The consumer electronics industry loves creating new markets. Profit margins are frothy in new markets like tablets, compared to the trench warfare common in mature categories like PCs.
This is why the industry invests billions of dollars annually generating products with uncertain demand, in the hope of riding a wave of surging customer interest that values novelty over price. What can we learn from the industry’s most recent efforts?
Over the past week, 140,000 visitors to the annual Consumer Electronics Show saw the best of what the industry can muster. The reaction of many went something like, “Is that it?” There were of course dozens of tablets (Wikipedia currently lists 76, a number already out of date), and the industry believes (prays?) this is at last the year for 3-D TV. Most of these entries will fail for classic reasons — they are the result of technology-push rather than consumer pull, and corporate planning processes favor incremental me-too innovations vs. game-changing efforts.
Yet there were exceptions, perhaps most notably the Motorola Atrix. At first glance, the Atrix is an unremarkable Android smartphone — competent but indistinct. The trick lies in its accessories. While the Atrix works just fine as an ordinary phone, it can also be plugged into a dedicated screen to convert into an ultra-sleek laptop. The phone provides the processor and memory for the laptop, which results in 1) no need to sync devices 2) a super-portable and likely inexpensive laptop and 3) the ability to use Android apps in an entirely new way. The Atrix also plugs into an HDTV to make movies and photos highly accessible.
The beauty of this idea is fourfold.
Contrast the Atrix with 3-D TV. Consumer demand likely exists in some categories such as action movies and sports, but it is best served through viewing movies rather than TV programs (that must choose camera angles catering to the majority of TV viewers). Therefore this expensive purchase gets rewarded mainly through movie viewing on expensive disks, which is inferior in several respects to movie theaters on the one hand, and to far lower-resolution movie streaming on the other. Second, it requires a large investment not only in the TV but also in glasses and a large video library — you cannot switch over bit by bit, and so will want to see friends do it first. Unfortunately, there is the third constraint, which is that it is not viral. Unless you buy lots of $100 glasses for your Super Bowl party, or rapidly rotate viewers from the dead-center position needed to see 3-D images without glasses, not many friends will appreciate your purchase. 3-D TV is at least somewhat intuitive (unlike, say, controlling your refrigerator from your smartphone, another hyped technology this year), but with these other factors stacked against it the technology will likely be slow to take off.
A contrasting approach for 3-D TV would be to narrowly target a market segment and make the technology highly demonstrable and somewhat cool (a hurdle with those clunky glasses). Sports bars, for instance, cater to an appropriate target customer, offer opportunities to demonstrate technology, and mitigate the nerd effect of 3-D glasses. Imagine the Panasonic college basketball tournament offered on 3-D TVs at sports bars in trendsetting cities, with glasses for all patrons, coupled with Panasonic TV sponsorship that allows for more camera shots tailored for 3-D viewing (“the Panasonic 3-D replay”, for instance). It would not be a cheap promotion, but doubtless less expensive than engineering a series of TV sets for non-existent buyers.
Creating new markets requires attention to patterns. Motorola has had more than its share of misfires in recent years, but with the Atrix it seems to have thoughtfully paid attention to what works in market creation. The super-smartphones we are likely to see in airplanes and coffeeshops over the coming years may create a trend, and Motorola will have linked its brand closely to the experience. It will be a triumph not only of clever engineering, but also of strategic thinking.
Story by Steve Wunker.