In the winter of 1994, Kevin Bailey was working at a Daimler-Benz research campus outside of Stuttgart, Germany, helping engineer a device that most people wouldn’t hold in their hands for another decade. It had a full touchscreen, keyboard and built-in speaker system. In other words, everything that would eventually make the iPhone the best-selling […]
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In the winter of 1994, Kevin Bailey was working at a Daimler-Benz research campus outside of Stuttgart, Germany, helping engineer a device that most people wouldn’t hold in their hands for another decade.
It had a full touchscreen, keyboard and built-in speaker system. In other words, everything that would eventually make the iPhone the best-selling consumer product in history. The problem, however, was that the cellular networks of the 1990s were not prepared for the technology and Nortel, the Ottawa tech giant bankrolling the project, was losing patience with anything to do with hardware.
“The switching market was nowhere near ready for the inefficiencies of dropped calls and services that weren’t ready,” Bailey recalled. “People would just be left frustrated.”
And so he flew home to Ottawa just as Nortel exited hardware completely to focus on software and fibre. That was a signal for Bailey, who was a hardware engineer.
“I’m a guy that’s been hardware my whole life,” he told OBJ. “So I said, okay, that doesn’t smell right. It’s time.”
He left Nortel and founded Design 1st in 1996.
While Ottawa went on to become one of North America’s great software cities, Bailey spent the next three decades working against the current and turning Design 1st into Canada’s largest and most experienced physical product consultancy. Today, it has more than 1,200 commercialized products and counting.
Its studio near Woodroffe Avenue and Merivale Road has a team of more than 30 full-time specialists working on upwards of 70 projects per year, for clients hailing from Los Angeles to Saudi Arabia to Berlin.
“There probably isn’t a component out there that we haven’t spec’d, gone into detail on or integrated in some form,” Bailey said. “So we ended up becoming very powerful for a small group.”
He calls the studio a playground filled with physical objects. “Anyone that comes into our operation, whether it’s a mother or a kid or the cleaning staff,” Bailey said, “the very first thing they say is, ‘Wow, I want to work here. This looks like so much fun!’”
In fact, it’s a disciplined playground for creatives. The firm’s founding philosophy is what Bailey calls the one-roof model, which originates from a hard-won insight from his Nortel years: that hardware projects fail when teams work in silos. Everyone at Design 1st works under one roof, whether they are involved in industrial design, engineering, firmware or anything else. Projects go from the initial napkin sketch to the factory floor with everyone involved, Bailey said.
As a result, the firm can pull together a realistic product strategy before the client has committed to even a single line of engineering.
“We can quickly bring together a plan, a real project strategy, with client teams before we jump into the engineering details,” Bailey explained. “When we’ve positioned and organized it, the engineering details follow along.”
The arc that eventually brought Bailey to found Design 1st began at the University of Waterloo, where he graduated top of his mechanical engineering class in 1984. He registered as a professional engineer in Ontario the following year, and went on to do stints at the National Research Council, General Motors and Shell.
But his career really took off in the late 1980s when he joined a forward-thinking design group at Bell Northern Research, Nortel’s R&D arm. It was an unusual unit for Nortel because it blended mechanical engineers with industrial designers and user-interface researchers to study how human beings actually interacted with technology. Bailey calls it the Wild West of the digital age.
The team’s most consequential work came in 1994, when Bailey spent time at the Daimler-Benz facility in Germany working on the first global smartphone prototype, funded through Nortel’s partnerships with AEG. At the time, European manufacturers were focused on miniaturization and were trying to make phones as small as possible for basic phone calls only. Bailey’s team had a different idea.
“We, the crazy Nortel Canadians, came in and said look, we want a display phone, it’s got to be bigger,” he remembered. “It’s got to have audio on it. It’s got to have separable audio earpieces so people can look at the screen and talk at the same time. We came up with the idea of a sliding keyboard. We built the first smartphone.”
The hardware worked, but the infrastructure did not. After Nortel shelved the program a year later, several of the user-interface designers from the group went on to be lead players at Apple, instrumental in building the iPhone.
“They had to wait 10 years while the switching world caught up,” Bailey said.
