investor presentation and launched a new
venture capital financing round on September 9, 2001, two days before the tragic
terrorist attacks in the U.S. In response to these events and the uncertainty around
the world about the potential impact of terrorism, the financial markets immediately
turned extremely risk-averse. We realized some funds would withdraw from financ-
ing early-stage technology companies but were not clear which these would be. We
therefore felt compelled to launch a broad approach. About 90 venture capital groups
reviewed our business plan. We drew a broad geographic range of interest in the U.S.
and Europe as well as the U.K. I had face-to-face meetings with some 55 VCs, 36
of which proceeded to follow-on meetings. This was a very demanding period, with
the cash position yet again becoming a concern, up to eight intensive meetings a day,
and the business to run. It reminded me of a trait that a previous mentor had said was
a pre-requisite to be successful in business stamina. It was exhausting! All of this
activity resulted in only a single term sheet: despite all the interest from venture capi-
tal groups, only one had the risk appetite to lead our financing Foresight VCT.
The Foresight term sheet arrived in late November, and it took until February
2002 to agree to the terms and construct a syndicated investment. Our forecast had
been that we would finish 2001 with 40,000 in the bank, and we did. Our burn rate
was still 80,000 a month, but we had already taken steps to generate cash, which
enabled us to continue until June 2002 without further capital-raising. This was not
without some ingenuity. Each month we started without enough cash to finish the
month, but despite that, we never missed a salary run. We got a government R&D

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Oxonica Plc 153

tax credit, did contract work, and took a loan underwritten by the DTI in fact,
anything reasonable and legal to bring in cash. This was a business stage when both
hard work and grim determination were required. The Oxonica board recognized
that the company could only continue to trade if it believed substantive financing
was possible in a realistic timeframe. Without that belief, the company would have
been technically insolvent. The reputations and credibility of all the directors were
at stake, but we kept going and were able to close the venture capital round.
We had been selective over who came into the investment round and had
attracted companies such as the venture arm of the multinational German chemi-
cal giant BASF; two top-performing U.K. VCT funds, Foresight VCT and Trivest
VCT; Northern Venture Managers; Generics Asset Management; and NGen Partners
(aCalifornia based fund) overall a solid group of investors, with capacity to sup-
port the company in further financing rounds.
The fundraising was a difficult time for many people in Oxonica because we kept
changing priorities. If something else could generate immediate cash, we switched
to doing it. Yet we did not lose a single employee of the 12 we then employed through
the whole of that difficult year. We closed the financing in June 2002, and only then
could we really drive things forward. That 2002 VC (venture capital) round brought
in 4.2 million. The company won an award for the deal based on the fact that only
40 similar stage companies had received VC financing in H1 2002 across the whole
of Europe. Looking back, I do not think we would have been so confident at the
board table staring insolvency in the face had we known the odds we were playing
against. The harsh reality is that there were probably other companies with an invest-
ment-worthy business plan that did not survive you are reading Oxonicas story
now partly because we were able to raise money in a difficult financial market.
At the same time as closing the VC round, the board composition was changed to
reflect the new challenges and ownership of the company. Farleigh, Dobson, Wake-
field, the previous CEO, and the business development director all stepped down.
Representatives from Foresight and NGen joined the board, with Charles Eld con-
tinuing as chairman.
Personally, I had achieved the three objectives I had formulated on joining
Oxonica. The strategy was set, the business was funded, and the focus was now
on execution. We subsequently raised two further rounds of venture financing to
support development of the business. The first rights issue at the beginning of 2004
raised another 4 million, the majority of which came from the existing investors.
The second rights issue in Q1 2005 raised 2.6 million.

Go to Market 2002-2005
Business Model
Oxonicas mission statement is to develop innovative commercial solutions for inter-
national markets using the groups expertise in the design and application of nano-
materials. The business model Oxonica has chosen focuses on the groups strength
in identifying market opportunities, securing intellectual property, and introduc-
ing new technology to the market. The groups operational strategy is to introduce

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154 Commercializing Micro-Nanotechnology Products

End User
Identify Market Opportunities
Develop Commercial Solutions


Figure7.9 Oxonica has a highly leveraged model.

products to large end user markets to establish the customer value proposition, cre-
ate customer demand, and outsource manufacturing. The group then seeks to form
strategic partnerships with recognized industry leaders to accelerate and maximize
market reach.
The focus on market opportunity has resulted in the application of Oxonicas
broad based technology in a number of different industry sectors. This creates some
unique challenges in terms of managing the complexity of the business. The opera-
tional strategy the business has developed to address this complexity consists of two
main themes.

Partnerships and Intellectual Property

Oxonica focuses on product definition and application but outsources manufactur-
ing. In addition, Oxonica demonstrates market acceptance and price points through
focused niche or lead customer sales. To access the volume market, Oxonica seeks
to form strategic partnerships with organizations that already have the sales chan-
nel, market interface, and brand recognition in place. The model is exemplified in
Oxonica is structured corporately around market-focused operational divisions.
The Oxonica Group currently has four divisions: energy, healthcare, security, and
materials. As projects move through the pipeline and cross over from proof of con-
cept to scale-up, the risk profile is judged to be sufficiently lowered to allow the
recruitment of industry or domain specialists. Hence each division with products on
the go-to-market track is headed by a senior industry professional.
The other area of core focus for the group is intellectual property (IP), including
patents, trade names, and know-how. Ultimately, IP is Oxonicas core asset and is
actively managed. Oxonicas COO has considerable experience in prosecuting pat-
ents and initially had the principal role in liaising with the companys patent attor-
neys. However, as the portfolio grew and the activity dealing with the prosecution
increased, the company employed an experienced IP manager to manage the patent
portfolio on a day-to-day basis. The portfolio is reviewed regularly by the senior
team in order to both manage internal IP and maintain and develop knowledge of
external IP, always working to optimize an IP position that can be exploited as part

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Oxonica Plc 155

of Oxonicas commercial strategy. Oxonica currently maintains a portfolio of ca. 50

patent families, with around 210 national applications.
Oxonicas activities in nanotechnology are specifically in the area of nanoma-
terials. These products are specifically designed and engineered at the nanoscale to
have novel properties. The team has expertise in solid state physics, chemistry, engi-
neering, and biochemistry and uses a multidisciplinary approach. Oxonica has been
able to design and develop inorganic-based materials that deliver specific functional
benefits, often combining them with organic or biochemical systems. One of the key
challenges in the manufacture of nanomaterials is keeping them nano, stopping
them from forming larger particles in the product application. This often requires
the development of specific coating technology.
The key generic advantages of the Companys products are:

Stability and robustness to both heat and light and transparency

Significantly increased surface area as a percentage of total material
thereby increasing chemical reactivity
Functionality that is either novel or significantly enhanced relative to exist-
ing solutions

Two of Oxonicas products, Envirox fuel borne catalyst and Optisol UV

absorber for cosmetics, may be considered in order to exemplify the generic features.
Envirox combines the heat stability of an inorganic material with the significantly
enhanced surface area characteristic of small particles. This has led to a product that
improves the combustion of diesel fuel. Regarding Optisol, the UV light stability and
efficient UV absorbance of inorganic materials (titanium dioxide or zinc oxide) is
combined with a chemical additive that results in the undesirable UV radiation from
sunlight being converted into small amounts of heat, leading to a product technology
with significant performance advantages in UV protection.

Envirox Fuel Borne Catalyst for Greater Fuel Efficiency

Envirox is a fuel borne catalyst shown to yield significant improvements in diesel
fuel combustion with resulting benefits in fuel consumption and emissions reduction.
The product was launched in 2003, and fleet trials to date have demonstrated fuel
savings from 5% up to 11%. In addition, separate studies have shown a reduction in
particulate emissions by up to 15%. Envirox also contributes to the reduction of the
greenhouse gas carbon dioxide (CO2). For every tonne of fuel saved, about three
tonnes less CO2 is produced and released into the atmosphere. Envirox is marketed
based on the economic advantages of saving fuel and additional benefits to the envi-
ronment. Envirox is typically sold with 1 liter of concentrate treating 4000 liters of
diesel. No engine modifications are required to use Envirox.
Referring to the business model discussed previously, Oxonicas initial focus
was on gaining a lead customer. The niche identified was transport and specifically
buses. This was driven purely on pragmatic grounds; buses operate from depots that
have their own fuel storage tanks, hence simplifying the fuel addition process.

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156 Commercializing Micro-Nanotechnology Products

Figure7.10 Particle size determination for Envirox.

The lead customer identified was Stagecoach Group plc, a leading U.K.-based
bus operator. Following a successful 12-month trial, Stagecoach agreed in November
2004 to adopt Envirox for use across its entire U.K. bus fleet. The trial conducted
with Stagecoach involved 1500 buses in two regions of the U.K., 12 depots, and 15
bus/engine combinations. The headline results from the trial indicated a fuel savings
of greater than 5%.
Having secured a lead customer for Envirox, the marketing focus switched to
identifying potential channel partners to access the volume market and specifically
the non-depot based passenger vehicle and truck market. In the case of Envirox, the
obvious partners were fuel companies. The issue was how to position the product.
Clearly, when selling to a fleet, the message is simple: save fuel save money. The
oil company sale was more complex: save fuel reduce turnover does not work.
The answer is that the sale of fuel to consumers takes place in a competitive market
with relatively few differentiators: brand national or international, price or per-
formance. Therefore, Oxonica is selling a claim set to the fuel companies supported
by laboratory and field test data allowing them to differentiate their diesel fuel with
Envirox. The fuel company can then either charge a premium for the fuel or increase
market share, or it can do both.
In August 2006, Oxonica announced its first major oil company deal with Petrol
Ofisi A., the Turkish national oil company. This represented the first major use of Envi-
rox in the consumer market and was a significant step for both Envirox and Oxonica.
The size of the global market, estimated by considering Envirox is used in all
diesel fuel consumed in transport and off-road uses, results in an addressable market
of approximately $3 billion.
From a personal perspective, I believe that Envirox also offers a real and tangible
way of reducing carbon dioxide emissions. A great deal of effort is being invested
by many companies globally in trying to find the breakthrough, game-changing,

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Figure7.11 Petrol Ofisi forecourt with performance diesel fuel.

technical solution to the carbon dioxide emission problem, but in all cases it appears
that these are some ways off. There are many technologies and products sold today
that can give immediate and cost-effective benefits in terms of energy efficiency and
hence emission reductions. More priority and support should be given to these quick
wins to slow down the generation of greenhouse gases. In the case of Envirox, a 5%
fuel saving in the fuel supplied by Petrol Ofisi translates into 200,000 metric tonnes
of carbon dioxide saved annually.

Optisol Photostable UV Absorber

Optisol photostable UV absorber was launched to the suncare/cosmetics market in
April 2004. UV absorbers are active ingredients typically found in sunscreen products.
The performance of these ingredients essentially supports the performance claims on
the product packaging, e.g., sun protection factor (SPF) 30. As such, Optisol is an
ingredient sold into a consumer market in much the same way as Envirox. However,
the cosmetics and sunscreen market is a market that is much more complex than retail
fuel sales, with many more performance claims made for products and ingredients,
much more sophisticated claim language, and many more brand choices.
The major trends within the skincare market are continuing strong growth in the
overall suncare market being driven by public concern about the effects on health of
exposure to sunlight:

Increasing use of anti-aging products

Increasing incorporation of UV absorbing ingredients into everyday products
Increasing use of products containing sensitive components such as vita-
mins and natural products

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158 Commercializing Micro-Nanotechnology Products

Leading brand V Leading brand X Leading brand Z

Leading brand W Leading brand Y OptisolTM formulation
Mean UVA:UVB Ratio Per Unit Wavelength





0 1 2 3 4 5 6 7 8
Time Solar Exposure (hours)

Figure7.12 UVA/UVB ratio measurement demonstrates the relative photostability of a

sunscreen formulation containing Optisol.

The total materials market for UV absorbers was estimated to be between $250
million and $350 million in 2004.
In tests, when compared with a wide range of commercial sunscreens, a formu-
lation containing Optisol can achieve the highest ratings, with a sustained level of
protection against UV that is stable for more than eight hours. All other products
tested showed significantly inferior performance over the same period. Optisol has
been proven to reduce the production of free radicals, highly reactive chemical spe-
cies produced from exposure to the sun that contribute to long-term skin damage and
premature aging. Optisol has also been shown to be highly effective in stabilizing
other high-cost, photosensitive components in a cosmetic formulation such as vita-
mins C and E and kinetin.
Adopting the same approach as used for Envirox, Oxonica marketed Optisol
to branded cosmetic companies to secure niche access and lead customers. A key
milestone was the decision by Boots, who have a leading U.K. sunscreen brand, to
formulate Optisol initially into a facial product for the 2005 season as part of their
Soltan range. Initial sales to Boots were made in February 2005, and subsequently in
2006, Boots extended the use of Optisol into a once-a-day application product called
Soltan Once. Optisol enables an antiaging claim for the facial product. For Soltan
Once, the claims are high performance UVA protection with a Boots 5-Star UVA
Rating and a photostable (does not breakdown in sunlight) product with performance
maintained for up to six hours for a variety of SPF levels.

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Oxonica Plc 159

Adhering to the business model, Oxonica outsourced the manufacture of Optisol

to Umicore, a Belgian-listed multinational.
Consumer marketing is based on established brands, and it is therefore important
that Oxonica is successful with brands and category leaders to establish Optisol as a
key technology. The producers of sunscreen products and antiaging cosmetics include
many leading cosmetics and personal care companies such as LOreal, Beiersdorf,
Johnson & Johnson, Schering Plough, and Estee Lauder. In order to upscale signifi-
cantly the direct interface with the key brands and formulators, Oxonica concluded an
exclusive partnership in December 2005 with Croda International, a U.K. Specialty
Chemicals company with a major focus on personal care, to distribute Optisol.

Corporate Development 20022004

The key aspect of the corporate development of the organization from 2002 to 2004
was managing the shareholder base. As a result of the VC investment in 2002, a
discontinuity was created between the original investors and the VCs due to perfor-
mance clauses in the investment agreement.
Over the course of two years, this led to an
investment agreement with three classes
of preference share, a complex catch-up
mechanism that was formulaic and was
dependent on the original share price paid
by the investor. Overall, the agreement
was fair to all the investor parties but was
difficult to understand and in effect made
an investment from a new investor almost
impossible. Despite these constraints, the
board of Oxonica understood that to be
successful we needed to continue to secure
investment and probably to list on a pub-
lic market in due course. In early 2004, it
was clear that we needed to take two key
actions: strengthen the board and simplify
the capital structure.
In Q1 2004, the directors recruited
Christopher Moore as chairman, who
brought a strong track record in corporate
finance and venture capital, and in Q2
Richard Clarke as finance director, bring-
ing experience of public markets. This
also simplified the CEO role as intended
and allowed me to have a greater focus on
the commercial and operational aspects of
the business.
Figure7.13 Diagram of Boots Soltan
Facial Sun Defense Cream.

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160 Commercializing Micro-Nanotechnology Products

In the second half of 2004, the strengthened board focused on negotiating the
simplification of the capital structure with the various parties. In January 2005, this
culminated in the completion of a rights issue, raising 2.6 million. Oxonica had
now created a simplified capital structure with one share class, no preferential rights
for any group, and was therefore ready for a listing on a public market.

