Tweet

 

This is an exciting prospect, but the realities of the thin-film/printable batteries business have so far not proved as rosy as most once hoped.  Many (but by no means all) of the firms active in this space are unfunded or otherwise stretched financially.  Others are pretty close to being science projects.  NanoMarkets’ estimates for this year’s revenues from thin-film/printable batteries is just under $30 million; not impressive for an industry sector that has been around for quite a few years now.

 

NanoMarkets recent report on this topic, however, suggests that there is considerable hope for the thin-film/printable batteries in the future.  We see especially good prospects for such batteries in the sensors, smart cards and RFID sectors.  However, this is a demand-side analysis and begs the question of whether, how and to what degree firms in the thin-film/printable battery space are able to design strategies to capitalize on the opportunities.

 

Success in the Thin-Film/Printable Battery Space:  How Four Companies Define Their Strategy

 

A few thin-film/printable battery firms stand out, however, as having successes to date, coupled with plausible business cases and the money to make them happen.  A few have even made their case forcefully enough to attract significant amounts of capital from venture capitalists and strategic investors.  By “significant amounts of capital” what is meant here is tens of millions of dollars.

 

Cymbet:  Cymbet, for example, has had three rounds of funding to date, including a recent one for $31 million.  This round was co-led by Perseus and Intel Capital.  And one thing that distinguishes this company from most of the other thin-film printable battery companies is its product focus.  Specifically, the company is aiming to supply back-up power for integrated circuits (ICs).  This area is talked about by several other firms, but Cymbet is the one that is really pursuing the opportunity.

 

One particular aspect of this firm’s strategy that we see as positive is that it is aiming at a well- established addressable market in the form of applications where battery backup power is needed to maintain the settings of microcontroller memories, real-time clocks, and SRAM during power loss or power failures.  By contrast, an area such as RFID seems quite speculative.

 

IPS:  Infinite Power Solutions, Inc. (IPS) has raised over $60 million since its inception, and it has already built a facility which it describes as the “world’s first and only volume manufacturing facility for solid-state thin-film batteries.”  Again it has distinguished itself in the marketplace through the nature of its products, which are designed as a “permanent power source,” that is, one that will last the life of the product.   Applications cited by this company include powered autonomous sensors and it seems pretty clear that IPS is planning to serve the intelligence/military community where the price/performance of its products seems to fit.  But the wireless sensor market goes well beyond government applications and Infinite Power can expect to expand into wireless sensors more generally over time. 

 

Power Paper:  Power Paper is a supplier of micro-electric patch solutions to the cosmetic and pharmaceutical industries.  These are based on its own battery technology.  To date, Power Paper has secured $72 million from its investors.  This relatively high level of investment is really the key to Power Paper’s product/market strategy which is the ability to move up the value chain and produce its own products, not just batteries.  By moving up the value chain, Power Paper has opened up larger addressable markets for itself, although at the same time, it has repositioned itself in a way that suggests that it no longer quite thinks of itself as a battery firm.

 

Solicore:  Solicore, which offers an ultra-thin, flexible, lithium polymer battery, has raised over $53 million since its inception.  Part of Solicore’s competitive strategy lies in its proprietary manufacturing process, which it sees as a source of its competitive advantage.  Instead of the usual sputtering and evaporation processes used by companies of its type, Solicore uses a coating process, which gives high yields and can be scaled up to high volumes.  Solicore also has established customers, primarily in the smartcard business—something that most firms in the areas covered in this report really cannot claim.

 

Other Strategic Options for the Thin-Film and Printable Battery Space?

 

The product/market strategies being adopted by the four firms described above are certainly not the only possible approaches to the thin-film/printable battery market.  And there are certainly other viable product/market strategies being deployed in the TF/printable battery industry right now:

 

One rather obvious strategy is for TF/printable battery firms to just improve on performance measures for their products in an incremental and evolutionary way, providing longer lifetimes, or longer times between charging, for example.  However, we think that unless the performance improvements are big leaps forward, they are unlikely to provide battery suppliers with large competitive advantages. 

 

With the arrival of prelonic in this space, a new strategic approach has been thrown into the ring.  This “new” approach is exemplified in prelonic’s announcement that it has begun a five-year development phase that will begin by targeting applications “where the requirements already meet the performance of the products.”  The company sees this as “a way to start fast and to be ready for mass production in a short time.”

 

As a result, the firm is targeting marketing material, greeting cards or gaming cards.  This may well be a good way to get started and establish credibility, but it may not be much of a long-term strategy.  The volumes associated with specific products that fit into the categories mentioned above are typically quite low, and although some expected the “disposable electronics” applications to be the place in the market where printable and organic electronics would take off, this hasn’t proved to be the case. 

 

What Must be Done

 

Today, the current economic and funding climate means that thin-film/printable battery companies need to find ways to leverage the financial resources that they have now into quick returns.  One way of doing this is through partnerships and we note that printable battery firms are becoming increasingly willing to partner with manufacturers, product designers, applications developers and other firms.  Specific examples of potential partners include:  display makers; companies that supply digital security, such as smartcards and e-passports; smart packaging producers; and others that are involved in applications that these thin-film battery producers are targeting. 

 

In addition, several of the thin-film battery firms in the U.S. are working with government agencies, including the army, navy, DARPA and the National Institutes of Health (NIH).  Many tech companies are looking to government grants for funding these days, but these are intended primarily for R&D purposes.  Such grants are not intended to enable the firms to move to the productization stage. The industry is, apparently, not without its hopes for future funding.  For example, Planar Energy Devices has said it will seek $20 million in funding in 2010 to scale its manufacturing facilities and then do an IPO in 2012.  However, it is obviously impossible to be sure that such ambition will succeed, especially given the poor economic climate. 

 

NanoMarkets continues to see thin-film/printable batteries as risky business.  The good news is that they are not a technology looking for an application, as one so often sees in the case of new technologies. Instead, they represent a technology – or a class of technologies really – that has found its applications but also that those applications aren’t quite here yet.  Given the eventual emergence of these applications, NanoMarkets’ analysis suggests that the thin-film/printable battery market could reach over a $1.0 billion by 2015.