Trying to market emerging technologies is difficult because you have a product or more likely just an idea, concept, or even prototype, but the uncertainty of future markets is a reality. The potential market is not known, and there is very little, if any marketing data with which to work. Competition is unknown and impossible to plan for. Within an organization there will be several conflicting ideas and projections about when or if the product will succeed and who will be buying it. Product acceptance and timing are complete unknowns. The best a firm can do is try and minimize the uncertainty about a product market and make an educated decision about potential competitors and what direction they are going.
Three approaches:
1. Diffusion and adoption: The rate at which a technology will be adopted by the target market, or any market for that matter.
2. Exploration and learning: Information and research put a firm in the best position to make correct decisions along the development and marketing of an emerging technology and give themselves a better chance at success.
3. Triangulation and insights: This has to do with a firm using any and all types of research and combining them to give them the best information possible to use for marketing and production/design decisions in an emerging market. Since the customer is rarely the one to be asking for specific products, it's up to the corporations to try and figure out what will be accepted. Using information from any sources available should triangulate and give them the proper direction.
The rate of adoption example using digital imaging is a great example of all the items mentioned previously. The big question for early producers of digital imaging was whether or not users would rather drop off film at a brick and mortar store than plug something into their PC? There was no way to properly answer that question difinitively, so those companies had to use all the information available to them and enter the market with the hopes of adoption. Not knowing who the early adopters might be (except they had to be people with PCs) was probably the biggest question mark of them all. PCs were not as popular or affordable as they are now, so looking back that is quite a big risk over an emerging technology today that requires PC interaction.
Most technologies appeal to a certain segment of the technology enthusiasts population. These folks love technology and will buy the latest and greatest products and be lead users for many emerging technologies. Much of the success of the technology depends on some acceptance by this group of users.
Lead users are some of the best sources of information and feedback on emerging technologies. These users are familiar with the technology and the pros and cons and are motivated because they will be the beneficiaries of the final product.
No data or forecast will accurately project an emerging market. As the author says on pg 148, the best a company can do is determine the market is large enough to warrant product development. One example of a technology that I believe failed to do this was satellite phones. This technology never really took off and has been only used by the very wealthy and the military for the most part. Satellite phones were direct competitors to land based cellular phones, and providers of satellite networks such as ICO Global Communications and Iridium failed to determine whether or not the size of the market, after competition with cellular phones, whether or not the market was large enough to warrant massive amounts of investment in designing and launching communication satellites. What hurt these companies the most was the acceleration of acceptance of land based cellular phones in the late 1990s'. As quoted in the Reuters news article dated 8.27.1999, Mark Roberts, a telecommunications analyst at First Union had this to say: "I'm not at all surprised," referring to ICO Global's Chapter 11 filing. "The areas of the world that are not covered by wireless telecommunications are shrinking very rapidly, so the target market for satellites is shrinking."
Satellite phone providers also failed to look at how wireless users would be using the devices, as well as the design of the devices themselves. The handheld devices cost around $3,000 and required much more power so the battery pack was significantly bulkier than cellular phones. With a $3000 pricetag, the target marker was rich executives. Failure to see that rich executives who just dropped $3000 on phone would likely want to use their phones in the office, car, and airplane was also a major oversight. Satellite phones need line of sight to the sky, so use is very limited.
The market for some form of wireless phone was obvious and potentially very large in the early and mid 90s as technology improved. However, had satellite phone providers used triangulation and continuous market exploration (specifically into cell competitors) they likely would have (or should have) seen the imminent failure of a great idea that had poor design, and superior competition.
Sources: http://www.wired.com/techbiz/media/news/1999/08/21478
Wednesday, March 19, 2008
Wednesday, March 12, 2008
Wharton Chapter 5 -
This chapter dealt with what role the government can play in existing and emerging technologies. Discussed was the evolution of the Internet and the role that government played along the way until it stepped out of it completely. Government can encourage emerging technologies, such as those with a strong military or national security application. It can also stifle technologies due to moral or potential legal dilemmas.
The government plays a big role in many emerging technologies either by way of directives (military), standard setting (TV standard), regulation (FDA), or subsidies where the government will not necessarily subsidize a technology as a whole, rather specific companies. The Korean government subsidizing DRAM production is one of the many factors that has pushed the worldwide price down and affected Micron and chip industry. These are seen as protectionist and/or interventionist.
Public concern about effect of technologies may spark an outcry for regulatory solutions. Pornography on the Internet is a great example. Families were worried about how easy it was for young children to find adult content and demanded government regulation which was eventually denied.
The most important of the 10 lessons to me was that regulations that have the intent to promote competition or objectives have unintended side effects or even the opposite effect (pg 122). These types of regulations can produce side effects such as increased prices, decreased production, or the slowing down of innovation. Companies lose incentive to be innovative if they aren't free to earn a return on their investments. This can hurt the industry and all consumers of those products.
Even the threat of an emerging technology industry becoming regulated by the government can be enough to stifle progress and innovation. Regulation of an emerging industry can take place before the industry has a chance to develop and mature and mandates could be in effect that require providing technology services to every household, such as is the case with power today. This could create monopoly franchises. The argument then becomes is the good or service essential to all Americans to provide equal opportunities. Many argue that the Internet meets that criteria and as a result could result in market protection for providers. The ability of regulators to properly assess the market and technology can be questionable.