Floating On Aim
In the summer of 2004, Oxonica began to consider the feasibility of a public listing.
We met with a number of advisors and decided to appoint Panmure Gordon as our
corporate finance advisor. We changed our accounting firm to KPMG and our cor-
porate lawyers to Hammonds. The fundamental reasoning for these changes was that
as a company we had significant aspirations, and we felt that aligning the company
with high-caliber advisors would support the positioning of Oxonica as a leader in
the nanotechnology field.
Immediately following the rights issue in January 2005, we began to prepare for
going public, working on audit reports, the prospectus, patent attorney reports, and
an independent technical market report. We were making good progress on prepara-
tions for floatation when, around April, it became apparent that 7 million in capital
was already available from a combination of current investors and other parties such
as Stagecoach plc, who wanted to make an investment following its successful trial
of Envirox in 2004 and its decision to adopt the product. Our plan had been to raise
only around 8 10 million at the Initial Public Offering (IPO). Thus, we were
faced with a dilemma: If we carried out a full-blown listing, with an institutional
road show, we would almost certainly risk having to cut various parties back on
their preferred level of investment, thus disappointing either our current investors or
the incoming institutions. We decided to do a private round, raising 8 million, fol-
lowed by admission onto the London Stock Exchange AIM (Alternative Investment
Market). The potential benefits of admission were an important aspect of the fund-
raising. Firstly, we felt we needed to be public to improve corporate credibility and
visibility. Secondly, we wanted to be on the market so that we could begin to build
relationships with institutions and potentially respond rapidly to favorable market
conditions if we wished to raise further funds. Thirdly, it would make it possible to
use our paper in acquisitions. The downsides were also clearly understood: higher
reporting and corporate governance requirements. Also, the admission did not create
an exit event, nor did it create significant liquidity. On admission to AIM, the inten-
tion was to carry out either a future fundraising of primary capital or to organize
a structured secondary offer to facilitate the transfer of ownership from the private
shareholders to institutions such that the free float approached 20% or more and
allowed a normal market in the companys shares. Limited liquidity or a low trading
volume can mean that the share price is very susceptible to individual trades, which
can result in either the share price moving too high or too low and not tracking the
company performance.
Oxonica was very lucky with its founder investors. Richard Farleigh started
out with 20% of Oxonicas shareholding and has generally maintained his posi-
tion through the various rounds, now owning around 17%. He has achieved this

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Oxonica Plc 161

by following his money at key stages of the companys development, including an

investment of 3 million on admission to AIM in 2005. Farleigh was on the board in
the early days. From my experience of him over the last five years, I have developed
a great deal of respect for him. He is a very smart investor with a lot of experience
of financing structures, and he invests on the basis of the fundamentals: big markets
with clear macro-drivers; innovative technology that could be a winner; strong man-
agement teams. He is also willing to be patient, recognizing that real and substantial
value takes time to build. Farleighs recent involvement in the BBCs highly success-
ful television series Dragons Den has significantly increased his public exposure.
Because of this, he is probably not only Oxonicas biggest investor but also the most
well-known investor by the man on the street.

Pipeline Development
I have already spoken about the commercial products that Oxonica has developed
and launched. In addition, the group has a technology and commercial pipeline that
it is continuing to bring forward. The development of the Nanoplex technology is
a specific example of Oxonicas market focus.

Nanoplex Technology
Back in 2001 when we were deciding on the market areas to prioritize, diagnostics
was highlighted as having significant potential. A key fundamental driver for change
in the clinical diagnostics industry is the need to reduce treatment costs and improve
medical outcomes. There is a growing recognition by the health services, the phar-
maceutical and the diagnostics industries of the potential to improve healthcare by
a closer integration of treatment and diagnostics. Diagnostics have the potential to
impact throughout the medical process via developments in genetic profiling being
used to identify a latent health risk; improvements in the level of information from
conventional diagnostics (e.g., subtype of disease, stage of development of disease);
more rapid diagnostics to inform medical treatment in a timely fashion; the oppor-
tunity for instantly available personalized medicine, with a better match between a
drug and a patient (thereby reducing adverse drug reaction, which currently costs the
U.S. healthcare industry $130 billion per annum); and increasingly accurate moni-
toring of treatment and progress (theranostics). The establishment of a new gen-
eration of diagnostic testing technology that would allow faster, more precise, and
lower cost diagnostic testing is a key technical requirement to facilitate the required
industry changes.
Oxonicas original activities in this space were focused on quantum dots, which
are semiconductor materials with a light emission frequency (color) determined by
the specific nanoparticle size of the material. However, these semiconductor materi-
als are typically based on toxic elements, and the amount of possible simultaneous
detection of multiple colors or multiplexing is limited. Also, the sensitivity improve-
ments do not appear to provide significant improvements over incumbent technol-
ogy. So we looked at the feasibility of making tags based on complex inorganic
materials called polyoxometallates. This approach required a very specific synthesis

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162 Commercializing Micro-Nanotechnology Products

of a different material for each color. We abandoned this approach after about six
months as we realized that it was not possible to build a sufficiently large palette of
differently colored materials. This work, however, began to crystallize the technol-
ogy requirements: a convergent synthetic route leading to many unique or fingerprint
labels; significant improvement in absolute sensitivity; and good signal to noise ratio
relative to the background, which in this case would be biological fluids.
In early 2003, we identified a technology based on a technique known as Sur-
face Enhanced Raman Spectroscopy. Oxonica in-licensed this technology from the
University of Strathclyde and began to invest in developing the science into a com-
mercial product. Oxonica successfully secured a 450,000 DTI exceptional SMART
award over two years starting in January 2004, which contributed towards the costs
of demonstrating the marker technology. In late 2004, we became aware of a pat-
ent belonging to Nanoplex Technologies Inc., a company based in Mountain View,
California. It was immediately clear that these technologies were complementary.
We recognized the potential to act to consolidate and strengthen the intellectual
property position through an acquisition or joint venture. Nanoplex Inc. had a strong
technology team, led by Dr. Michael Natan, and needed to recruit commercial expe-
rience. Oxonica had a strong commercial team led by David Browning, who headed
up the healthcare activities. Oxonica had considerable commercial experience in the
clinical diagnostics market but needed to upscale its technology development activi-
ties. Thus the business needs were complementary, and the negotiations to acquire
Nanoplex Technologies Inc. began in earnest in September 2005.
We completed the acquisition of Nanoplex in February 2006, making the acqui-
sition for stock enabled by the fact that Oxonica went public in July 2005. The acqui-
sition allows the Nanoplex shareholders to participate in the growth of the combined
entity or to secure an exit.
The technology is currently being developed into a prototype with comparative
testing against current detection systems and assay formats. A prototype multiplexed
lateral flow device (LFI) to test for Flu A, Flu B, and Respiratory Syncytial Virus
(RSV) all together was showcased shortly after the acquisition was completed. This
simple device requires only a spot of saliva from the patient and can be easily read
and understood in minutes. The markers for these infections are visualized using cur-
rently available commercial equipment and tailored software. The LFI format already
has commercial application in point of care devices, including over-the-counter appli-
cations for pregnancy testing, but these are normally limited to yes/no single disease
detection. In a few cases, limited multiplexing has been achieved through spatial
separation on the test device. We believe that our showcased device where multiplex-
ing has been achieved without using spatial resolution offers a route to assays that are
easy to use and that provide significantly more information in one test.
Despite a number of potential end markets for this technology, including clinical
diagnostics, life sciences, veterinary, food testing, and bioterrorism, Oxonicas initial
focus has been on point of care applications that are easy to use. Oxonica has car-
ried out a detailed market analysis to assess the large number of product applications
possible and to establish which markets we need to partner to secure skills, market
access, or intellectual property. The analysis also sought to discover which mar-
kets have sufficiently low entry barriers for Oxonica to consider developing its own

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Oxonica Plc 163

Figure7.14 Rapid simultaneous measurement of disease.

products aimed at such markets. Oxonicas first major deal in the in vitro clinical
diagnostics space was concluded in August 2006 with Becton Dickinson, a leading
U.S. medical solutions company.

Other Pipeline Technology

Solacor UV protection for plastics and coatings
Initial data have demonstrated that Oxonicas Materials UV protection technology,
based on manganese-doped titanium dioxide or manganese-doped zinc oxide, can
provide benefits in stabilizing plastics and coatings from UV-induced damage. Poly-
mers, plastics, coatings, and textiles are all degraded by UV, which affects appear-
ance, mechanical properties, and performance. Oxonica is currently working to
identify a manufacturing partner who can make high volume material at relatively
low cost.

Security Markers
Losses from counterfeit goods are estimated to exceed 400 billion per annum. The
marker technology being developed for the clinical diagnostics program may also have
the potential to lead to commercial applications in security markets. Oxonica is in early-
stage discussions to consider developing a product for anti-counterfeiting requirements.

The Total Pipeline

Oxonicas pipeline now looks very different from the one from 2001. Several of the
programs are now either commercial or precommercial. The focus will remain for
the foreseeable future on ensuring the products already developed are marketed into
the volume markets. Estimates of the size of the markets that are being targeted add
up to more than $10 billion. So the challenge is not chasing bigger markets but now
executing on the marketing strategy and gaining market share.

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164 Commercializing Micro-Nanotechnology Products

Product Pipeline

Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Idea Feasibility Proof of Scale-up Pre-commercial Commercial



Figure7.15 Oxonica pipeline in 2006.

The Nanotechnology Debate

The Oxonica Groups approach to the safety and risk assessment of all its products is
based on a duty of responsible care throughout the product lifecycle.
Currently, the natural background levels of nanoparticulates mainly comprise
emissions from traffic, energy production, and mechanical abrasion processes rather
than being due to emissions from developing technologies and products associ-
ated with industrial nanoparticulate materials production. Natural aerosols, since
the Stone Age use of fire, have contained significant amount of nanoparticles, and
humans appear to have developed considerable tolerance to this form of materials.
However, there is also clear evidence that prolonged or elevated exposure to certain
particulate materials increases risk of adverse health effects, and this is particularly
true for certain forms of nanoparticulate, e.g., asbestos.
Oxonicas position on its products is therefore to carry out appropriate health,
safety, and environmental studies during the product development process to enable
a thorough risk assessment. These typically go beyond what is required for regulatory
requirements. At the same time, Oxonica aims to work with agencies to try to estab-
lish best practices and to encourage the introduction of proportionate regulations.
There is another aspect of nanotechnology, however, and that is perceived risk.
The perceived risk is often driven by scare stories classifying all nanotechnology
and nanomaterials together. This could be seen as similar to classifying all medi-
cine alongside thalidomide. Oxonica has undertaken public engagement activities
and works towards encouraging a balanced debate including the recognition that
some materials may carry risk and require appropriate testing and that certain prod-
ucts, among them products being developed by Oxonica, can deliver health and envi-
ronmental benefits.

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Oxonica Plc 165

Oxonica secures expertise in this area through a virtual team of independent

experts engaged to provide advice on the whole range of regulatory, safety, health,
and environmental requirements. Oxonicas work in this area will continue as we
bring more products to market. The company takes this aspect of the development
of nanoparticles seriously and is represented on a number of panels and international
bodies to continue to promote best practices in the Industry, including being a founder
member of the Nanotechnology Industry Association in the U.K. and Nanosafe, an EU-
funded project specifically set up to consider the risks associated with nanomaterials.

The Future
Oxonica has now moved into a new phase in its development. The strategic plan
laid out in 2001 has been executed, and the company has a portfolio of product
opportunities. The level of revenue generation from these products has resulted in
the company having significantly more flexibility and control with regards to its
financing activities.
Looking to the future the key challenges facing the business are to:

Consolidate its commercial positions

Grow market share in the commercialized products
Drive the pipeline to launch new products
Build out the global organisation to deliver the first three points
Continue to develop the shareholder base and drive enterprise value

A Personal Perspective
Money-raising can create anxiety and self-doubt, but, provided you believe in the
future of the company, the employees, the IP, and the unique products or expertise of
the company, you must give it your best shot.
Trying to drive through a new technology to market is extremely difficult, whether
in a large or a small company. The resilience and determination of the management
team and the investor base are both key to the successful growth of a young business.
One of my biggest challenges when I joined Oxonica was to get the organization
to accept the need to look outside and to be more inventive in its application of the
technology. I wanted to focus everyone on being driven by satisfying a market need,
even to the point that if any in-house technology, usually developed at great expense
and with much pride and excitement, fails to meet a market need, then ruthlessly
abandon it and seek another technology.
Building a public company from a university spin-out is all about giving people
the opportunity to influence their own future and to be part of a high-performing
team working on exciting projects that can make a real difference to our everyday
lives and producing profits for the shareholders.

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8 Providing Nanotechnology
Zyvex Corporation

Solutions Today
James R. Von Ehr II


A Nanotechnology Vision Authors Note.......................................................... 167

The Zyvex Vision.................................................................................................... 170
Market Pull or Technology Push?........................................................................... 171
Funding Research................................................................................................... 173
Engineering to Development.................................................................................. 176
Just Add Marketing................................................................................................. 176
Listening to the Customer....................................................................................... 177
Importance of the Lead Customer.......................................................................... 180
Focus 183
Processes................................................................................................................. 183
Broadening the Product Line.................................................................................. 184
Partnering............................................................................................................... 185
Final Thoughts........................................................................................................ 186
References............................................................................................................... 187

A Nanotechnology Vision Authors Note

I started Zyvex in 1997 to develop a new manufacturing technology that, if success-
ful, would change the world more profoundly than the industrial revolution did with
its power machinery, interchangeable parts, and factories. We call this Atomically
Precise Manufacturing, or APM. APM will give us the tools and techniques to build
objects potentially very large objects with atomic precision. Using chemistry
to provide low-cost parts and advanced engineering to provide flexible manufac-
turing systems, APM will allow us to make such varied products as advanced mate-
rials, supercomputers, and astonishing medical devices. It will revolutionize fields
as diverse as energy, transportation, and construction. Zyvexs mission is to com-
mercialize this technology.
Famed physicist Richard Feynman imagined such a technology in his 1959
speech Theres Plenty of Room at the Bottom. At least as early as 1983, Japa-


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168 Commercializing Micro-Nanotechnology Products

nese Professor Norio Taniguchi predicted that atomically precise precision machin-
ing tolerances were coming and forecasted that we would achieve that milestone
by 2015. Eric Drexler articulated a nanotechnology vision more clearly in the late
1980s, calling it molecular nanotechnology or productive nanosystems. Drex-
lers vision was fundamentally different from Feynmans and Taniguchis in that he
realized that additive manufacturing (putting atoms where we wanted them) rather
than subtractive machining (grinding atoms away from where we dont want them)
would support an environmentally clean manufacturing process and much higher
value-add in manufacturing. We like clean, flexible, high value-add manufacturing.
Such a bold and dynamic vision of course has its skeptics. Skepticism about new
things has been around since the first cave dweller learned how to keep a fire. Take
this quote from The New York Times (October 9, 1903) commenting on the prospects
of heavier-than-air flight:

It might be assumed that the flying machine which will really fly might be evolved
by the combined and continuous efforts of mathematicians and mechanicians in from
one million to ten million years provided, of course, we can meanwhile eliminate
such little drawbacks and embarrassments as the existing relation between weight and
strength in inorganic materials.

Just 2 months later, on December 17, 1903, at Kitty Hawk, North Carolina, the
Wright Flyer became the first powered, heavier-than-air machine to achieve controlled,
sustained flight with a pilot aboard. So much for the predictions of the pundits.
Civilization advances by the actions of risk takers who are willing to ignore the
conventional wisdom of the masses that follow the critics. This is true in all areas of
human endeavor, not just technology. I recently met Mart Laar, former Prime Min-
ister of Estonia and winner of the Milton Friedman Prize for Advancing Liberty in
2006 for his brave reshaping of Estonia after the fall of the U.S.S.R. When forming
a new government, he received heaps of advice from the advice professionals on
how to tax and regulate this newly independent country. He chose instead to follow
a different path, against all the conventional wisdom and tested approaches, embrac-
ing deregulation, low taxation, and trusting individuals. Ignoring the wise men of
the international development elite allowed Estonia to become the most economi-
cally free country in Europe in just a few years. Conventional wisdom is usually not
wise. Entrepreneurs must be skillful at listening for gems of wisdom in advice from
the crowd, and from old experts, but be willing to ignore most of it to follow their
own approach. The market will be our judge, not the skeptics and pundits.
Against a backdrop of skepticism, I launched Zyvex because I thought nobody
else was doing nanotechnology right. This is a risky endeavor. There are a million
ways to go wrong. However, there are also a million ways to succeed. We need to
avoid going too wrong for too long but only need to hit one right pathway to succeed.
We have the big idea and now must execute it.
Michael Porter, the well-known professor from the Harvard Business School,
says there are two basic ways to be a leader in business: either by being a low cost
producer or a high differentiator. APM will allow us to be both simultaneously.

