Standards Coordination Office
The Economic Impacts of
Documentary Standards:
A Case Study of the
Flat Panel Display
Measurement Standard
Erik Puskar
Standards Coordination Office
National Institue of Standards and Technology (NIST)
June 2011
Outline
• Status Report
• Assessment of a documentary standard using the NIST approach
• Why do we care?
 Documentary standards in the U.S.
 Getting a handle on NIST support for SDOs
• The Flat Panel Display Measurement (FPDM) Standard
 Background
 Findings & Illustrations
 Measures of Economic Impact
•Lessons Learned
•What’s next?
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Status Report
• Contractor developed
• Full report is in review
• Expected to be finalized in summer 2011
• To be published as NIST publication
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Economic Impact “the
NIST Way”
• Assessment of a documentary standard
• Involves communicating rich details with performance metrics focused
on:
 Project-specific sources of value creation, absorption, and diffusion
 Generation of cumulative social benefits
• NIST has conducted dozens of micro-economic, case-based, economic
impact assessments
 Quantitative and qualitative
 Retrospective and prospective
 Utilize a microeconomic framework refined by NIST’s Dr. Gregory Tassey
 Emphasizing “infratechnology”
 In the case study tradition of Griliches/Mansfield
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Why Do We Care About
Economic Impact?
Standards & the Innovation Process
Adapted from Gregory Tassey, The Economics of R&D Policy, 1997.
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Why Do We Care About
Economic Impact?
• Documentary Standards in the U.S.
 Voluntary/Industry-driven
 NIST plays an important supporting role
• How do we best manage NIST support for SDOs?
 Over 300 NIST experts are involved in more than 1100 documentary
standards committees (2011)
 Impact assessments provide clues about how NIST’s expert resources
should be focused: to advance measurement science and maximize
economic competitiveness, safety, health, and quality
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Background (1)
1960-1980 — U.S., Asian, and European firms productized and commercialized underlying FPD
material, component, and device technologies
1992 — Significant demand for IBM Personal Computer Company Thinkpad— precursor to 14
inch “killer app”
1992 — NIST Flat Panel Display Laboratory (FPDL) established
1994-2000 — Notebook PC and FPD TV industry “take off”
1995 — VESA organizes the FPDM Workgroup with NIST’s FPDL as a collaborator and editor
1998 — FPDM 1.0 released.
2001 — FPDM 2.0 released.
2007 — VESA’s FPRM Workgroup reorganized within Society for Information Display (SID) as
the International Committee for Display Metrology (ICDM)
2010 — NIST discontinues Display Metrology project funding
2011 — Expected release of Display Measurement Standard (DMS) by ICDM/SID
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Background
• Westar, Microvision,
Autotronic Melchers,
Eldim, Radiant
Imaging, NEIO, AMA,
Contrel, G&H,
Datacolor
(2)
End Users
Original Equipment
Manufacturers (OEMs)
Display
Manufacturers
• Dayton T. Brown,
ITRI
• General consumers
• Professional
consumers
• Dell, Apple, Sun Microsystems,
HP, Sony, Lenovo, Sharp,
Samsung, AUO
• Boeing, Lockheed-Martin,
Raytheon, Northrop Grumman
• Samsung, LG, AUO, CMO, CPT,
HannStar, Innolux
• (Aerospace Displays) Honeywell,
Rockwell-Collins, American Panel
Corp
Component
Manufacturers
Industry Value Chain
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Findings (1)
• FPDM standard enabled the transition to “structured dialog”
between FPD manufacturers and application OEMs
 Users able to specify tolerances of product attributes
 Technology to measure attributes is available, reliable
and unambiguous
 Procurer understands how, when, and why variation will
affect system performance
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Findings (2)
• Economic Impacts of FPDM:
Industry metrology labor-saving (measured)
SDO consensus-making labor saving (measured)
 Enhanced quality of products that use FPDs, FPD industry
revenues, and consumers’ “willingness to pay”
(unmeasured)
Measurement device designs (a product of NIST’s role in
the FPDM Workgroup) transferred to industry
(unmeasured)
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Illustration of Metrology Labor-Saving
• Metrology labor saving (net): ~$2.4 million annually (1998-2010)
• In 1994, prior to the publication of FPDM 1.0 (1998), a NIST workshop
on display standards concluded that:
 Few companies could afford to follow all the display standards
activities
 Industry metrologists needed access to the latest measurement
developments
 OEMs needed a bedrock of measurement standards to enable
their choice of the best display for their application.