Still, Nortel’s exit from hardware gave Bailey an unexpected opportunity. He initially worked with a U.S. company developing sound systems before morphing that into his own firm, Design 1st. Ironically, his first big contract came from a familiar source: Nortel. The tech giant’s Calgary office needed help updating its Northstar phone line for the Asian market.
“I took all the Nortel knowledge because I’d been developing Northstar phones for many years,” he said. “Within the telecom network I found a project, and that grew into more things.”
Design 1st grew in response to client needs. The firm acquired an electronics company and added firmware and software capabilities. Medical device contracts pushed it to develop expertise navigating complex rules from the Food and Drug Administration and Health Canada.
The company also experimented with expansion by opening satellite offices in Montreal, Vancouver and Toronto. All were eventually closed. The reason was simple, according to Bailey. Clients wanted to deal primarily with the Ottawa design team.
“People would fly out, meet us once and then (we’d) work with them for an entire year without seeing them in person again,” he explained. This was because the firm had built remote collaboration tools, including early smartboard set-ups that allowed real-time sketching and co-design with clients in other cities, long before Zoom existed. “That was actually our saving grace,” he said.
The past 30 years have not been without challenges, including the gap between engineering success and market success, Bailey said.
For example, Design 1st played a significant role in the development of We-Vibe, the Ottawa sex toy brand that was eventually acquired by a German company. Allan Kerr, Design 1st’s vice-president of digital marketing, remembers there were significant challenges casting hot silicone over sensitive electronic sensors. The team eventually found a way to design molds and fixtures that protected the electronics, then transferred that knowledge to We-Vibe’s Asian manufacturers.
“That was an interesting time as that grew and blew up,” Kerr remembered.
According to Bailey, a particularly challenging moment was when his team spent years working with a local dentist who had developed a locking mechanism for high-speed dental drills. It addressed a real safety problem with friction-fit bits that sometimes spun loose. The product was fully developed by Design 1st and manufactured in Germany, met every technical standard, and yet couldn’t find a market. The infrastructure of the dental industry was just too entrenched for change.
“Everything was done,” Bailey said. “Everything was manufactured. We did a really good technical job. But it’s not always about design. It’s really about business execution and strategy.”
Today, the majority of Bailey’s clients are outside of Ottawa, mostly in the U.S. and Europe. He’s measured and frank about Ottawa’s relationship with physical product development: the city’s reputation in software is strong, but its hardware ecosystem is thin.
“Over 35-plus years that I’ve been doing this, Ottawa has been a centre of larger corporations doing technical products and product refreshes,” he said. “But our sweet spot is those companies that start from nothing and grow into giants. There isn’t a lot of that in Ottawa, though.”
The talent picture is similar. Kerr said mechanical and industrial design roles attract strong applicants from across Canada, but electronics and firmware engineers are harder to find.
“Ottawa is a software town with some hardware,” he explained. “The talent’s here, but they’re being swallowed up by the bigger companies.”
To make up for the local talent shortage, the firm has recruited from the Waterloo tech corridor as well as from China and Eastern Europe, where there are larger skilled talent pools.
Another issue is the time it takes to develop a new hire through integrated, multidisciplinary work. Bailey said Canada has been losing ground in the field of hardware for decades.
“When you don’t train people on the physical world, you know, the trade-offs and what’s feasible, you end up with people that have nice dreams but are unable to transfer that to something functional,” he said. “Those ideas end up being a company somewhere else in the world.”
But he remains optimistic about the future. He sees the convergence of AI and physical hardware as the most significant opportunity Design 1st has encountered. He describes the myriad of tertiary components needed to support robotics.
“Behind robots is a million other physical products that are going to be needed,” he explained. “To collect data, organize people, take actions. All those things are going to be exploding.”
A recent Design 1st project highlights his point. The firm built the hardware for Arc Asset Recharge, the intelligent device-charging lockers for enterprise environments that are now deployed in Amazon warehouses and at Walmart Canada, according to Kerr. The lockers allow employees to use and swap out tablets to complete order fulfillment, ensuring tablets are charged and ready to go.
It’s one example where Bailey believes Canada can stay competitive. He says design is a highly specialized skill and very few firms can pull it off. Design 1st has proven, for 30 years, that design is in high demand around the world.
“There are many micro-markets and there is opportunity in every one of them,” Bailey said. “There isn’t a market where I’ve said, there’s nothing to do here. There is always something to do.”