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APM will be low cost, because the APM factory will be made with the same
technology as its products, driving the cost of the factory down as we get better at
manufacturing products in that factory. Nature works this way. A tree is an example
of natural Atomic Precision Manufacturing clean and green, making wood out
of air, water, and soil, powered by sunlight, and generating the oxygen we breathe
as a waste byproduct. And like a tree, APM should also be a clean manufacturing
technology, building things by rearranging the atoms in its feedstock materials rather
than processing vast quantities of materials while generating even larger quantities of
waste. Consider the amount of dirt that must be moved to make the steel in a single
automobile tons of iron ore, tons of coal to refine it, and tons of CO2 blown into the
air in the process. The machining of that steel generates even more scrap as we use
expensive precision machine tools to scrape away everything that isnt the shape of
the finished part. APM will allow us to manufacture in a better way, ultimately work-
ing from liquid or gaseous feedstock, and producing little or no waste. Of course,
early implementations are unlikely to be so clever and efficient, but just as improve-
ments in silicon technology affect all new integrated circuits from that point forward,
improvements in APM will affect all new products made with those systems.
With APM, we will also be able to customize products during manufacturing,
leading to high differentiation. The heart of our planned APM system is a program-
mable nanomanipulator able to direct chemical reactions to take place precisely
where they are desired building objects one molecular fragment at a time. Mas-
sive parallelism will simultaneously manufacture huge numbers of structured build-
ing blocks, which can then be assembled into larger and more complex assemblies.
Treating matter as digital information in this fashion will allow the economics of
software to apply to physical objects.
Designing atomically precise structures will be as complex and expensive as
designing a modern integrated circuit, but building huge quantities of those struc-
tures will be as cheap or cheaper than manufacturing integrated circuits. This
is because we apply the economics of digitization to matter, and this digital approach
will let us do for manufacturing what digitization has done for computation, control,
and communications. Precise, digital manufacturing will also allow us to control
errors and tolerances, which will allow us to make systems orders of magnitude
more complex than todays most complex manufactured object, the jumbo jet, with
as much control over the quality of the final product as we care to design.
Nanotechnology promises to be both a disruptive and an enabling technology. A
disruptive and enabling technology is something that is so unique and extensive in
its capabilities that it creates a market pull.
There have been such technologies throughout history, but a recent example is
the integrated circuit. Consider the impact that the integrated circuit has had on our
lives, not only here in the United States but all over the world. Most business people
believe that nanotechnology has that same potential on an even larger scale.
The integrated circuit industry is similar to APM in certain ways. An integrated
circuit factory, known as a wafer fab, can make an unlimited variety of different
integrated circuits, determined by the software that makes the optical masks used
to define the integrated circuit features. By changing the geometries of the mask,
but using essentially the same processing steps, the products of that factory can be

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170 Commercializing Micro-Nanotechnology Products

changed minute to minute as different silicon wafers flow through the wafer fab.
APM will deliver similar capabilities with a wider variety of products.
Why are more companies not working on APM? Because it is a hard prob-
lem, and the time to success could be very long if brute-force approaches are used.
Conventional chemistry will require many, many decades at its current pace to even
come close to these capabilities and will never deliver the flexibility to manufacture
different products in a common factory, nor the error control necessary to control-
lably make complex systems. Chemists who imagine the solution-based chemistry
they were trained to do suddenly enabling the manufacture of complex atomically
precise objects are right to be skeptical conventional chemistry wont work. Suc-
cess in APM will require an interdisciplinary approach, bringing together chemistry,
engineering, and software-based system design. That is the vision of Zyvex.

The Zyvex Vision

Zyvexs vision is to be the leading worldwide supplier of tools, products, and ser-
vices that enable adaptable, affordable, and molecularly precise manufacturing. We
are taking an assembly-based approach to integrating across all length scales from
macro to micro to nano.
This was, and is, a bold vision, but in 1997, one that was so far out of the main-
stream that people said it would be unachievable for at least 100 years. Some people
even laughed at the very concept of using positional assembly to make atomically
precise structures in volume, at low cost.
Funding for long-term research projects is usually difficult, but in the late-90s
era of fast-money Internet startups, asking investors to make a major long-term com-
mitment into a pioneering company building a technology instead of a product was
unlikely to be successful.
Thanks to the great success of my first company, I was able to self-fund Zyvex
using some of the proceeds from selling that company. We started in a little 400-
square-foot office tucked away in a suburban office-tech building in Richardson,
Texas. No major government grants or newsworthy venture capital investments
funded us at the beginning. We hired employees one by one, steadily building to the
68 employees we currently employ.
The early days of Zyvex violated my first rule of business: spend less than you
make. I decided the opportunity warranted a large, long-term investment, without
spending too much time bootstrapping our way up to critical mass. I was a former
software entrepreneur with a long-term vision of how such a manufacturing technol-
ogy could work, but I had no detailed roadmap to get there. We hired young scientists
who had never built anything people would pay money for. There was no technol-
ogy base from which to develop products. We had no customers for things we envi-
sioned building. Some theoreticians claimed it was possible, and they used computer
modeling programs to draw fantastic pictures of imaginary molecular-scale devices.
Other older, establishment scientists dismissed the whole area as a field for crack-
pots, claiming this approach would never work. Amusingly, some of them are still
skeptics, even with todays published and peer-reviewed papers showing atomically
precise structures made one atom at a time by directly manipulating atoms.

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Zyvex Corporation 171

We began by building a world-class lab, with electron microscopes, scanning

probe microscopes, ultra-high vacuum systems, chemistry labs, more lasers than I
want to write checks for ever again, and a well-equipped machine shop. We literally
had to make our own tools to do this research. We hired the best scientists and engi-
neers we could entice to come to work for such a radical company, constantly striv-
ing to hire the best people as our reputation grew. Most other businesses would have
started by hiring experienced managers to build the team, but there werent any man-
agers experienced in building molecular nanotechnology companies or products. In
hindsight, we should have hired energetic and experienced managers with open minds
who could learn nanotechnology. One lesson I had to relearn at Zyvex is that manag-
ing creative researchers is often harder than creating breakthrough technologies.
A few years after I sloughed off the laughter of the skeptics and started Zyvex,
President Clinton announced the National Nanotechnology Initiative (NNI), which
directed a few hundred million dollars per year toward this technology. Most of the
skeptics stopped laughing and started writing grant proposals. The U.S. NNI stimu-
lated similar programs worldwide, and suddenly nanotechnology was respectable.
Yves had to grow faster than the industry if we wanted to be successful. It was
time to move from research to development. We selected two technologies from our
research portfolio, suspended or killed most of the other projects we had been work-
ing on, and began productizing those two technologies for the new applications that
were now paying attention to nanotechnology: name them here?
We had long been working on a dual pathway to APM: top down and bottom up.
Top down is how we do the system architecture and control for APM. Bottom up is
how we do the chemistry that enables clean and low-cost manufacturing.
Top down is required for making an easily controlled factory and basically
means building controllable machines that build smaller machines that build still
smaller machines. If we want to easily control the types of products we make, we
need to communicate with the smallest machines directing the molecules, and top
down is a good way to structure this communication from the macroscopic world to
the molecular.
Bottom up is required for getting product costs down and consists of controlling
chemistry so desired reactions can take place only at the locations and times we want
those reactions to happen. With bottom-up control, we can move away from todays
chemistry of bulk reactions towards the types of precision reactions done by living
systems: atomically precise, structurally complex, and extremely diverse.
We need this bottom-up chemistry to get our costs down to where we want them.
Integrated circuits are cheap on a per-transistor basis, but those costs are a poor com-
parison to the cost of the atomically precise molecules coming from the bottom up
reactions taking place in a petroleum refinery or drug manufacturers reaction vessel.
Chemistry makes things cheaply. Engineering makes complex things in a repeatable and
controllable manner. Both of these working together will transform manufacturing.

Market Pull or Technology Push?

Entrepreneurs work in different ways. Merchants see an opportunity to buy some-
thing, then transport it, change its form somehow, or combine it with other things

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172 Commercializing Micro-Nanotechnology Products

to make a composite product or service. They then sell it to people who will pay
more than it cost the merchant to bring it to the customer. This is the classic business
person responding to a visible market. Creators invent a new thing that has never
before existed, hoping to make something other people will find valuable enough to
buy. These entrepreneurs take more risk but can achieve great rewards if they cor-
rectly develop a product people want and can market that new product successfully.
If people initially do not laugh at their new idea, the idea probably is not bold enough
to be successful at creating a new market. It might fill a niche in an existing market
but wont become a disruptive innovation.
My favorite technological innovation of the last 50 years is the Apple personal
computer. Invented by a couple of engineers who had worked at Hewlett Packard, the
apocryphal story told about it is that Steve Jobs was in his boss office pitching the
concept, and his boss declined to get HP into that business, saying it was a cool idea
but that the only two people in the world who would buy it were those two engineer-
ing geeks. Jobs quit HP to pursue his vision, and thanks to the correctness of that
vision, the superb engineering of his partner Steve Wozniak, good business advice
and adequate funding, and the (eventual) pragmatism to adjust the vision to market
realities, the personal computer became a huge, society-transforming success. The
original Apple computer was also an excellent example of a product where all the
pieces were available individually but had never been put together in the right way to
make a breakthrough product. How many other new categories of valuable products
are waiting for clever entrepreneurs to invent them?
MBAs study the differences between technology push companies and market
pull companies. Sales are easier for a market pull company the products solve an
existing problem, and customers can easily understand why they want to buy a prod-
uct that solves their problem. On the other hand, technology push companies have to
educate their customers and teach them why they need the product. Sales growth is
slow for companies that have to educate their customers, because educating people
is expensive and time consuming. Technology push companies may not even hit the
correct market on their first try and may simply educate the market for a market pull
competitor to come to market later and grab all the volume sales. Everyone knows
that companies should be developing products with market pull instead of technol-
ogy push.
I believe the best strategy for a pioneering technology company is actually
push-pull. Breakthrough product creation cannot be done via a formula, because
a lot of the act of creation is unquantifiable it takes an entrepreneurs instinct,
and luck, to succeed. By luck, I dont mean blind luck, like winning the lottery,
but the kind of luck that comes from being prepared and being in the right place
at the right time for success. So here is my push-pull strategy for innovative prod-
uct development: push the technology envelope to create a product with market
pull. The market pulls products, not technology. If youre just selling technology,
youre going to have to work too hard to achieve success. Use the technology
inside the product to differentiate that product, but dont try to sell the technology
for its own sake.
Push the technological envelope to develop a prototype of something the product
creator has a passion for, and an understanding that there is a big market for (OK,

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Zyvex Corporation 173

this is harder than it sounds if it was easy and obvious, everyone would be able to
do it). No market survey will turn up a major demand for a product that people cant
imagine, but if people can see a prototype that meets at least some of their needs,
they can almost always articulate how to make that prototype better. Now find a lead
customer who can represent the product user for a broad base of users, and then use
that customers feedback to develop a final product that will be pulled into the mar-
ket. If you cant find such a lead customer in three tries or less, or they cant inspire
you with ways to attack a bigger market, you probably didnt have the right product
idea or understanding of the market. Give up that product and show your creativity
by developing another one. Push the technology envelope; dont push products.
Success requires the right instincts to get close to something a customer wants
with the first product, good marketing in picking the lead customers to work with to
refine the prototype, good listening skills in teasing out how to improve the product,
and good execution skills in developing the final product. I dont think its possible
to do this with a success formula, but it also isnt something that takes genius to
accomplish. It took me many years to learn to trust instinct as a rationalist, I
denied the validity of a process I couldnt analyze. I finally came to a rational expla-
nation; what we call instinct is a nonconscious type of information processing that
connects things we arent consciously able to analyze. There is nothing wrong with
trusting instinct, if you verify that trust with reality. If you doubt this, think analyti-
cally about how you choose words when you speak (and if you can analyze how you
speak, immediately write that algorithm into a computer program, because youve
just come up with a very valuable artificial intelligence program.)

Funding Research
Venture Capitalists. Weve heard them called bad names, and entrepreneurs fre-
quently like to talk about our bad experiences with them, but be careful some
of my good friends are venture capitalists. I just dont ask them to invest in my
company. Venture capitalists are usually the funding source people think about first,
but raising VC money to build a company should be approached with open eyes and
awareness. Never forget that they get involved to make money, and the most success-
ful ones dont care about you or your technology except for how it helps them deliver
a great return to their funding sources, the limited partners. VCs have an aversion
to funding research, due to a natural desire to reduce needless risk, the short time-
frames they operate on, and ready availability of other, less risky deals. Beyond aver-
sion, they actively spurn science projects, and rarely want to be the first and only
investor into a new technology. And if they do participate, they take a large percent-
age of the company in return for their funding. This isnt always bad, since the com-
pany may be more valuable due to their presence in the deal, but theyre more likely
than any other class of investors to shut the company down or sell it prematurely if it
disappoints them. VC money is prestigious, but expensive. Most entrepreneurs will
be fired and/or cashed out of the company before it becomes successful, so go into
these deals expecting such an outcome.
Another funding source often used by entrepreneurs is known as FFF: friends,
family, and fools. This is a great source of funds for start-ups but often leads to a bad

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174 Commercializing Micro-Nanotechnology Products

capital structure, with too many tiny shareholders and all too often some restrictive
covenants or antidilution provisions. I have seen companies with such a bungled stock
ownership structure that they were unable to raise money without making some very
difficult changes to their ownership and, in one case, enduring an expensive lawsuit
from a disgruntled early shareholder. I was going to question why lawyers dont warn
more strongly against companies bringing in large numbers of small owners, but the
last clause of the preceding sentence (expensive lawsuit) really answers the ques-
tion. Accepting shareholders who individually invest less than 12% of the capital to
be raised will eventually hurt you more than the money will help you.
Large corporations pulled back from funding their own basic research as it
became less affordable, and activist shareholders and analysts encouraged them
to focus on quarterly earnings instead of long-term and risky development efforts.
Increasingly, large public corporations fill their product and technology pipelines
with technology and products purchased from small companies. They might fund
a small company to tailor an existing product for a special purpose but would
rarely fund a new product development program. Corporate venture capital arms
fund quite a bit of research but these days rarely lead funding rounds, preferring
to ride along with larger VC firms. Corporate capital can be good, or it can be
bad. The good part comes in getting to know a big company that might buy your
products, or even your company, in the future. The bad part comes in restrictive
covenants about who you can sell products to (not their competitors!). All in all, I
think corporate money for development is a good thing. Large corporations need
small, innovative companies to keep their product pipelines full. Contracts will
probably feature a tough negotiation over intellectual property, but large corpora-
tions can be great partners.
Funding an early prototype with savings or government research money will
usually result in the best deal for the company and entrepreneur. In my previ-
ous software company, I was able to significantly raise the terms of a licensing
deal by bringing the prototype closer to reality in the time between discuss-
ing a rough prototype with those potential licensees and showing them a nearly
releasable prototype. If you cant show a prototype, any deal you might get with
a customer, partner, or acquirer will be a fraction of the deal youll get with a
demonstrable prototype. Speed of execution for delivering the prototype is incred-
ibly important.
Use government R&D money if you can, because it doesnt dilute your owner-
ship of the company or complicate your capital structure. Just dont fall into the trap
of thinking the government is your customer, unless youve set out specifically to
sell things to the government. Any government money comes with strings youll
be reporting, accounting, justifying, changing how you run your business so it is
more easily monitored, and reporting more on every dollar. There is a lot of red tape
involved with government funding, so it is important to get out to the real market as
soon as possible.
Our initial research was funded directly by my investment into Zyvex and led
to some early scientific papers that helped establish our reputation. Figure8.1 shows
the first ever picture of a carbon nanotube being pulled apart in a Scanning Electron

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Zyvex Corporation 175


10 m 2 m


200 nm 500 nm

Figure8.1 First Zyvex carbon nanotube manipulation image.