• Other standards spoke to the issue of what to measure but nothing had
been published on how to measure and how to avoid the pitfalls of bad
metrology
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Illustration of Metrology Labor-Saving (Continued)
• Prior to the development of FPDM, a producer or buyer of flat panel
displays (FPDs) would consult any (or all) of a number of existing
standards, depending on the specific application and:
 Expend considerable resources working out which measurements best
suited a given need
 Working out the numerous technical measurement inconsistencies among
the various measurement standards
 Negotiating agreement on chosen metrics and measurement procedures to
be used in qualifying a FPD for future use
• The FPDM resolved many of these technical difficulties by offering a
measurement standard with a set of measurement procedures that
is unambiguous, that applied to multiple display technologies, and
that was practical to utilize
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Illustration of Consensus Labor-Saving
• Consensus labor-savings (net): ~$640,000 annually (1995-2001)
• The range of reduced time commitment for industry WG participants by
10-1200 hours.
• Prior to the resolution of measurement issues in the FPDM, attempts to
reach consensus in so technically challenging and complicated a field
could be bogged down in “specsmanship”:
 Reporting a measured value that could mislead or where the
display is measured in a configuration in which it would never be
used but provides better reporting values to hide a deficiency for
competitive purposes
• NIST staff analyzed, tested, reviewed, composed, and edited the
FPDM drafts under the auspices of NIST’s Flat Panel Display
Laboratory
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Illustration of FPDM’s Revenue Impact
• One test equipment manufacturer with average
annual sales of $700,000 (2005-2010) estimated
that, without FPDM, sales would have been much
lower, in the range of only $200,000 - $500,000
• FPDM was developed faster due to NIST’s
participation
 FPDM 1.0 (1998): Avg. estimate was 4.5 years faster
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Illustration of FPDM’s Consumer Surplus
Implications
• Intense competition in the FPD industry forces prices below
some consumers’ willingness to pay. Economist call this
benefit, “consumer surplus”
• A few survey respondents indicated that FPDM increased
consumer surplus (increased willingness to pay above
competitive market prices) by 36%, 36 cents worth of value
for each dollar actually spent by consumers for FPDMsupported products
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Flat Panel Display Measurement
Standard (FPDM)
FPDM — Measures of Economic Impact
Very conservative estimate of VESA’s/NIST’s return on investment (ROI) in FPDM
Net Present Value (NPV) in 1992: $15,573,930
 Value, in 1992 dollars, of the eventual outcome of the VESA/NIST
investment
Net Present Value in 2010: $56,323,545
 Value, in 2010 dollars, of the 1992 NPV invested for 19 years at 7% per
annum
Real Social Rate of Return: 48%
 The discount rate that makes NPV 1992 = 0 and makes BCR = 1 (VESA/NIST
“breakeven”)
Benefit-to-Cost Ratio (BCR): 4
 NPV of benefit stream/NPV of cost stream
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Lessons Learned
• Documentary standards have significant economic impacts,
similar to the economic impact of other “infratechnologies”
• NIST collaboration with SDOs is a significant technology
transfer platform
• NIST involvement in SDOs improves the efficiency of the SDOs
operations by reducing consensus-making time and speeding
standard release date
• NIST’s measurement know-how played a critical role in the
dynamics of this global, knowledge-driven industry, enabling
the “structured dialog” that lead to the proliferation of FPD
applications
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What’s Next?
• NIST Standard Coordinating Office (SCO) plans to continue to support the
development of impact assessments
• SCO will translate “lessons learned” into a strategic planning approach to
advise NIST staff about the likely impact of their SDO collaborations
• Ultimately “leading indicators” of the economic impact of NIST
engagement with specific SDO committees
 Many economic studies point to the value of standards in general:
“more is better”
 The management question is, “Will this engagement in standards
development be economically significant and add significant value
and best support NIST’s mission?”
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