Careers at IPG Photonics
IPG Photonics’ mission is to use fiber lasers to deliver superior performance, reliability, and usability at a lower total cost of ownership.
Valentin P. Gapontsev was a physicist at the Russian Academy of Science (RAS). Having worked there for 25 years, he began noticing fewer opportunities at the institution. Specifically, it had become overcrowded, and it was more and more difficult for employees to receive research funding. Consequently, scientific yield per scientist was falling behind that of Western counterparts. Disappointed by his environment, Gapontsev decided to start his own businesss in 1990.
That business was a company called IPG Photonics. He teamed with a group that included laser specialists, a few students, and Alex Schestakov, a former partner of his at the Industrial Laser Institute. Their first commercial offerings were crystal lasers, customized glass, wireless temperature meters, and laser components. They also began marketing solid-state and glass lasers, but neither caught fire. Gapontsev decided that to break out, they needed to introduce a disruptive technology.
He settled on high-power lasers with a fiber optics basis. At the time, fiber lasers could not emit more than 10 mW, but he believed they were capable of better. So in 1992, the firm poured all of its limited resources into that pursuit. Its first prototypes were promising, and the gambit paid off -- IPG obtained its first research contract from Italian telecommunications carrier Italtel to develop a high-power fiber amplifier. Soon afterwards, the carrier granted the company two more contracts.
One of the projects involved erbium fiber amplifiers, which utilized innovative pump schematics. Italtel wanted to sell the product immediately, so IPG opened a subsidiary in Europe. In 1994, it obtained another major customer, DaimlerBenz Aerospace. The client wanted an eye-safe laser transmitter for a helicopter warning system. It offered to fund development if the product was made in Germany, so IPG opened a location in Berlin. A year later it opened a plant near Frankfurt.
Over the next few years, IPG became known as a groundbreaker in advanced high-power fiber amplifiers and lasers. It launched hundreds of products for various applications, selling them at an annual run rate of $5 million in Europe, the U.S., and Japan. By 2000, it had become profitable with $52 million in annual sales and clients such as Lucent, Alcatel, Siemens, and Reltec. It also opened a plant in the U.S. In 2006, the company decided to capitalize on its success by going public.
Business model of IPG Photonics
IPG has a niche market business model, with a specialized customer segment. The company targets its offerings at system integrators, original equipment manufacturers (OEMs), and end users that have the in-house capability to integrate its products into their solutions. Its customers primarily operate in the automotive, aerospace, electronics, heavy industry, natural resources, semiconductor, photovoltaic, and medical device manufacturing industries.
IPG offers four primary value propositions: accessibility, performance, risk reduction, and brand/status.
The company creates accessibility by providing a wide variety of options. It develops low, medium, and high-power amplifiers and lasers, and its products are used in a diverse array of areas, including materials processing, biotechnology, medical, entertainment, and communications applications.
The company has demonstrated strong performance. Its unique technology platform enables its solutions to offer superior beam quality and higher output powers at a lower cost than other similar technologies. Furthermore, its proprietary designs are based on high-performance components and innovative pumping techniques perfected by the firm over 20 years of investment.
The company reduces risk by instituting high standards for its products, which are often used in safety-critical and mission-critical applications. Its main components are burned-in or tested for hundreds of hours, and it only utilizes parts that have met rigorous control requirements. Moreover, IPG is certified ISO 9001:2008, an international quality standard. Lastly, IPG claims to have the best warranty in its sector, with all products repaired or replaced without charge if they demonstrate any defects in workmanship or materials under normal use within two years.
The company has established a strong brand as a result of its performance. It bills itself as the top manufacturer of fiber lasers in the world. At the end of 2013, it was the second-largest producer of laser sources (in terms of total sales). In 2015, success continued, as the company generated a record $901.3 million in revenues, a growth of 17% from 2014. That year, it shipped over 32,800 devices to more than 3,050 customers globally. Lastly, IPG has won many honors, including the Prism Award for Photonics Innovation/ Industrial Lasers (2015), recognition as the “#5 Small Company in America“ by Forbes (2014), and recognition as the ninth fastest-growing company by Fortune (2012).
IPG’s main channel is its direct sales force, which operates from offices around the world. It also sells its offerings through distributors and independent sales representatives. The company promotes its solutions through its website, social media page, and participation in trade shows and conferences.
IPG’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.
IPG’s business model entails designing, developing, and manufacturing its products.
IPG’s key partners are the best-in-class suppliers it uses for its fiber devices. The company selects these companies based on superior products/services on a cost and performance basis, a proven track record, and the capacity to meet customer needs. They must be ISO 9001:2008 certified, be able to respond quickly to production requests, and provide effective technical service and support.
IPG’s’ main resource is its proprietary technology platform, which includes innovative pumping technologies. The company also depends on its human resources, including over 410 research and development employees who have expertise in fiber, optomechanical, and optoelectronic components, as well as laser materials. IPG relies heavily on physical resources such as its manufacturing facilities in the U.S., Russia, Germany, and Italy, and materials processing application centers in those locations as well as Japan, China, and South Korea. Lastly, it places a high priority on its intellectual property, with more than 200 issued and 320 pending patent applications.
IPG has an “economies of scale” structure, in which it leverages its scale to reduce cost per unit output (and thus product prices) for customers. Its biggest cost driver is cost of sales, a variable expense that primarily consists of manufacturing overhead, direct labor expenses, and the cost of components and raw materials. Other major drivers are in the areas of research and development, administration, and sales/marketing, all fixed expenses.
IPG has one revenue stream: revenues generated from the sale of its amplifiers and lasers. Pricing information must be obtained from direct sales staff.
info: Valentin earned a Ph.D. in Physics at the Moscow Institute of Physics and Technology. He previously served as a senior scientist in laser material physics at the Soviet Academy of Science's Institute of Radio Engineering and Electronics.
info: Eugene earned an M.S. in Physics at the Moscow Physics and Technology Institute and a Ph.D. in Quantum Electronics at the Russian Academy of Science. He previously served as Technical Director of IPG Laser.
info: Timothy earned an Upper Second B.Sc. Honors degree in International Trade and Development from the London School of Economics and Political Science. He previously served as Group Finance Director of the UK operations for IPFD.
info: Igor earned an M.S. in Physics from the Moscow Institute of Physics and Technology. He previously held several technical leadership roles at NTO IRE-Polus, IPG’s Russian subsidiary.
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