Microscope using our first nanomanipulator, built in 1998. This led to a publication
in the prestigious journal Science.
As we grew, we decided to apply for government funding for a risky research
program we needed to make our top-down approach work. On the recommendation
of a program manager in the National Institute of Standards and Technology
Advanced Technology Program (NISTATP), we partnered with three universities
and another company and submitted a proposal for a $25 million/5-year cost-shared
program (Zyvex paid 50% of the costs) entitled Assemblers for Nanotechnology
Applications and Manufacturing: Enabling the Nanotechnology Era. In 2001, we
won this award to develop systems that provide highly parallel microassembly and
nanoassembly for real-world, high-volume applications.
That program allowed us to develop a risky and otherwise unfundable
microassembly technology that has spawned a number of technologies and product
prototypes, including:

Micro-tweezers able to pick up objects the size of a red blood cell

A rotary micro-motor that would fit into one of the letters on a United
States penny
A miniature Scanning Electron Microscope lens assembly that will allow
an electron microscope to be shrunk to the size of a briefcase
3D assembly technology capable of complex 3D assemblies of dozens of
components ranging in size from microns to millimeters
A miniature Mass Spectrometer able to shrink what is currently a back-
pack-sized existing product into a handheld unit
Miniaturized assembly robots less than 1 cm on a side
Core technology leading to a whole line of nanomanipulation systems

The goal of research for any company should be to get a product out. Research for
its own sake is great for universities and government labs, but any for-profit business

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176 Commercializing Micro-Nanotechnology Products

needs to get past the research stage and onto a product as soon as it can. It doesnt have
to be a finished product but does need to show off most of the essential features.

Engineering to Development
Once I made the decision to move Zyvex from research to development, we chose
nanomanipulation as our top-down product technology and nanomaterials as our
bottom-up product technology. We then developed specific products in each of those
technology areas, which will be discussed later. We continued to work on our NIST-
ATP contract, but that technology development was still too far away form market to
deliver any immediate products, so it remained an R&D program.
We built our first nanomanipulator system in 1998 to pull apart nanotubes in
a Scanning Electron Microscope, as already described. We looked into marketing
that system in 2000, but a brief market study showed that the market was too small
to be worth the engineering costs of developing a nanomanipulator as a product.
After the National Nanotechnology Initiative was launched, we took another look
and decided the market had become large enough to sustain the product devel-
opment effort, thanks to NNI money funding directed nanotechnology-related
research in universities and government labs. We decided to commercialize our
prototype nanomanipulator so it was manufacturable and supportable and take it
to market quickly.
This decision not to launch too early was important. Just because we had some-
thing that was cool and which did a novel task was not a reason to develop it as
a product and push it to market. Too many technology companies fall in love with
their technology and fail to ask the hard question of who will really buy that product.
We built this product because we needed it for our own research but used market
research to demonstrate that we were too early and waited until the market caught
up with us. Once we determined that the market was ready, we aggressively moved
into the development phase.
We hired a director of product development and several engineers and turned our
lab prototype into a commercial product in less than a year. Since we had used this
tool to do our own work, we could serve as our own main customer, which meant
we knew the pitfalls and possibilities of such a nanomanipulator. A picture of the
released version of prototype nanomanipulator can be seen in Figure8.2.
Like most small companies, we were able to launch this product without a heavy
dose of processes and procedures because the product development team was small
and tightly coordinated and had previous product development experience. Like
most survivors of that approach, we wanted to do better in the future, so we adopted
a product development process that Ill discuss later.

Just Add Marketing

A few months after the launch of our nanomanipulator, we hired a chief marketing
officer (who later became president), and he developed a crisp strategy supporting
tools, materials, and structures, as shown in Figure8.4. Building on our established
base of physics, chemistry, and engineering, we had already developed skills in tools,

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Figure8.2 Zyvex Nanomanipulator released version.

materials, and structures that provided our technology base to build products for the
market segments of aerospace and defense, healthcare and medical, and Semicon-
ductors and electronics.
An engineering company can develop fantastic products, but without marketing,
nobody will know about them, and nobody will know about the company. Our CMO
established worldwide distribution, organized a sales force focused on application
sales engineering, and focused the entire organization on execution.
During this time, our nanomaterials business was starting to develop, thanks
to our development of some proprietary technology to process carbon nanotubes.
After some exploratory product introductions, we found a real lead customer, Easton
Sports, which we learned how to satisfy with products that led us to many more mate-
rials markets. Ill have even more to say on the materials business when I describe
how we launched our tools business.

Listening to the Customer

Before starting my software company, I used to work for an engineering company
that prided itself on knowing the customers needs better than the customer. Its sales
force could tell the customer why he needed a blue widget when he was asking for a
green gadget. The companys engineers thought the customer didnt understand his
own requirements, while the customer thought the company was just selling what
they had, instead of what he needed. Treating its customers like they didnt know
what they wanted didnt work as well as the company expected, and a lot of business
moved to other vendors. The company is still successful but might have done even
more if it listened.
Companies need to listen more than they tell and especially need to engage in
active listening by understanding what the customer is saying explicitly, understand-
ing what the customer is meaning implicitly, and helping the customer to articulate
his or her true needs. Good marketing people do not try to impress the customer with

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178 Commercializing Micro-Nanotechnology Products

Aerospace Health Care Semiconductor

& & &
Defense Medical Electronics

Zyvex Technology Base

Materials Tools Structures

Synthetic Micro & Nano

Supramolecular, Manipulation,
Positional Assembly

Chemistry Physics Engineering

Figure8.3 Zyvex Technology Base and its interaction with targeted markets.

how clever their company is they spend their time helping the customer to under-
stand how the company product solves customer problems. Engineers often, and
scientists almost always, try to impress people by explaining the complex technology
and the engineers or scientists part in creating that technology. Remember, custom-
ers dont buy technology they buy products that meet a need. Stay paranoid, and
dont fall in love with your technology.
We met customers by taking a mockup of our nanomanipulator to trade shows,
where we could meet several potential customers at once. Picking the right trade
show is worth a chapter in its own right, but Ill just say there are a lot of shows, and
not all of them are equally worthwhile. It is beneficial to measure prospect and lead
generation from every show, and drop those that dont measure up.
At one show, a major semiconductor manufacturer came to our booth and asked
if we could probe their integrated circuits, which at that time had geometries less
than 90 nanometers in size and couldnt be probed with any other tool. In a textbook
case of listening to our customers (or customers-to-be), we told them we would try, if
they would send us a chip. Several weeks of development later, we had successfully
solved several key problems of probing and showed them the results of probing their
chip in our electron microscope.
They were impressed enough to want to probe more chips, so we rented them
time on our prober system while they got comfortable with the system. Word got
around, and most of the semiconductor manufacturers started renting time on our
system, and all submitted purchase orders to buy their own system. See Figure8.4
for a sample illustration showing three probes on an integrated circuit. The round
dots on the surface are contacts, and they are about the size of a virus.

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Figure8.4 Probing a CMOS transistor with the Zyvex KZ100.

Figure8.5 (See color insert following page 16.) Zyvex nProber with positioners aligned
250 microns apart from each other, just a few millimeters above the center stage.

Our new nProber, in Figure8.5, can now land up to eight probes in an area less
than one quarter the size of this image, which works out to about one wavelength of
light. Thats small, in case you were wondering.
Following up on this one inquiry led us to a major market in the semiconductor
industry, which is now by far our largest customer segment. Add-on products such
as extremely sharp probes and other types of probing and sample preparation tools
will likely mean the semiconductor industry will continue to be our largest market,
dwarfing the original research tools market. This success came about because we
listened and adapted to the market need.

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180 Commercializing Micro-Nanotechnology Products

We are beginning to use the MEMS components from our NIST-ATP in the
tools business, which has now broadened into the instrumentation business thanks
to our success in both tools and MEMS. From micro-tweezers to miniature mass
spectrometers, these businesses are converging to provide an unparalleled ability to
build miniaturized analytical instruments. We will continue to follow our prototype,
test, refine, sell sequence for these future products.

Importance of the Lead Customer

Our materials business provides a good example of the importance of getting a pro-
totype into the market and making an early connection with a lead customer.
Carbon nanotubes (CNTs) were discovered in the early 1990s almost simulta-
neously by researchers at NEC and IBM. At the atomic scale, these look like tiny
cylinders of rolled-up sheets of graphite graphite itself being a particularly strong
form of carbon normally found as flat sheets of atoms bonded to one another in a
hexagonal arrangement. Different varieties of CNTs range from less than one up to
forty billionths of a meter in diameter and are frequently 10,000 times longer than
their diameter. Due to the strong molecular bonds of these tubes, and their near-
perfect structure, CNTs are perhaps the strongest materials that will ever be made.
CNTs are almost 20 times stronger than steel; they are the best-known electrical
conductor and the best-known thermal conductor.
The desirable properties of CNTs also lead to problems in using them. Low-cost
manufacturing techniques produce tangled bundles of tubes, which are extremely
difficult to process. Most attempts to disperse these CNTs in solvents or host poly-
mers result in either getting a terrible dispersion, or the techniques are so aggressive
and rough that they damage the CNTs and destroy the desirable properties. The outer
surface of the CNTs is also very slippery, so it is hard to get them to adhere to a host
polymer matrix to strengthen the polymer when you just add them to a polymer and
stir them up.
Our NanoSolve technology resulted from a breakthrough we developed while
doing applied research using CNTs as a building block. NanoSolve allows us to
unbundle the CNTs, disperse them in solvents or polymers, and adhere them to the
host polymer matrix, all without damaging the CNTs in the process. NanoSolve thus
provides our customers with the best processing capabilities for CNTs available in
the industry.
We hold the NanoSolve technology as a combination of patents and trade secrets.
We patented the molecules and molecular systems that our chemists engineer to
interface with both the customers polymers and the sidewalls of the CNTs. The
molecular systems themselves are trademarked under the name Kentera. Our
chemists molecularly engineer different types of Kentera to solve the unbundling,
dispersion, and adhesion problems for whatever host polymers our customers need.
We also keep a number of processing steps as trade secrets rather than patents in
order to further protect our business. The mix of patents and trade secrets gives us
a level of protection against both large and small competitors. Since patents require
full disclosure of the technology, they provide a roadmap for competitors to develop
similar (or even identical) technologies. Patents protect against direct copying only

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by the long and expensive process of lawsuits, which can take years and millions of
dollars to conclude. Trade secrets protect the key processing steps so long as they
remain secret but once divulged offer no protection whatever. A combination of the
two is a powerful safeguard for proprietary technology.
Early on, we made the decision that our strength was in processing, not manu-
facturing CNTs. This has proven to be a good decision there are currently more
than 50 CNT companies worldwide, so becoming the cost, volume, or quality leader
would be stunningly expensive. As we investigated some of those companies, we
found a widely variable range of quality and repeatability in manufacturing CNTs.
This led us to develop a CNT certification program, where we ran a number of
tests on CNT samples to find the companies with the best quality control. We certi-
fied several companies and developed a close relationship with a few key partners,
including Paris, France, based Arkema a seven billion euro per year chemical
giant. Arkema became our prime supplier for the most cost-effective form of nano-
tubes called multi-walled nanotubes.
With our processing technology, our chemists do molecular engineering of a cer-
tain class of molecules in order to design just the right molecules that can interact with
the CNTs and get a good dispersion in some host polymer that we can then process
further. This is not quite the bottom-up nanotechnology we need for APM but is a
good example of a mixed-scale system containing a structured interface from the size
of molecules up to the size of microns. The dispersion-enabling molecules live in the
molecular world. The CNTs live in the molecular, nano, and micro worlds simultane-
ously. When put into the right host material, CNTs can be embedded into macro-scale
objects and deliver increases in performance at the human size scale or bigger.
We had invented the processing technology but werent sure in what form cus-
tomers might want the CNTs powders, dispersions in solvents, or dispersions in
host polymers. We offered all of those for sale on our Web Site and took several
forms to trade shows to meet potential customers. Early orders did not show any
pronounced trends for one form over another, since all the customers were still in
testing mode. We continued to improve our processing capabilities as we collected
data about how much improvement in materials properties was achievable with prop-
erly processed CNTs.
Before long, Easton Sports became our lead customer for nanomaterials, based
on meeting us at a trade show. Easton is a midsized, highly entrepreneurial company
that is a leader in several kinds of sports equipment such as baseball and softball
bats, hockey equipment, and high-performance bicycle parts. They were looking for
a way to improve their equipment by using nanotechnology. We showed them some
early data on how to improve the properties of polymers such as epoxy by adding
CNTs, and they decided to give this a try in their carbon fiber composites.
Todays highest strength materials use sheets of carbon fibers laminated together
with high-strength epoxy to make composite panels or structures. These carbon
fiber composites are extremely strong and light but suffer catastrophic failure when
stressed beyond their limits. The failure mechanism is usually delamination of the
carbon fiber sheets due to inadequate strength of the epoxy holding them together.
Funded by a NASA research program to build the worlds highest strength-to-
weight ratio material, we were developing a unique composite-in-composite for high

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182 Commercializing Micro-Nanotechnology Products

Figure8.6 (See color insert following page 16.) This Easton road bike, created using
Zyvexs NanoSolve materials, was given to President George W. Bush in June 2006.

strength materials. Our approach puts CNTs into the epoxy that binds the carbon
fiber sheets together, strengthening the epoxy, and thus strengthening the entire
structure. CNTs not only fill and strengthen the spaces between the carbon fibers
that would otherwise consist of only resin, but the long, high-strength strands help
hold the structure together by stopping cracks.
Easton became our first commercial-scale materials customer, working with us
to develop a reliable process for making carbon fiber composites using CNT-rein-
forced epoxy. In a remarkably short nine months, they were able to release the first
CNT-reinforced bicycle parts, which delivered 1020% performance improvement
in material toughness. The result is a full-size, 20-speed road bike that weighs less
than 16 pounds, yet is stronger and stiffer than most bikes available on the market
today (see Figure8.6). Easton then introduced CNT-reinforced hockey sticks and a
baseball bat that has bigger sweet spots and maximum performance along the entire
length of the barrel (see Figure 8.7).
Once Easton had made some actual CNT composite components and we had
performance data showing the efficacy of CNT material, our next tradeshows were
more fruitful, with numerous companies coming by our booth to learn how to use
our NanoSolve material in their products. Eastons role as lead customer was to help
us understand the most useful form of NanoSolve material CNTs in epoxy and
to demonstrate real products made with this material, delivering real performance
gains by the use of nanotechnology.
Our current NanoSolve business is growing at more than 50% per year and
likely to accelerate as our customers learn more about processing nanomaterials and
increase their adoption.

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Figure8.7 (See color insert following page 16.) Easton Stealth/Synergy line of baseball

Some people have said we are unfocused because we are trying to do too many things
at once. Conventional wisdom says to do one thing, and do it well, so all the compa-
nys attention is focused. That is great advice for most companies in most established
fields. In my software company days, we were focused on desktop publishing as a
market and sold two sequentially developed products as our key products. But con-
ventional wisdom also says most new companies fail. Maybe as an entrepreneur it
doesnt pay to listen to conventional wisdom.
Businesses involved in nanotechnology tend to be more diverse in their products
than most other companies. They have a wider variety of products, sold to a wider vari-
ety of customers, than a typical start-up. This may be due to the limited size of markets
consuming nanotechnology-enhanced products a one-product company probably
will not have enough sales of that one product to sustain itself as the market grows.
It is just not prudent, at this stage of nanotechnologys development, to go after
a single niche market. And, it is too early to say what the real market potentials are.
We have developed a set of heuristics, including the accessibility of the market, the
size of a given market, our core competencies, alignment with our overall goals, and
others. We look at various applications and market segments that we believe we can
impact. We target only those applications where we believe we can be a leader.

