FAST FOLLOWER STRATEGY — THREE OPTIONS FOR SUCCESS

By: New Markets Advisors
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Sharp Corporation faces a dilemma. As a world leader in display technology, it has doubtless studied the potential of tablet computers for years, as have many other consumer electronics firms.
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The category may eventually be worth over $10 billion, and it has been open for pioneers to lay a claim. Yet these companies waited until Apple moved first with its iPad. Now that Apple has sold over 3 million of these devices, Sharp, Acer, Toshiba and others are pouring in. But how do they distinguish their offering from the market leader?

​The irony for these firms is that they would love to be in Apple’s current position, but it was not feasible for them. Lacking Apple’s millions of loyal fans, strong brand, retail outlets, and wireless carrier partners, their launch of a tablet may have been widely ignored. Only a firm with Apple’s strengths could have created this category quickly. Sometimes being a fast follower is simply a consequence of being slow, but in this case it was the only realistic choice.

There are other circumstances in which fast follower strategies can be compelling. In categories where there are few network effects, no proprietary company ecosystems, minimal brand advantages, and small scale economies, companies may be wise to wait to understand how markets react to a first mover. For instance, a grocery chain strong in a particular local market can observe what a chain in a distinct market is doing around self-service salad bars, then copy the eventual winning formula.

In the tablet PC industry, Sharp has three options. It could choose a niche to pursue vigorously, seeking to be known quickly as the dominant player for that particular market need. Panasonic has done this successfully with its Toughbook computers, such as through creating a variant catering just to healthcare workers. Sharp could also focus on a geographic territory where it is comparatively strong, leveraging its brand and distribution to force consumers to pay attention. It could also subsume its brand under that of strong sales channels, letting the channels do the heavy lifting of seizing market share.

Sharp has opted for all three approaches. It is emphasizing Asian character handling, which it claims is poor on the iPad. The company is focusing heavily on its home turf of Japan. Outside of Asia, the firm is partnering with wireless carriers to provide them with tablets proprietary to their network — it is widely rumored to be working on such a device with Verizon in the United States. These are all sensible strategies. Once the firm has built market position, it can leverage scale economies to create advanced technologies at relatively low costs. After all, this is how a once-obscure Finnish company, Nokia, became the world’s leading mobile handset maker.

​Story by Steve Wunker.