Comparing Microsoft to a power or telecom company that controls the content and conduit was something I had never considered. I always thought the lawsuits against Microsoft for making Internet Explorer part of the operating system were silly, since everyone had the option to download Netscape or Opera at the time. However, understanding the concept of vertical integration now makes those complaints a little more legitimate, but apparently not to the DOJ who didn't prosecute.
I don't believe that Internet providers will ever be regulated due to the relatively low barrier to entry to the market given the wireless technologies available. An absence of wireless technology would likely draw regulations due to high infrastructure costs, but that is not the case. Companies like Clearwire are likely to attract other companies into the market who see a potential for profit. According to money.cnn.com on May 8, 2007,
(http://money.cnn.com/2007/03/08/technology/pluggedin_mehta_clearwire.fortune/index.htm)
Clearwire will be trying to compete head on with the likes of Qwest, Verizon, and cable companies who are trying to get customers to bundle services. More competition without the limitation of expensive physical infrastructure will produce a healthy competitive market.
The government plays a big role in many emerging technologies either by way of directives (military), standard setting (TV standard), regulation (FDA), or subsidies where the government will not necessarily subsidize a technology as a whole, rather specific companies. The Korean government subsidizing DRAM production is one of the many factors that has pushed the worldwide price down and affected Micron and chip industry. These are seen as protectionist and/or interventionist.
Public concern about effect of technologies may spark an outcry for regulatory solutions. Pornography on the Internet is a great example. Families were worried about how easy it was for young children to find adult content and demanded government regulation which was eventually denied.
The most important of the 10 lessons to me was that regulations that have the intent to promote competition or objectives have unintended side effects or even the opposite effect (pg 122). These types of regulations can produce side effects such as increased prices, decreased production, or the slowing down of innovation. Companies lose incentive to be innovative if they aren't free to earn a return on their investments. This can hurt the industry and all consumers of those products.
Even the threat of an emerging technology industry becoming regulated by the government can be enough to stifle progress and innovation. Regulation of an emerging industry can take place before the industry has a chance to develop and mature and mandates could be in effect that require providing technology services to every household, such as is the case with power today. This could create monopoly franchises. The argument then becomes is the good or service essential to all Americans to provide equal opportunities. Many argue that the Internet meets that criteria and as a result could result in market protection for providers. The ability of regulators to properly assess the market and technology can be questionable.
Comparing Microsoft to a power or telecom company that controls the content and conduit was something I had never considered. I always thought the lawsuits against Microsoft for making Internet Explorer part of the operating system were silly, since everyone had the option to download Netscape or Opera at the time. However, understanding the concept of vertical integration now makes those complaints a little more legitimate, but apparently not to the DOJ who didn't prosecute.
I don't believe that Internet providers will ever be regulated due to the relatively low barrier to entry to the market given the wireless technologies available. An absence of wireless technology would likely draw regulations due to high infrastructure costs, but that is not the case. Companies like Clearwire are likely to attract other companies into the market who see a potential for profit. According to money.cnn.com on May 8, 2007,
(http://money.cnn.com/2007/03/08/technology/pluggedin_mehta_clearwire.fortune/index.htm)
Clearwire will be trying to compete head on with the likes of Qwest, Verizon, and cable companies who are trying to get customers to bundle services. More competition without the limitation of expensive physical infrastructure will produce a healthy competitive market.
Wednesday, March 5, 2008
Chapter 4 - Assessing Technologies
The first thing that came to mind when reading this chapter about technology assessment was the Flight of the Kittyhawk paper Clayton Christensen published in the Harvard Business Review. It specifically applies to scope and strategic intent.
HP began development of the Kittyhawk microdrive without targeting a specific marketing segment. "If you don't have a target, you'll miss it every time". That doesn't ring more true than with HP's Kittyhawk.
HP developed the 1.3" microdrive capable of withstanding a 3 foot drop onto a concrete floor, and then began investigating and pursuing potential customers. One of their biggest potential customers was Nintendo who was very interested in the compact size of the drive for their gaming systems, but had no need for the capability of a product that could sustain a 3 foot drop, rather they wanted a cheaper, stripped down version at a lower price. Because the product was engineered to such high standards, the price was too high for potential customers like Nintendo and other companies who were just about to enter the handheld device market.
HP did a great job of assessing that compact harddrives could be a very profitable emerging technology with potential in several horizontal and vertical markets. They also had the resources in place to begin R&D immediately and be the first to market. However, they failed to assess the market for this emerging technology, and subsequently were first to market for a product that really had no market due to overengineering and a high price.
HP began development of the Kittyhawk microdrive without targeting a specific marketing segment. "If you don't have a target, you'll miss it every time". That doesn't ring more true than with HP's Kittyhawk.
HP developed the 1.3" microdrive capable of withstanding a 3 foot drop onto a concrete floor, and then began investigating and pursuing potential customers. One of their biggest potential customers was Nintendo who was very interested in the compact size of the drive for their gaming systems, but had no need for the capability of a product that could sustain a 3 foot drop, rather they wanted a cheaper, stripped down version at a lower price. Because the product was engineered to such high standards, the price was too high for potential customers like Nintendo and other companies who were just about to enter the handheld device market.
HP did a great job of assessing that compact harddrives could be a very profitable emerging technology with potential in several horizontal and vertical markets. They also had the resources in place to begin R&D immediately and be the first to market. However, they failed to assess the market for this emerging technology, and subsequently were first to market for a product that really had no market due to overengineering and a high price.
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