Some managers think their processes drive companies to greatness, but peoples
creativity and judgment are what really does it. Processes should be employed to
support people by making sure we dont forget things or make the same mistakes
twice. They are not replacements for good judgment or talent.

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184 Commercializing Micro-Nanotechnology Products

Do not fall in love with a process it should be there to support you, not con-
trol you. We use a formal new product development process to manage our product
releases. Generically, this looks like a stage-gate process, where we move along a
checklist that has certain requirements that must be met at each stage before moving
through the gate to the next stage of the product development cycle. This process
helps us assure that we have performed all the steps necessary to develop a product
that can succeed but is no substitute for managerial and technical skill and judgment
along the product development path. It is possible to meet all the criteria of such a
process, even including market studies and customer identification, and still make a
product that does not succeed. We know it has happened to us. We strive to use
this process as a craftsman uses a tool, not as a bureaucratic obstacle to progress.
We treat this new product development process as a living document and con-
tinue to modify it frequently as we develop better ways to do things.
We also have a number of processes relating to our quality program. We became
ISO 9001:2000 certified in late 2005, because we wanted to demonstrate our com-
mitment to quality. Very few nanotechnology companies have bothered to earn ISO
certification, but we pursued that because we believe that documenting our processes,
and being committed to improving those processes over time, is an important part of
our future. We sought official certification, rather than using an informal approach,
because we want to be measured and want to be sure our customers know we have a
commitment to quality.

Broadening the Product Line

I am not constrained by conventional wisdom but like to pay attention to it when it
works. Once an innovative product has become successful, the innovation changes to
a sustaining model, and classic marketing and product development applies.
I talked earlier about pushing technology to create a new kind of product, testing
it with a lead customer, then modifying it based on what you learn to develop market
pull for the final product. That is a good way to develop a new class of product for
which you cant do a market survey to find customer pull, because the customers
cant imagine such a product to know to ask for it. However, once you enter a new
market, there are classic ways to grow as a company, and broadening the product line
is probably the best.
There are two ways to broaden your product line: sell more things to your exist-
ing customers, or sell to more customers in your market segment.
It is classic marketing to sell more products to your existing customers. Finding
a good customer is expensive, and once you have one, you should find more things
you can do for them and sell to them. Product add-ons, related products, or substitute
products for things they are buying from your competitors are all obvious things to
do to be more successful. For example, some of our nanoprobing customers needed a
heated and cooled sample stage. This was developed as an extra-cost option for those
who needed it. We had to learn to make extremely sharp probes to probe nanoscale
objects, and those probes have become a recurring purchase, since they wear out
during use. We have seen opportunities to develop next-generation products for these
customers and are designing future generations of systems.

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Gate S/D

1 m EHT = 2.00 kV File Name = 165_203_?? Signal A = SE2
MAG = 11.61 KX Date: 20 Feb 2004 Focus = 8 mm


Selling to more customers in your market segment can happen either because
your marketing works and more people have heard about you or because you learned
from existing customers and added some key features the new customer needed that
were not in the original product. Basic marketing, but it works.

People often ask us what enabled Zyvex to so rapidly develop products and applica-
tions and penetrate the markets we targeted. Hiring smart and talented people is a
given, and stressing execution keeps us focused, but there is one more important
piece the great partnerships we developed with others. From day one, we decided
we wouldnt suffer from NIH (Not Invented Here) syndrome and that we wouldnt
be all things to all people.
In a business, you have to decide what not to do just as much as what to do. There
are so many potential opportunities to target with nanotechnology that it would be
easy to lose focus. We want to be broad enough not to miss great opportunities, yet at
the same time, we cant do everything. We cant dilute our resources on loser projects
or programs. If you know of a gap in your technology or in the implementation of
your marketing strategy, partners can be a wonderful asset as long as they result
in a win/win relationship.

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186 Commercializing Micro-Nanotechnology Products

It is worth discussing some real-world examples of two of our partnerships. We

recently announced a relationship with Arkema, a 7.5 billion ($10 billion) chemical
company with its corporate headquarters in France and a worldwide presence.
In addition to their chemical business, Arkema is a leading manufacturer of CNTs
and is our primary vendor for multiwalled CNTs (MWNTs). Zyvex has a portfolio
of patented and trade secret protected technologies for processing MWNTs in poly-
mers. This technology is very useful for Arkema and for their end users. Together,
our processing technology and their applications experience allow us to develop new
markets worldwide. Arkemas global credibility helps get us in the door with new
customers, and our ability to move quickly and leverage our NanoSolve technology
helps them get to market faster. For Zyvex, it is like having a big brother who has all
the financial, marketing, and production capability that a customer might question if
they were just dealing with Zyvex. It is a great example of a win/win partnership.
For a second example, several years ago, when we started working on MEMS,
we developed a software tool for modeling, which we called the MEMulator. This
software allows us to model the successive material deposition and etching pro-
cesses used to make MEMS (depositing a layer, patterning it, etching the patterned
or unpatterned part, then repeating). We had looked at existing software packages
to help us with this modeling but never found anything that was accurate enough to
get a useful answer, nor stable enough to handle the large and complex components
we developed. We developed the MEMulator to meet our needs but realized it was a
great tool for anyone doing complex MEMS.
We wanted to be able to sell this great tool but did not want to distract ourselves
from our primary APM goal by entering the software business. Partnership was the
obvious solution. We chose Coventor, Inc., the leading MEMS design software ven-
dor, as our partner, and negotiated an exclusive contract where they can sell MEMu-
lator and we get royalties to fund continued development. This winning partnership
also means a lot more users get the productivity benefits of running the MEMulator
to model their MEMS devices. Current releases of the program even model semi-
conductor process steps, changing its name to SEMulator, and creating benefits for
customers in markets beyond our original plans. The original MEMulator develop-
ment was supported by our NIST-ATP R&D program and is a good example of a
commercial success coming from ATP funding.

Final Thoughts
Nanotechnology is exciting, but we still must manage it as a business. We need to
make products that customers want, so we can make a profit. We want to keep our
eye on the long-term goals of the company, so we know where were going, while
executing to our plan in the short run, so we can see how were doing on getting
there. There are lots of other things that we do, and have done, that time and space
limitations preclude mentioning. Suffice it to say that the way we run the company
helps us perform like a much larger company than we are. Our executives have all
worked in larger companies, so the processes we have in place are there to prepare
us for high-quality, sustainable growth. We have accomplished a lot since starting
out in that first little office, but we still have the largest part of our journey ahead of

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Zyvex Corporation 187

us. It is exciting to see what weve accomplished and envision what we will do. It is
frightening to see how much more remains to be done. Most of all, its interesting. I
have only told you a little of Zyvexs story a few anecdotes from the journey, with
a few tidbits of lessons learned. I encourage you to watch us at www.zyvex.com.

Zyvex, the Zyvex logo, MEMulator, NanoEffector, NanoSolve, and NanoWorks are regis-
tered trademarks, and Kentera is a trademark of Zyvex Corporation. SEMulator is a
trademark of Coventor, Inc.

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9 The History of the
microParts GmbH

Development of a
Successful German
Based Business

Reiner Wechsung


Introduction............................................................................................................. 189
Origin of the LIGA-Technology............................................................................. 190
Foundation of microParts GmbH First Steps into Business.............................. 193
Products.................................................................................................................. 201
Nebulizer for Drug Delivery.......................................................................202
Microspectrometer....................................................................................... 214
Technology.............................................................................................................. 216
Intellectual Property............................................................................................... 220
Commercial Results (Sales, EbiT).......................................................................... 221
Human Resources and Organization...................................................................... 223
Conclusion............................................................................................................... 225

microParts GmbH was founded in 1990 by STEAG AG with the mission to com-
mercialize applications of the newly invented LIGA-technique. STEAG-microParts
is an example of how a research-driven project became a commercially successful,
market oriented, profitable business.


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190 Commercializing Micro-Nanotechnology Products

By showing drawings and a few samples that had been produced in the research
laboratory, several visionaries convinced the management of STEAG, together with
four additional shareholders, of the market opportunities for microtechnology-based
products. The task for microParts, therefore, was to identify products that could form
the basis for a profitable business and develop the appropriate production processes
to take these products from a laboratory scale up to industrial mass production.
The expertise of microParts lay in its understanding of the technology, so the
best way of building a business was to find customers who could apply the unique
features afforded by this new technology into their development programs so as to
improve existing products or produce new ones. Examples include improvements to
spinnerets nozzles and the development of noninvasive blood analyzers. The com-
panys objective was to work with customers who were prepared to enter into a long-
term business relationship.
In this chapter, the business development of microParts is described from its
inception, with all the complexities of a start-up company, through to a strategically
focused, profitable operation.

Origin of the LIGA-Technology

The LIGA-technique was developed by the Nuclear Research Centre Karlsruhe
in conjunction with STEAG AG for a project entitled Micronozzle for Uranium
Enrichment. The goal was to develop an alternative to the ultra-centrifuge method
of uranium enrichment that could be applied for nonmilitary use. The principle of
the micro-nozzle is shown in Figure9.1.
Gaseous uranium hexafluorine flows through the nozzle, and because of the
mass dependent centrifugal forces that are developed, isotopes are separated. The
characteristic features of the micro-nozzle are:

Figure9.1 Micronozzle for uranium enrichment.

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microParts GmbH 191

Lateral dimensions in the micron range

Structure height of 300 micron (aspect ratio > 100)
Material used is nickel or other metal alloys
Possibilities for mass production at low cost

Achievement of the above required the development of a new production pro-

cess: the LIGA-technique. This was the only motivation for the Nuclear Research
Centre Karlsruhe and the power company STEAG to develop the LIGA-process.
The LIGA-technique combines x-ray lithography to produce master units, Elec-
troforming processes (Galvanoforming) to create the production tools, and plas-
tic molding (Abformung) to replicate high aspect ratio microstructures in a high
throughput production process.
As in lithographic methods for microelectronic engineering, the design of the
microstructure is first defined in a CAD system, and then the corresponding x-ray
mask is produced by optical or electron beam lithography. An important feature of
this step is the almost complete design freedom. The mask consists of a thin mem-
brane made from a highly transparent material such as titanium or beryllium and
of absorbent structures made from gold. In a further process sequence typical for
the LIGA-technique, a layer of x-ray resist material with a thickness up to several
hundred microns, which has been fixed on a stable metal ground plate, is irradiated
through the x-ray mask by synchrotron radiation.
The irradiated areas of the resist are removed by a suitable solvent, creating the
primary microstructure. In the next process step, metal is deposited on the ground
plate by electroplating, and a metal structure is formed within the cavities of the
resist structure. This process continues until a thick layer of metal has firmly over-
grown the resist structure. After removal of ground plate and resist, a complementary
structure is obtained, which is used as a mold insert for subsequent micromolding
processes. The multiple use of the mold insert is the key for low-cost mass produc-
tion, even though it is a rather costly production process. The principle of the LIGA-
technique is illustrated in Figure9.2 (ab).
If the product material is a polymer, the samples from the injection molding
can be used directly. If the product material is a metal, the mass-produced polymer
samples are used as molds for a second electroforming step in which the final prod-
uct is plated in metal or a metal alloy.
The teams from STEAG and the Nuclear Research Centre Karlsruhe realized the
potential for wider applications of the LIGA-technique during the 1980s, but they con-
centrated their efforts strictly on the development project Micro-Nozzle for Uranium
Enrichment. Only at the end of this technically successful program, which was discon-
tinued for economic and political reasons, did the teams demonstrate and publish the
general features and potentials of the technique as an important microtechnology.
It was necessary to facilitate the transfer of the technology to German industry
so that a return on the large investments made could be realized. Some examples
are given below that show the precision of the LIGA-technique. Figure9.3 (ab)
shows a resist structure 400 micron high and 7 micron wide with a deviation of only
+ 0.1 micron over the whole structure height. The spinnerets nozzle was chosen as
an example of a product where this technique could be employed to advantage. In

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192 Commercializing Micro-Nanotechnology Products

X-ray Deep-etch Lithography and

1st Electroforming
Synchrotron Radiation
Irradiation Mask Membrane
Absorber Structure

Resist Structure

1st Electroforming Metal

Removal of the Resist Structure


Final Product Mould Insert


figure9.2 (ab) Principle of the LIGA-technique.

Figure9.4 (a), the ground plate with resist columns is shown, and in Figure9.4 (b),
the corresponding nozzle after plating with nickel can be seen.
The performance of the LIGA-technique was described in acquisition material
as follows:

Height: 20500 m
Maximum dimension: 2060 mm
Minimum dimension: 2 m
Smallest structure detail: 0.5 m
Materials: nickel, nickel/cobalt, copper, gold, PMMA,

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microParts GmbH 193

Plastic Moulding
and 2nd. Electro-
forming/Casting Slip
Mould Cavity
Mould Insert

Mould Filling

Mould Removal

Plastic Structure
as Lost Mould
or Final Product

2nd. Electroforming

Metal or Ceramic
Final Product Structure


figure9.2 (Continued).

The research teams also demonstrated the potential for low-cost mass produc-
tion, which could be realized by German industry under licensing agreements and
supported with technology transfers from the research laboratory.

Foundation of microParts GmbH

First Steps into Business
With completion of the development project Micronozzle for Uranium Enrich-
ment, the Nuclear Research Centre Karlsruhe and STEAG recognized the large
potential for commercializing the LIGA-technology and, therefore, the Institute for
Nuclear Process Technology was transformed into the Institute for Microtechnol-
ogy, and the STEAG team was spun off as the start-up company microParts GmbH.
In 1990 by means of a detailed licensing agreement, STEAG secured the rights to
use the basic patents of the LIGA-technology and also those of the existing product
ideas. The license agreement was supported by an additional cooperation agreement,

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194 Commercializing Micro-Nanotechnology Products



Structure Height (m)



7.0 7.2 7.4 7.6
Structure Width b (m)

(a) (b)

Figure9.3 (ab) Resist structure of height 400 m, 7 m wide with a deviation of 0.1 m.

which was important and very useful because of the requirement for the transfer of
a substantial amount of know-how to microParts, thus allowing it to initially use the
research centers equipment.
Together with Hoesch AG, Huels AG, VEW AG and Rheinmetall GmbH,
STEAG founded microParts GmbH in 1990. This new company was relocated from
Karlsruhe to rented offices in Dortmund from January 1, 1994. It contributed to the
structural change of the German Ruhr area from coal- and steel-based industries to
new high technology; it therefore received support from the government of North-
rhine Westphalia and the European Commission.
The shareholders of microParts, who had been convinced by the visionaries from
the research group of the extraordinary business potential of the LIGA-technology,
were ready to invest in a new business with expectations of a good return on their
investment and the securing of profits within five years.
The first LIGA-brochure prepared by the STEAG team during the foundation
period of microParts, shown in Figure9.5, described a large variety of product ideas
in the following list of categories:

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100 m


10 m


Figure9.4 (ab) Spinneret nozzle resist structure, 5 m nozzle after plating.

Sensor components
Fluid components
Components for microelectronics
Components for microoptics and integrated optics
Micromechanical components
Microfiltration components
Microstructured layers

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196 Commercializing Micro-Nanotechnology Products

Figure9.5 The LIGA brochure.

The development teams of STEAG and the Institute for Microstructure Technol-
ogy produced some demonstrator samples for what they expected would be typical
LIGA-products, shown in Figure9.6 (a-g). With these promotional materials, on the
potential of the technology together with functional models, a broad marketing pro-
gram was started with sales literature, exhibitions, and presentations at conferences.
The initial enthusiasm of the research-oriented teams soon turned into skepticism
because the expected orders were not realized, and the goodwill of the few interested
customers turned into disappointment with the realization that the technological pro-
posals took too long to produce.
With the foundation of microParts, the shareholders realized that excellence in
R&D is not sufficient to build up a profitable business. They therefore hired an expe-
rienced business manager with the necessary technical expertise. This was the start
of the process of developing microParts into a professional business enterprise.
The first step was to reexamine the technology in order to define achievable
specifications that could be met without further development efforts. As a result,

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ceramics were removed from the acquisition list. The broad list of potential products
and applications was compiled into a priority ranking using the following criteria:

Technical specifications require the application of LIGA with a low risk of

substitution by alternate technologies.
microParts is chosen as a partner for development and future production of
the microproducts.
Application is in an attractive growing market.
Customer is a strong enterprise with capabilities for substantial investments.
Customer has a strong competitive position in the planned product program.
Customer is willing to make financial commitments.
Plan for scale up of the production allows for realistic time schedules.

