Innovation: Shimano's Bicycle Parts Get Smart

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That wasn't easy because the engineers had to time the more powerful front derailleur to work in sync with the rear. They now move in a tightly orchestrated fashion to prevent the chain from rubbing or falling off the gears.

Mixed Reviews

So far the reviews have been mixed. Some pros and longtime riders back Shimano's claim, but purists have railed against putting a battery-powered device on a bike. Other critics have questioned the merits of replacing cables with electric wiring. "The more complicated we make things, the more apt they are to having problems and the more specialized the service required tends to be," wrote one skeptic in an online review.

Shimano's Fujii and his colleagues knew their task wasn't easy. The company's two earlier attempts at offering electronic gear shifts and suspensions on bikes for casual riders, beginning in 2001, had confused retailers and consumers. Inside Shimano, many executives disappointed by the early attempts thought the company shouldn't gamble its future on electronics. But a small group, led by bike components marketing director Masahiko Jimbo, pushed hard to convince higher-ups that it was worth the effort. Unlike past attempts, they would try to sway the public on a product's virtues by getting the pros to use it first. "At first there was lots of resistance internally," says Fujii.

Technology has transformed the bike industry in recent years. Manufacturers now design frames with 3D computer software, make parts from ultralight carbon fiber and aluminum, and use wind tunnels to test a bike's aerodynamics. Shimano had focused on making lighter parts. But by the late '90s, progress had slowed. "We realized that it would be very hard to surpass the innovation of the past if we kept doing what we had done before," says Jimbo. Around 2003, Shimano's top brass gave the go-ahead for the Di2 project.

Deep Pockets for R&D

Shimano won't say what the Di2 cost to develop, but the development team involved more than twice as many members as other projects. The company's deep pockets helped: Its $90 million annual research budget is larger than the spending of all of the rest of the bike parts makers combined, says CLSA analyst Morten Paulsen. "They need to be ahead and they can afford to gamble a bit with something that's new," adds Paulsen.

The Di2 is in a category all by itself, but it's not the first of its kind. Mavic of France made two electronic derailleurs in the '90s that failed in bad weather and were discontinued. Shimano was determined to avoid the same mistakes.

In March 2004, Shimano's engineers took the first working prototype to Belgium, where they had a few young riders test it. The derailleur was fashioned from steel. A plastic bag in the middle of the bike frame prevented the circuit board and battery from getting wet. "Some riders saw it and said, 'This toy?'" says Fujii. "The veteran mechanics thought it was outrageous."

One of the testers that day was Dutch rider Tom Stamsnijder. He remembers being surprised by the shifter's responsiveness—except when it failed as he pedaled hard uphill. Another rider, Joost Posthuma, thought the device had too many buttons. It broke down when Posthuma hit cobblestones. "Naturally, the shifting wasn't what it should be," Stamsnijder wrote in an e-mail.

Speed Is Key

The lesson Fujii's team took away: "We realized early on that speed was key," he says. They made that a top priority, tinkering with the tiny motors whose job it was to make the split-second gear changes. Even after Fujii's crew timed the prototypes and found them to be faster than manual shifters, some riders didn't believe it.