200 m


50 m


Figure9.6 (ag) LIGA product proposals.

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198 Commercializing Micro-Nanotechnology Products

200 m


50 m 50 m

(d) (e)

Figure9.6 (Continued)

As a consequence of this strategic check, projects proposed by start-ups with

interesting product ideas but no business experience or financial backing were no
longer pursued. There were many requests for cooperation with the promise for
excellent future business but requiring funding of the development programs by mic-
roParts. Other classes of projects were rejected for very different reasons. In some
cases, it turned out that large companies with strong in-house production capabilities
wanted microParts only to perform development projects with the transfer of know-
how to enable the customer to take over production.

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100 m


100 m


Figure9.6 (Continued)

Examples are:

A request for the development of a fuel-injection nozzle for the automotive

industry, where it turned out that the customer definitely wanted to under-
take the production.
The request for the development of an electrical micro-connector, seen in
Figure9.6, for a Japanese electronic company, which demanded the deliv-
ery of a detailed description of the microtechnology process parameters be
contained within the quotation for a development program.

From the many product ideas that were presented by the initial research team,
only two projects fit into the newly defined strategy an optical coupler and a

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200 Commercializing Micro-Nanotechnology Products

200 m

Figure9.7 Optical coupler.

microspectrometer. Here the plan was for microParts to present a product develop-
ment proposal that included final production. The commercialization of the product
would be undertaken by a strong customer who is already operating in the respective
business area. The LIGA-produced coupler for optical fibers, offering as an advan-
tage a very low surface roughness, in the order of 2030 nm, which results in low
scattering losses and the possibility of molding with optically compatible polymers
such as PMMA and PCs. Such an optical coupler is shown in Figure9.7.
Good initial interest was shown by large players in the U.S. and Japan, which
indicated some promising business opportunities. It turned out that telecommunica-
tions had a large potential, but a real breakthrough was still remote. Therefore, in
the mid 1990s, microParts decided not to target the telecommunications business.
As a result, the microspectrometer remained the only product to be developed and
marketed by microParts and is described later in this chapter.
A very promising project was started for microParts to develop an ink-jet head
for a medium-sized company that was established in the ink business. The project
was of strategic importance to the customer, who was committed to investing in the
new business and needed microParts for the development and future production of
the product. As a result, a very efficient development project a nozzle plate for a
300 dpi ink-jet head was developed, as shown in Figure9.8. During the course
of the program, microParts took over the development of the complete ink-jet head.
Within two years, serial production of a few thousand ink-jet heads with excellent
performance was completed. Unfortunately, during the negotiations to finance the
scale-up of the production, it became impossible for the customer to obtain a manu-
facturing license for the patent protected ink-jet head. This was a big surprise for
microParts, which had assumed that a customer who was making million-dollar
investment decisions would have ensured their rights to produce the product. During
the negotiations with the big players in the ink-jet business, microParts realized that
in order to protect its core competence, it had to refuse to cooperate with small sup-
pliers, even if they could offer some technological advantages. Although microParts

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50 m


20 m

Figure9.8 (ab) Ink-jet nozzle plate.

had not lost money on the ink-jet project, it tied up resources without the prospect of
developing a new business. Nevertheless, microParts had strengthened its technol-
ogy portfolio in microtechnology with the valuable know-how it had gained from its
work in microfluidics.

As a result of the intensified marketing and acquisition activities focused toward
the criteria described earlier, a few customer projects were acquired that offered the

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202 Commercializing Micro-Nanotechnology Products

23 25 21
(54) Atomising Devices and Methods 4 1

(57) A metered dose inhaler comprises a piston (3) 13

which is mounted in a cavity (2) within a body (1), 22
and is urged by a pre-loaded spring (6) into a 11
reduced cross-section pressure chamber (4). The 5 12
piston (3) may be loaded by means of an actuating
rod (31) having a handle (32), and may be latched 3 16
in a loaded position by a latching means (33). A
liquid drug (e.g. in aqueous solution) is contained 10
in a collapsible bag (10). Metered quantities of the
drug are successively presented in the pressure 15
chamber (4), and then subjected to a sudden and 6
great increase in pressure, to eject the liquid drug
through an atomising head (22), to reduce it to a fine 2 34
atomised spray of small mean particle sizefor 35
example, less than 30 micrometers. Non-return 33 31
valves (13 and 23) control the flow of liquid through
the device. The sudden pressure pulse is caused by 32
releasing the spring loaded piston (3), upon depressing GB 2 256 805 A
an actuating button (35) connected to the latching
means (33).

Figure9.9 Patent Respimat.

potential to build up a steady new business after the successful completion of all the
phases of a well-defined development program:

Development of a functional model to provide proof of concept

Engineering of a serial product and of the corresponding production process
Fabrication of tools and small batch production
Scale up of production
Serial production (million parts per year)

Both parties had the option to terminate the cooperation if the well-defined cri-
teria of any phase could not be achieved. Parallel to the ink-jet head and optical cou-
pler projects, microParts had started a few customer projects that fulfilled all above
mentioned requirements and that successfully completed all phases from feasibility
tests to large-scale production.

Nebulizer for Drug Delivery

Using the experience and skills of the company, a new Respimat aerosol inhaler was
developed for Boehringer Ingelheim, a leading manufacturer of metered aerosols.
Respiratory and lung diseases are on the increase the world over, urgently neces-
sitating new kinds of therapy completely free of CFCs and other propellant gases.
In order to meet these future requirements, Boehringer Ingelheim had purchased a
patent in which a soft mist inhaler utilizes the pressure of a released tensioned spring
instead of propellant gas (see Figure9.9). A micromechanical pump forces the medi-
cal solution through a micro-nozzle, generating a soft spray.

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5 m


5 m

Figure9.10 (ad) Micronozzles for Respimat.

In the early stages of the project, the role of microParts was to develop micro-
nozzles with 5m holes in different shapes in order to generate a spray with an
aerosol droplet size of 5 m. Examples are shown in Figure9.10 (ad). microParts
development task was expanded into the development of a nozzle unit in combina-
tion with a filter structure to deliver the specified spray characteristics. Employing
a semi-empirical approach, different nozzle principles were investigated, ultimately
resulting in the uniblock (shown in Figure9.11).
The uniblock consists of a filter structure including two micron-sized outlet
channels built onto a silicon wafer. The drug solution is forced through the channels,

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204 Commercializing Micro-Nanotechnology Products

5 m


5 m

Figure9.10 (Continued)

producing two fine jets of liquid that converge at a carefully controlled angle. The
impact of these two jets generates the slow-moving soft mist. The generation of the
soft mist lasts for more than a second, compared to about 0.2 seconds for the clouds
generated with a propellant gas, and this facilitates the coordination of actuation and
inhalation. Depending upon the formulation, between 66 and 81% of the droplets of
the Respimat fall into the fine particle fraction (less than 5.8 m), compared with less
than 40% for the majority of metered dose inhalers.
With completion of the uniblock, a device for a drug delivery system, including
a pressure-generating system for the micro-nozzle, had to be developed. Boehringer

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Figure9.11 Uniblock Respimat brochure.

Ingelheim contracted that task to medical device manufacturers who were well
established in that field. Very soon it became obvious that a substantial competence
in microstructure technology was required for this to be successful. In order to avoid
a complete failure of the project, microParts proposed a design of the complete nebu-
lizer system and built a working prototype. This was accepted by Boehringer Ingel-
heim, which then contracted a supply agreement with microParts for the complete
Figure9.12 shows a schematic diagram of the Respimat with its unique delivery
mechanism that utilizes the energy from a tensioned spring to generate a soft mist. A
simple 180 twist of the inhalers base compresses the spring and draws a predefined,
metered volume of solution through the capillary tube and into a dosing chamber.
When the dose-release button is pressed, the energy released forces the solution
through the uniblock to form a soft mist of fine aerosol particles.
During the development program, all the required specifications were met, and
microParts also took responsibility for the design of an attractive, easy-to-use product
(see Figure9.13). When the prototype was completed and a frozen design had been
agreed, microParts was contracted to develop the production processes according to
medical GMP rules (Good Manufacturing Practice) and to scale up the production
to a capacity of 10 million devices per year. Whereas the development costs for the
prototype were just above $10 million, the budget for production scale up exceeded
$100 million. This is explained by the complexity of the workload involved in this
task. In most cases, this is underestimated by start-up companies.
The microstructure technologies applied to Respimat production combine sili-
con micromachining, micro-injection molding, mechanical micromachining, and
specific mounting and assembling procedures. A robotic system for mounting and
assembling was specially developed and proven for the assembly of 40 Respimat per
minute, shown in Figure9.14 (a-d).
In addition to the long development and production scale-up times, the oblig-
atory clinical tests determined the timing of the first market introduction, which
became possible in January 2004. With new drugs under development for delivery

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206 Commercializing Micro-Nanotechnology Products

Figure9.12 (See color insert following page 16.) Schematic diagram Respimat brochure.

via the Respimat, this unique product looks forward to a prosperous growth over the
coming years.

With completion of the Respimat development and production program, a system-
atic search was started to apply this competence in micro-nebulizer technology to
nonpharmaceutical applications in order to ensure further growth of the microParts
business. It soon was recognized that the Respimat principle, with its limitation

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microParts GmbH 207

of released dose of a few microliters per single shot, was not applicable to mass
markets like perfume, deodorants, or hairspray. In a systematic search, microParts
investigated other nebulizer applications in order to find a unique opportunity for
microParts core competence in microtechnology and one that would offer functional
improvements to the large aerosol markets. The final choice was an innovative aero-
sol particle generator based upon capillary atomization as shown in Figure9.15.
The use of capillary tubes instead of swirl chamber nozzles makes it possible,
for the first time, to spray highly viscous products at optimum flow. Due to low flow
rates, capillary atomization does not need highly diluted formulations. The result
is a significant reduction of solvents and propellants (VOCs) compared with exist-
ing products. Products can be sprayed much more effectively, reducing amounts of
solvents and propellant gases down to 20% of conventional aerosol systems, and thus
offering an environment-friendly alternative. In addition, higher viscosity products
such as concentrates, lotions, gels, and even waxes can be delivered as an aerosol
Lowering the proportions of propellant and solvent enables the size of the aerosol
cans to be reduced, which is an additional advantage in function and cost. Together
with the German tube manufacturer Tubex, a leading supplier of aerosol cans, a new
innovative shaped can was developed in order to establish TRUSPRAY as a unique
registered trademark (shown in Figure9.16). The high recognition oval shape makes
the product attractive and user friendly.
Since mass production and sales of aerosol products are not in the area of mic-
roParts core competence, a business model was developed based upon the establish-
ment of licensing agreements with a network of leading European suppliers, each
having a core competency within the aerosol business:

LINDAL group System production, marketing and sales

TUBEX group Can production
ColepCCL Filling

microParts supports this network with further microtechnology and by investi-

gating new applications.
As with many other innovations, the market introduction turned out to be much
more difficult than expected. The large European players in the aerosol business
were more concerned about the risks and customer reaction to the products than they
were about capitalizing on the multiple new opportunities. A breakthrough was the
successful introduction of a TRUSPRAY version of a deodorant by Sara Lee, which
sold more than 10 million devices in the first year. Another example was the suc-
cessful introduction of an aerosol version of a ski wachs by the Austrian company
TOGO, which also demonstrates the innovative potential of this invention.

The advances in ink-jet printing technologies achieved by applying microstructure
technologies have demonstrated new ways of handling fluids within micron-sized

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208 Commercializing Micro-Nanotechnology Products


Figure9.13 (ac) Design studies for Respimat.

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Figure9.13 (Continued)

structures. These have been used by many teams in research institutes and industrial
organizations aiming for innovative solutions in biomedical diagnostics.
Microstructures permit precise fluid handling of very small volumes (microli-
ters to picoliters) in a minimum available space. Sophisticated microfluidic designs
enable the integration of fluidic functions such as dosing, mixing, resuspension of
dried chemicals, triggering, and valve functions. In the micron-sized channels and
cavities, capillarity can be utilized as a simple and robust fluid propulsion mech-
anism. All this can be combined to build platforms (lab-on-a-chip) for complete
chemical reactions. Typical applications are:

In vitro diagnostics (point of care)

High throughput screening for drug discovery
Analytical instrumentation

microParts core competence in microstructure technology, especially with

polymers, offering low-cost mass production for polymer chips, positioned it as a
competent partner for a life science industry already in the early stages of this new
field of application. The miniaturized microtiterplate Lilliput seen in Figure 9.17
(a-d) developed together with Merlin Diagnostika (Bornheim, Germany) is an
example of such a lab-on-a-chip system, produced in polymers by injection molding.
The microtiterplate integrates 96 reaction wells, 4 sample reservoirs, and 5 addi-
tional chemical ports on an area that is smaller than a thumb. The wells are pre-
loaded, e.g., with various antibiotics. Microchannels link the wells with the sample
reservoirs, allowing capillarity to propel the sample cell suspensions into the reac-
tion wells. The cell growth rate in the different wells is optically monitored during
incubation by using the microParts microspectrometer, which is described in the
next paragraph.

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210 Commercializing Micro-Nanotechnology Products



Figure9.14 (ad) (See color insert following page 16.) Robotic system for mounting and
assembling Respimat.

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Figure9.14 (Continued)

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212 Commercializing Micro-Nanotechnology Products

Figure9.15 TRUSPRAY principle brochure.

Figure9.16 TRUSPRAY can brochure.

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Figure9.17 (ad) Microtiterplate LILLIPUT brochure.

The key properties of the Lilliput diagnostic chip for clinical microbiology are:

Low consumption of reagents

Short analysis times
Easy handling
Automated test procedures
Savings in costs and time

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214 Commercializing Micro-Nanotechnology Products

Figure 9.17 (Continued)

Other examples of the successful developments of bio-chips are a DNA chip for
Exicon (Denmark) and several chips for home-care tests, which are currently in the
market introduction phase.
The demands in analytical instrumentation for high speed, low sample consump-
tion, and low cost can be met with the application of microstructure technology. A
typical example is the introduction of a micro-degasser for High-Performance-Liq-
uid-Chromatography (HPLC) by Agilent, which was developed and manufactured
by microParts. A large 18-inch box with a long tube system for degassing eluents for
HPLC is replaced by a micro-system consisting of an ultra-thin PTFE permeable
membrane supported by a micro-structured PEEK inlay of 1.2 million columns as
shown in Figures. 9.18 and 9.19. The advantages are not only smaller size and lower
cost but, even more importantly, a reduction of the processing time for degassing
the samples under investigation from 4 hours to 15 minutes. Patents for the product
design are owned by Agilent, whereas the production processes are protected and
owned by microParts.
Another microstructure product that is very well suited for analytical instrumenta-
tion is an optical microspectrometer, which is described in the following paragraph.

An optical microspectrometer was one of many product ideas that was investigated
by the inventors of the LIGA-technique in 1987:

European patent EPO242574 A 2 1987 10 28

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microParts GmbH 215

Figure9.18 Micro Degasser product sheet.

0.2 mm

Figure9.19 Microstructured inlay microdegasser product sheet.

Procedure of the manufacture of an optical component having one or more

echelette-gratings and device thereby obtained.
This product proposal was the only one that passed the evaluation criteria
described in Chapter 3, and therefore an appropriate budget was allocated for the
development of a monolithic miniaturized grating spectrometer incorporating all
the functional elements onto a single chip. After discussions with many potential
customers, it was decided to develop a product with one basic design verified in two
versions for different wavelength ranges as shown:

Visible enhanced 3001000 nm

Near infrared 10001800 nm

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216 Commercializing Micro-Nanotechnology Products

Figure9.20 Microspectrometer principle.

A schematic of the LIGAmicrospectrometer is shown in Figure9.20.

An optical fiber images the sample onto the entrance slit of the device. The light is
then propagated onto the self-focusing Echellette grating. The diffracted light is deflected
onto a detector array, which reads out the optical spectrum as an electrical signal.
The lateral dimension of the microspectrometer is 20 13 mm. The small size, low
power consumption, and robust design with no movable parts make the microspec-
trometer ideally suited for incorporation into handheld and tabletop instruments.
A spectacular application is the Bilichek instrument, which was introduced by
the U.S. company Spectrx for the noninvasive measurement of the blood parameter
bilirubin as a means of detecting jaundice in newborn babies. The BiliChek focuses
white light on the babys skin and analyzes the spectrum of the backscattered light
to determine the bilirubin concentration in the blood. For the first time, it offers
a mobile, noninvasive method for the diagnosis of neonatal jaundice. Results are
instant, while the need for blood samples and the resulting risks of infection and
pain trauma are eliminated. The BiliChek instrument has received FDA approval
and today is successfully sold throughout the world by the company Respironics (see
Other typical examples of instruments that incorporate the microspectrometer
are in dental and cosmetic applications. The IdentaColor II by Identa A/S Denmark
is a small portable tooth color measuring instrument (see Figure. 9.22). It allows
dentists to determine the individual tooth shades and to select from a set of color
shades the optimum match of the new ceramic insert. Without the device, this is
sometimes a difficult task because the color appearance of teeth depends largely on
environmental conditions.
Today there are roughly 150 different applications using the microspectrometer;
the most important ones are in the field of point-of-care diagnostics, biomedical and
clinical analyzers, quantitative determination of ingredients in food and agricultural
products, color sensors, and classical analytical instrumentation.

As described in the first chapters, microParts was founded with the mission to com-
mercialize the newly invented LIGA-technology. Therefore, in the early phase, all

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Figure9.21 BiliChek.

Figure9.22 IdentaColor.

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218 Commercializing Micro-Nanotechnology Products

Microstructuring Techniques

X-ray-, E-beam-, Excimer-Laser Reative Ion Mechanical

UV-Lithography Machining Etching Microfabrication

Fabrication of Mold Insert by Electroforming

Series Production

Micro Injection Molding

(hot embossing)

Surface Modification

Assembly/System Integration

Figure9.23 Microstructure technologies fluidic brochure.

efforts were taken to validate the numerous process steps and to transfer the tech-
nology from a laboratory scale to industrial mass production. With the small series
production of demonstrator samples, it became already obvious that the production
processes required special adaptation and optimization for each individual product,
and since a product is assembled from different components, it typically requires the
application of a broad spectrum of different microtechnologies.
The basic idea of the LIGA-invention is the production of a master using
sophisticated microtechnologies and reproducing from this master in large
quantities utilizing injection molding. This principle was followed, and the origi-
nal master-fabrication by deep x-ray synchrotron lithography was augmented by
other microstructure processes (as shown in Figure. 9.23) such as x-ray lithography,
UV-photolithography, silicon dry etching, electro-discharge micromachining, and

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Figure9.24 (See color insert following page 16.) Respimat production line.

mechanical micromachining. All combinations of these techniques are used to pro-

duce the required microstructure. In contrast to microelectronics, these rather com-
plicated and costly processes are applied only once to create a master structure, which
is copied into a metal tool by electroforming. By using this tool in a micro-injection-
molding process, exact replications of this master are produced in large quantities.
In addition to microtechnology capabilities, microParts had to develop compe-
tences in surface modifications like hydrophilization or metallization and surface
fictionalization, e.g., for the coupling of biomolecules. In order to fabricate a working
microsystem out of the different components, it is essential to use bonding methods
like ultrasonic bonding or laser beam welding.
Mounting and assembling processes have to be developed for every single micro-
product. The development of the Respimat assembly line (see Figure. 9.24) took
more than two years, with costs in excess of $20 million.
Clean room conditions A, B, and C, as with microelectronics, are required for
contamination-free microlithography and also to meet hygiene requirements for
pharmaceutical products in accordance with FDA/GMP guidelines. microParts
manufacturing processes take place in accordance with DIN EN ISO 9001 and EN
ISO 13485.
These complex and costly technologies require a strong financial commitment
by the customer in order for microParts to make the investments required for the

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220 Commercializing Micro-Nanotechnology Products

scale up of production following successful product development. This factor is often

underestimated by start-up companies.

Intellectual Property
The value of a high-tech company strongly depends on its intellectual property. A
strong patent portfolio serves two main objectives:

It secures a unique selling position and defends against competition.

It secures the freedom to operate.

At the beginning of all business activities, a careful search must ensure the
freedom to operate. This means there are no patents, which could prohibit the
new enterprise to act in its field of competence and to execute its business plan. In a
pioneering industry like microsystems technologies, broadly claimed patents are an
important step in staking territorial claims.
Once microParts had defined its core business, an active patent strategy was
implied to secure this territory with patents. There are three categories of patents for
microParts business:

Production processes
Design elements for -fluidics and -optics, which can be combined for
innovative products (see Figure9.25)
Product patents

Design Elements (IP@BImP)

Dosing Mixing Resuspension Separation Time Gate

Platforms (IP@BImP and 3rd parties)

Products (IP@3rd parties)

Cardiac LabCD96


Figure9.25 Microfluidic design elements.

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Filing a patent is an efficient way to find out if an invention has a pioneer charac-
ter (no other publication found in patent search) or if it infringes on previously issued
claims. Filing of a worldwide patent incurs a substantial investment in finance and
workload. Therefore, microParts reviewed the possible implications of every new
patent application on microParts business:

Economic use was uncertain; application only in Germany (defensive pat-

ent to secure freedom to operate).
Economic use planned in future; application in Europe, United States,
and Japan.
Economic use planned in core business; worldwide application.

microParts has issued approximately 30 patents and has many new inventions
under consideration. When the broad search phase was finished as described, pat-
ent activities were focused, and patents not related to the core business were sold,
generating a good income.
A strong patent portfolio not only serves to secure the companys business, it is
also important to obtaining good profit margins. microParts development and deliv-
ery contracts typically include a license agreement for using intellectual property. In
general, the customer receives exclusive rights in his application, which have to be
defined and very carefully described in the contract.
In order to pursue all relevant aspects of patent issues, an interdisciplinary team
was established that made the necessary decisions during regular twice-monthly
meetings. Throughout the lifespan of microParts, there have been no claims or dis-
cussions with regard to patent infringement.

Commercial Results (Sales, EbiT)

With the foundation of microParts GmbH, its shareholders STEAG AG, HOESCH
AG, HUELS AG, VEW AG, and Rheinmetall GmbH committed to finance the
start-up phase and agreed in their shareholder contract to accept responsibility for
any losses. The prognosis for the business plan was that break even would be reached
in five years. For launching the LIGA-technology, the operating expenses were esti-
mated at 6 million per annum, mainly for developing a reliable process technology
and demonstrator samples, which would be used to convince potential customers of
the viability of the technology. The first income was generated from development
contracts and two years later with the first small series production contracts.
At a board meeting in 1993, the projected growth of revenue and operating
expenses was presented as shown in Figure9.26. The numbers until 1998 were agreed
as the valid business plan. The following projection was only a general estimate.
The blue dots for year 2004 are the actual numbers for revenue and total operat-
ing expenses. The actual numbers for revenue and EbiT from start to year 2004 are
shown in Figure9.27. Investments increased from 2 million euros in 1997 to 8 mil-
lion euros in 2004. A positive cash flow was generated from year 1998.
Public support with development contracts from the German government and
the European Commission strengthened the R&D budget but were below 1 million

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microParts will mit der derzeitigen Fokussierung der Aktivitten so schnell wie mglich
die Produkt- und die Marktphase erreichen

Umstze/ Phase I Phase II Phase III Phase IV Um-

Kosten Grundung, Start, Selektion und Ertolgreiche Projekte Finden Ttigkeitstelder, Identifizierung Mrkte, stze/
p.a. Suche Fokussierung Produktdefinitionen Herstellung Deckung Ttigkeitstelder/Mrkte Kosten
(Mio.DM) Projekte. An- p.a.
passung Ko- (Mio.DM)

Commercializing Micro-Nanotechnology Products

Aufbau- und Fokus- Produktphase Marktphase
Such-Phase sierungs-




2000 2004
Vergangenheit Gegenwart Mittelfristige Zukunft 2000 2004
19901992 19931994 19951998 Langfristige Zukunft
ab 1998

Figure9.26 Business plan from 1993.

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microParts GmbH 223

Turnover (MIO ) 45.5
EbiT (MIO )
40.0 37.1


10.0 8.6
1.8 2.6
0.4 0.7 0.9
0.2 0.4 0.2 0.4 0.4 0.8 1.6 3.3 2.5
6.3 6.6 7.1 6.4
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure9.27 Revenues and EbiT actual data.

per annum. The city of Dortmund made a substantial investment in the technical
buildings rented by microParts.
Different from conventional businesses, the largest part of the budget (approxi-
mately 70%) was personnel costs. This reflects again the importance of excellent
human resources management.

Human Resources and Organization

When a venture capitalist is asked what are the most important criteria in identify-
ing the value of a start-up company, the answer will be product plan people.
Where intellectual property is the dominant value and material costs are negligible,
for MNT, in the seed phase the answer should be people people people.
During the challenging LIGA-research project, only the best young scientists
were selected by FZK and the STEAG project team. With the foundation of mic-
roParts, additional selection criteria were applied, choosing only those employees
who showed, in addition to their technical expertise, talent and motivation for the
commercialization of the new technology.
In the start-up phase, microParts was supported by its parent company STEAG
with the provision of the general functions of human resources, legal subjects, IP,
and control, all of which were assumed by microParts in the subsequent years.
The initial R&D oriented staff were trained in special management adapta-
tion programs such as project management, time management, decision analysis by
Kepner Tregoe, and controlling for engineers. This included the total participation
of the entire management team.
Training for specialized functions was provided on an individual basis,
e.g., marketing, key customer relationship management, and accounting rules for
small enterprises. A determined effort was taken to educate personnel from all man-
agement levels in leadership skills. This important personnel development support

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224 Commercializing Micro-Nanotechnology Products

program was contracted to the specialized consultant group Impuls, Ltd., Bonn. The
program offered practice-oriented training with subsequent individual coaching and
regular counselling to review the leadership skills of individuals.
Together with the consultants, a team of microParts personnel from all levels of man-
agement developed the following nine dimensions of individual leadership principles:

Trust and respect

Role model
Motivation and support
Delegation of responsibility
Transparency and flow of information
Target agreements
Feedback and appraisal
Advancement and further education

An illustrated brochure describes the leadership principles together with detailed

descriptions as to how a microParts executive should ideally behave when interact-
ing with his or her colleagues or with customers or the general public. As a part of
360-degree feedback, all employees have the opportunity to anonymously appraise
their supervisors regarding the accomplishment of the leadership principles by tak-
ing part in an annual online survey. The level of participation was always close to
90%. The results of the survey are then discussed between the assessed executive
and his supervisor during the annual performance evaluations.
Top management participated in all the microParts in-house seminars and used
these seminars as opportunities to communicate information regarding the mission,
culture, purpose of the organization, and the actual budget situation. Information on
these subjects was also communicated to all employees during periodic meetings.
This open and unrestricted flow of all relevant information concerning the business
of microParts helped all individuals to identify with the goal of microParts and con-
vince them that the values that had been created for microParts also were valuable
in their individual careers.
The increase in personnel over the years is shown in Figure9.28. Parallel to the
increase in personnel and the foundation of the business, an organizational struc-
ture was continually developed. The initial functional organization was established
as follows:

Product development
Production processes development

This was developed into a hybrid divisional organization (shown in Figure9.29),

according to the principle structure follows strategy. In this evolutionary process,
the principles of the learning organisation were applied:

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Actual value Planning 553
500 471

300 284
148 159


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Figure9.28 Personnel increase over years.

We are a small part of a rapidly changing system.

There is no absolute truth.
There is always a better way of doing things.

The business development of microParts demonstrates the chances and risks of a
start-up business that is based upon an innovative technology requiring the determi-
nation of new applications and products.
The transfer of the newly invented microtechnology from the laboratory scale
to an industrial platform took much longer and required much more financing than
was anticipated and promised to the investors by the scientists. The new features of
the LIGA-technology offered improvements to existing products like ink-jet heads
and opened up the possibilities for completely new applications such as noninvasive
biomedical diagnostics.
In all cases, in order to win the business of prospective customers, there had to
be the potential to realize a functional improvement in their devices as well as a cost
saving. Whereas microtechnology could demonstrate the feasibility of a new product
idea that could be realized at low cost, the development of tools and processes for
low-cost mass production required a much larger effort on behalf of microParts and
a strong financial commitment of the customer.
Since components with micron-sized structures offer value only when mounted
into a functioning system that is usable in the macro world, processes and equipment
for mounting and assembling have to be developed for every single microproduct, a
factor that is underestimated by many newcomers to the field.
The introduction of an innovation or even a disruptive technology requires leader-
ship skills that typically exist only in small- and medium-sized enterprises, whereas,
on the other hand, in many cases, large-scale financing is critical to success. To

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226 Commercializing Micro-Nanotechnology Products

General Management

Nebulizer Microfluidics Microoptics

Marketing & Marketing & Marketing &
Sales Sales Sales
Development Development Development
Engineering Engineering Engineering
Mounting & Mounting & Mounting &
Assembly Assembly Assembly


Clean Room Processes

Injection Molding

Quality Management

Administration & Controlling

Figure9.29 Organization diagram microParts.

introduce an innovation within a large company operating in an established market

requires a product champion with a strong influence within the organization.
Middle management in R&D or product management alone will fail to over-
come the resistance of the establishment. In the case of the middle management of
large corporations, it seems to be more important to avoid risks than to explore new
opportunities. To manage a successful business in microtechnology, a clear focus
is required in technologies, fields of applications, and the needs of key customers.
This must be balanced by the day-by-day top management decisions as to whether
or not to step into new opportunities. Too many small businesses will defocus with
a resulting decrease in efficiency. A business should not be too dependent on a small
number of customers.
By far the most important success factor for a high-tech start-up is excellence
in management. The high level of complexity involved in building a new business
requires know-how in business management, products and markets, production
technologies, and leadership and motivation of people. Management of innovations
requires different skill sets, often in one position:

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microParts GmbH 227

analytical versus visionary thinking

focused concentration versus open mindedness
discipline versus creative chaos

A new enterprise should not follow successful predecessors benchmarking

makes all businesses equal and should not accept the established rules of market
leaders but should instead develop its own rules. To follow a vision needs courage; it
is a journey into an undiscovered area with many challenges and risks but also many
fascinating surprises that are rewarding to true pioneers.

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10 Shaping the Future
David Tolfree


Introduction............................................................................................................. 229
From the Past to the Future......................................................................... 229
The Future of Health and Medicine....................................................................... 232
Nanomedicine.............................................................................................. 233
Current Developments................................................................................. 234
Future Developments................................................................................... 235
Stem Cells for the Future14.......................................................................... 236
Materials Products Applications................................................................... 236
Nanoparticles, Nanomaterials, and Nanomanufacturing............................ 236
Carbon Nanotube Composites..................................................................... 238
Microchips and Nanoelectronics................................................................. 239
Supplier Companies.....................................................................................240
Existing MNT Products and Components.............................................................. 241
Emerging New Products and Systems.................................................................... 242
Nano Food Products.................................................................................... 243
Smart Packaging for Food...........................................................................244
Fuel and Transportation Systems................................................................ 245
Detection and Analysis................................................................................246
2030 and Beyond.................................................................................................... 247
References............................................................................................................... 251

From the Past to the Future
The nineteenth century heralded the first industrial revolution based on steam power.
It created a manufacturing industry that provided new wealth and social change.
The twentieth century was the age of scientific discovery: electrical power replaced
steam; and new disciplines such as electronic engineering, nuclear physics, genom-
ics, and computer technology were born. The atom was split, nuclear power became
a reality, transistors and microchips were developed, computers were built, and the
DNA molecule was decoded, leading to the map of the human genome. Governments


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230 Commercializing Micro-Nanotechnology Products

funded research, and the stock of human knowledge rapidly exceeded the ability to
exploit it. At the dawn of the twenty-first century, the World Wide Web (the Internet)
came into common use for the communication and exchange of information. The
twenty-first century is the age of knowledge and communication; intellectual capital
is its currency. Now in the first decade of the new century, we look out onto an ocean
of unparalleled opportunities when, for the first time, we can begin to see how to
manipulate matter at the molecular level. The capability of manipulating atoms and
molecules was first hypothesized by Richard Feynman and others in the late 1950s.
In his lecture to the American Physical Society, Theres Plenty of Room at the Bot-
tom,1 in 1959, American Nobelist Richard P. Feynman presented his audience with
a vision of what could be done with extreme miniaturization. He proved simply that
the entire 24 volumes of the Encyclopdia Britannica could be written digitally
on the head of a pin. That well-quoted statement started people thinking about how
nanoscale science could become nanotechnology.
In his books Engines of Creation,2 first published in 1986, and Nanosystems:
Molecular Machinery, Manufacturing, and Computation,3 published in 1992, Eric
Drexler examined the enormous implications of developments in nanotechnology for
medicine, the economy, and the environment and made astounding yet well-founded
projections for the future. We are now able to understand the possible realities of
those predictions.
Zyvex, one of the first U.S. nanomanufacturing companies (see Chapter 8), has
developed Atomically Precise Manufacturing (APM) to make the tools to manufac-
ture objects potentially very large objects with atomic precision. Using chem-
istry and advanced engineering, this technique will enable advanced materials with
unique properties to be made and used in the manufacture of many new products.
For example, low-cost, lightweight golf clubs, baseball bats, and tennis rackets have
been manufactured with increased strength using carbon nanotubes.
The next leap forward may not be from scientific or technological breakthroughs
but from unifying science and the convergence of technologies. Success in achieving
this will initiate a new renaissance in manufacturing. This has already started with
many new products becoming available in sectors such as communications, textiles,
and medicine. The establishment of high bandwidth carrier technology means that
voice, data, picture, and other interactive multimedia can be transported together
over fiber-optic cables or satellites. This is an example of an innovation that has
advanced communications technology. The satellite helps facilitate communication
irrespective of geographic location. Any person can communicate with anyone at
any time, anywhere on earth, if the right equipment is available. The economic and
social power of mobile telephones and personal handheld computers is already hav-
ing an impact on the way people live and work.
Converging information technologies with computer technologies, the Inter-
net being an example, has already brought benefits that were not conceived of two
decades ago. Communication media are combined into one service and available on
a computer screen. At the touch of a key, people and companies can trade goods and
services. It brings buyers and sellers together, allowing the rapid transfer of informa-
tion and finance. This can be carried out at any time and at any place convenient to

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Shaping the Future 231

the user. Google, the most used software search engine, is replacing reference librar-
ies to give users almost instant access to unlimited information.
The convergence of nanoscience and nanotechnology; biotechnology, biomedi-
cine, and genetics; information technology, computing, and communications; and
cognitive science and neuroscience will facilitate advances in science and technol-
ogy, improve human abilities, and enhance human performance. The synergistic
combination of these sciences and technologies is referred to as NBIC.4
Geographic boundaries are no longer barriers to communication. Nations are
coming together into regional groups, creating the global village concept. The
technological and economic developments that took place in the latter part of the
twentieth century and led to the concept of the global economy are now a reality.
This will inevitably lead toward a globalized society and eventually political con-
vergence. If this can be achieved, then most of the worlds current problems would
be solvable.
The future destiny of nations, governments, companies, and individuals is inex-
tricably linked to decisions made today. Such decisions have to be based on available
information and a reliable prediction of the future. An accurate prediction of the
future enables governments to produce economic strategies and policies, companies
to make meaningful business plans, and individuals to plan their lives. Sometimes
roadmaps or foresight documents are available to forecast trends in technological
development, economic progress, and market intelligence. Predictions based on
extrapolation from current trends can be made with a high degree of accuracy, but
the rapid pace of innovation makes long-term forecasting beyond 25 years much
more difficult. As can be seen from the earlier chapters in this book, disruptive
technologies can produce discontinuous innovations that lead to unexpected changes
and new areas of development. Any futurist must consider such possibilities when
predicting the future.
Predicting the future has become a business. Governments and companies often
have their own foresight programs and think-tanks with specialist staff to advise
on future developments and trends. A number of specialist companies and institutes
have been set up to trade advice, carry out vision surveys, and write reports on
areas of topical interest. Their names can be found by searching the Internet. Some
examples of the more prominent ones are listed later.
Ian Pearson, a futurist at British Telecoms Research labs, in his book Business
2010: Mapping the New Commerical Landscape5 states that within a generation, we
will grow computers from biological cultures that are faster than those we use today.
The ability one day to make conscious computers with an intelligence that
exceeds humans will provide a challenge to our present society. The development and
consequences of artificial intelligence were explored by futurist Ray Kurzweil in his
book The Age of Spiritual Machines.6 This was followed by The Singularity is Near,7
which explores the evolution of the union of humans and intelligent machines.
In his book The Extreme Future,8 James Canton, who runs the Institute for Global
Futures in the U.S., gives a compelling extrapolation from our current knowledge to
the next 40 years. He outlines eight fundamental innovations that will shape the future
taken from an American perspective: biomimetrics, photonics, nano-biotech, targeted
genomics, bio-detection, neuro-devices, nano-energy, and quantum encryption.

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232 Commercializing Micro-Nanotechnology Products

Perhaps the most compelling is biomimetrics mimicking natures mecha-

nisms to make new products. The living world is a manifest of innovative design. It
has evolved over the Earths history to adapt to its particular environment. We can
understand such designs only by examining them at the micro and nanoscale, i.e.,
at the cell biology level. The natural world uses bio-nanotechnology to create nano-
structures and nanomachines. Studying these structures and analyzing the materials
from which they are made gives insight about the processes used. Some of these
processes are explored in Richard Jones book Soft Machines.9
Intense studies are being made of plants and insects to understand how they
produce the materials that give them unique abilities to develop and survive in their
environment. Accurate and sensitive analytical instruments are now available to
make observations and measurements at the nanoscale. Many natural phenomena
exist that require explaining why is the inner shell of the abalone twice as tough
as modern high-tech ceramics? why can spiders spin a flexible web five times stron-
ger than steel? why can adhesive mussels stick to rocks, ships, etc., under salt water
quite efficiently? why can certain bacterial cells utilize sunlight at 95% efficiency?
and why can many insects regenerate lost limbs? Attempts to copy these natural
phenomena have so far not succeeded, but studies continue. The results of the stud-
ies should help technologists in their quest for making new materials. Our ability to
design molecules and biological systems will be dependent on advanced computer
modelling that has yet to fully develop. The complex biochemical processes that take
place in living cells are being actively studied. This is a priority area for research
and development because of its huge importance to medicine and the understanding
of life and its origins.

The Future of Health and Medicine

Expenditure on world healthcare is now over $3 trillion, which makes it the worlds
largest industry. The governments of most countries give health and medicine a
high priority. Actual statistics relating to what each nation spends on these can be
found on the Internet. With increasing world population, and in some countries a
larger aging population, the demand for healthcare is placing impossible burdens on
governments. Technological advances in every field of medicine are raising expec-
tations and pushing up demand for services. In democratic countries, politicians
and governments have to respond positively to this demand to secure support of the
people they represent. They are turning increasingly to science and technology for
solutions. The areas where nanotechnology is most likely to enhance the quality of
life for human beings will be in the fields of medical diagnostics, drug delivery, and
customized therapy. The availability of low-cost, easy-to-use, portable devices and
measurement systems will empower people to make their own decisions and plan
their own treatment schedules.
The Institute for Alternative Futures (IFAF)10 sees in the next 25 years the devel-
opment of a Health Advocate Avatar. This is a knowledge interface that can medi-
ate interactions between individuals and medical knowledge. It would provide an
information platform for organizing and integrating personal medical information to
the newest advances in biomedical developments, thus enabling individuals to make

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Shaping the Future 233

informed choices about their own healthcare. It is predicted that before 2030 this
will become an accepted practice, making healthcare fully personalized.
In the next decade, medical practitioners and health specialists will have enough
data on genetics and proteomics from patient records to replace diagnostics with
prognostic systems. The mapping of an individuals DNA and linking that knowl-
edge to his or her health profile will determine vulnerability to a wide range of
diseases. This will advance predictive medicine and will enable drugs to be targeted
to an individuals specific needs. Wearable computers will record and analyze data
from body monitors containing biomarkers that track disease in people at risk. These
computers can be securely connected to health monitoring centers. In this way, the
human population would contribute data directly to a central database for storage
and analysis. Clinical diagnosis can then be validated by accessing a central library
of biomarkers, thus identifying disease at its early onset.
The continuing development of imaging systems permits visualization of internal
organs and body processes, including brain functions. Within the next two decades,
this will advance our understanding of the relationship between body and mind and
lead to a predict and prevent approach to medicine. Eventually these health mea-
sures will result in life extension. Antioxidant and hormone replacement therapies
will further aid reduction of the aging process. Future markets will be shaped by
anti-ageing and health-enhancement products. Longevity medicine will become an
established practice.
It is estimated that within the next two decades human life expectancy for
healthy people could approach 100 years. Longevity medicine will retard the
aging process and promote better health and quality of life; but it will have pro-
found political, economic, and cultural consequences for society. Here we can see
change society beyond anything that has gone before. This leads us to the field

Biomedicine and biology are currently undergoing an information revolution. Huge
amounts of data are being generated from DNA sequencing, molecular structures,
and macromolecular structures (proteins, RNA, DNA); and from modelling and
visualizing biological pathways (metabolic, signalling, genetic control).
Nanomedicine is a subset of biomedicine. It can be loosely defined as the pres-
ervation and improvement of human health using molecular tools and knowledge
of the human bodys biochemistry. Nano-sized tools are used for the diagnosis,
prevention, and treatment of disease. They help to gain increased understanding of
the complex underlying physiology of disease. Nanomedicine will shape the future
direction of medicine. For a complete coverage of the subject, the reader is referred
to Robert Freitass excellent Nanomedicine Book Site.11 On this site, which is exclu-
sively devoted to nanomedicine, can be found four volumes of information covering
all aspects of the field. Each volume is available as a hardback book.
With the authors permission, I have taken the following definition from the
Nanomedicine Book Web Site.

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234 Commercializing Micro-Nanotechnology Products

Molecular nanotechnology has been defined as the three-dimensional positional con-

trol of molecular structure to create materials and devices to molecular precision. The
human body is comprised of molecules; hence the availability of molecular nanotech-
nology will permit dramatic progress in human medical services. More than just an
extension of molecular medicine, nanomedicine will employ molecular machine sys-
tems to address medical problems, and will use molecular knowledge to maintain and
improve human health at the molecular scale. Nanomedicine will have extraordinary
and far-reaching implications for the medical profession, for the definition of disease,
for the diagnosis and treatment of medical conditions including ageing, and ultimately
for the improvement and extension of natural human biologica.

In 2005, the European Science Foundation produced a report looking at the future
of nanomedicine12 and identifying Europes strengths and weaknesses. The work for
this foresight study report was carried out by a group of 35 experts from academia
and industry at workshops held in Amsterdam in 2004. One of the main conclusions
was the urgent need to raise awareness and improve communication of the economic
and social benefits of nanomedicine to stakeholders and to the wider public.

Current Developments
According to the findings of the IFAF 2029 Project,10 work is in progress in the fol-
lowing six areas as outlined on the Web Site. These will provide the foundations for
the future of nanomedicine.

Antimicrobial Properties: An investigation is being carried out on nanoma-

terials with strong antimicrobial properties such as nanocrystalline silver.
This is already being used by some medical centers for wound treatment by
coating bandages.
Biopharmaceutics: Efforts are focused on drug delivery applications using
nanomaterial coatings to encapsulate drugs and to serve as functional carri-
ers. Nanomaterial encapsulation could improve the diffusion, degradation,
and targeting of a drug.
Implantable Materials: Work is centered on using nanomaterials to repair and
replace damaged or diseased tissues. Nanomaterial implant coatings could
increase the adhesion, durability, and lifespan of implants, and nanostructure
scaffolds could provide a framework for improved tissue regeneration.
Implantable Devices: Efforts are concentrated on implanting small devices
to serve as sensors, fluid injection systems, drug dispensers, pumps and
reservoirs, and aids to restore vision and hearing functions. Devices with
nanoscale components could monitor environmental conditions, detect
specific properties, and deliver appropriate physical, chemical, or pharma-
ceutical responses. In the longer term, the development of nanoelectronic
systems that can detect and process information could lead to nanodevices
that serve as retina implants by acting as photoreceptors, and cochlear
implants by improving nerve stimulation.
Diagnostic Tools: Lab-on-a-chip devices are being used to perform DNA
analysis and drug discovery research by reducing the required sample

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Shaping the Future 235

sizes and accelerating the chemical reaction process. Devices could pro-
mote early detection and diagnosis of disease. Research is in progress using
nanoscale devices and materials to learn more about how biological sys-
tems self-assemble, self-regulate, and self-destroy at the molecular level.
Wyeth and Merck, Pfizer, GSK, Astra Zeneca, and Genentech are using
nanotechnologies for drug formulation and drug screening, employing the
technique of quantum dot analysis.13
Molecular Imaging Systems: Advances in nanomedicine will depend on
developments in molecular imaging systems. Molecular imaging is the non-
invasive visualization in space and time of normal as well as abnormal cellu-
lar processes at a molecular or genetic level of function. It is used to provide
characterization and measurement of biological processes in humans (invivo).
Current noninvasive imaging developments fall into three categories:
Radionuclide Imaging Devices visualize very low concentrations of
radionuclide probes in real time and provide quantitative information but
with low image resolution. They can be used for whole body imaging.
The PET (Positron Emission Tomography) scan visualizes probes
labelled with positron emitting radioisotopes; it is increasingly pop-
ular for both research and clinical medicine. It can reveal the pres-
ence of lymphoma cancer cells in specific areas of the body earlier
and more accurately than previous diagnostic methods.
The SPECT (Single Photon Emission Computed Tomography) uses
probes labelled with radioactive isotopes, which emit gamma rays
detected by a gamma camera to create the scan.
Quantitative Autoradiography is a technique used in the laboratory
to visualize radioactively labelled molecules in substances.
Radionucleotide Imaging combined with a computed tomography
(CT) or a nuclear resonance imaging (NRI) scan provides high ana-
tomic definition along with functional imaging for precise location
of the selected molecular activity.
Magnetic Resonance Imaging (MRI) uses paramagnetic-labelled probes
and produces high imaging resolution, but a large concentration of the probe
must be given, which can overwhelm the system being investigated.
Optical Imaging uses fluorescent and bioluminescent probes that emit
radiation in the visible or near-infrared wavelengths, which can be
scanned by optical cameras. Since light can travel only a few milli-
meters through tissue, it is limited to skin, breast, small animals, and
endoscopic procedures not deep tissues.

Future Developments
In the future, scanners will become so small and inexpensive that they could be used
directly by people in their own homes. They will be able to illuminate a large number
of biomarkers that identify disease processes. Beyond disease, some experts see that
molecular imaging could prove even more important for revealing healthy biologi-
cal processes as well. Brain scans already show neurological changes that energize

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236 Commercializing Micro-Nanotechnology Products

areas of the brain ass