In New Product Development, Timing is Everything
Introducing a new product that satisfies a significant emerging need is the ultimate goal of every market manager. Finding that sweet spot with a product that works, and can be manufactured and sold at a profit, keeps design engineers up at night.
Managers are imbued with a business school postulate that a product with a five-year life taken six months late to a market with annual 20% growth and 12% price erosion can lose one-third of total net profit. The trick is to identify the opportunity early enough to obtain development funding, gain access to the necessary technical resources, attract people with relevant expertise, and get management commitment to successfully bring a new product to market. Known as the window of opportunity, it is that Goldilocks period that is neither too early before potential customers see the need or too late when competitive products already dominate the market.
New Product Development
Introducing a new product in this prime-time slot provides an opportunity to control the market in terms of price, penetration of new applications, and potential licensing agreements. A product introduced late is forced to compete on price unless the developer can introduce a competitive product with significant improvements. The industry is littered with failed products and unemployed managers who worked for companies that did not see money spent on a terminated project as an opportunity for personal development.
The amount of time it takes to transition to a new, improved technology or product has been shrinking as the rate of new technology introduction accelerates. Candles and oil lamps dominated lighting for thousands of years. The incandescent electric bulb owned the market for about 100 years. The compact florescent lamp (CLF) had a short life before light-emitting diodes (LED) became practical for general lighting. Will electroluminescent ceilings be next?
The Market Was Not Ready for these New Products
A few notable products were introduced to the market before the market was ready for them, or without an existing volume market.
- 3D television. As much as Americans are addicted to watching TV, stereoscopic TV bombed in the market. First introduced in the early 1980s, and heavily promoted at the 2010 Consumer Electronics Show, the requirement for clunky electronic shutter glasses ultimately turned off consumers. Some Blue-Ray discs were produced but broadcast 3D never materialized. Production of 3D TVs ended in 2016. Most experts think it may never be resurrected. Holographic TV may be the next big contender, but don’t bet on it.
- Bubble memory. Bubble memory was a type of non-volatile computer memory that used a thin film of a magnetic material to create small, magnetized areas, known as bubbles. It was developed to address applications where excessive shock and vibration would prevent the use of rotating hard drive memory. The introduction of flash memory killed the niche market for bubble memory before it ever achieved volume production.
- Augmented reality goggles. The market is still out on this technology. Manufacturers continue to improve the AR experience by replacing the cable with a wireless connection, reducing the bulk of the goggles and introducing a more eyeglass-type device. Commercial applications involving training and assembly have had some limited success. Meta has bet the farm to create a virtual world (as if the real world is not scary enough). It plans to integrate artificial intelligence and augmented reality using lightweight goggles. Apple Glass fell flat in the consumer market, but rumors persist that Apple is continuing to develop a next-generation AR eyeglass-style device. The market remains skeptical, however, as it may be a product searching to find a compelling need.
- Gen5 smart phones. The darling of the industry today, when first introduced in 2019, these devices caused more frustration than satisfaction. Early phones were costly, and users reported that they got uncomfortably warm. The lack of an extensive 5G network infrastructure at the time made 5G coverage spotty at best. Consumers were confused by the multiple iterations of networks, the lowest of which offered little improvement in speed or range. Even today, the limited ability of high-speed signals to penetrate office building walls requires the installation of pico cells inside the building. 6G, the sixth generation of cellular networks (estimated commercial launch in 2030), is expected to be capable of delivering many of the services promised by 5G.
- Self-driving automobiles. Auto manufacturers got ahead of themselves with the possibilities offered by autonomous transportation and hyped selective self-driving features of their top tier of vehicles. Unfortunately, many consumers assumed that these cars were capable of Level 5 autonomous control (no human driver needed). In reality, most cars sold over the past five years feature driver assist functions at somewhere between Levels 1-2. Stories abound in which drivers were seen playing games on their cell phones or falling asleep at the wheel, blissfully unaware they were careening off the road or picking off pedestrians. Fully autonomous transportation is on the roadmap, but it will be many years before the technology and infrastructure to enable it will be in place.
- Electric cars. Electric vehicles (EVs) are another example of placing the cart before the horse. The idea of replacing fossil fuel-eating cars with clean electric power is laudable, but the current state of the technology leaves EVs short on performance and convenience. The energy density of current automotive batteries is approximately 1% of gasoline. Some forecasts call for energy equity between gasoline and advanced battery chemistries by 2045. Long charge cycles using enormous amounts of high voltage/current electric energy are a problem, especially given the limited number of existing charging stations. Current battery chemistry adds massive weight to the vehicle, and performance is negatively impacted by both hot and cold temperatures. The result is range anxiety. Firefighters are said to let an EV fire burn itself out as they are difficult and dangerous to extinguish. A bigger question is how charging electricity is produced. Electricity generated by burning coal or natural gas contributes to air pollution and global warming. The only 24/7 source of clean electricity would be nuclear, but that introduces a new set of political and emotional challenges. I am not sure we can wait for nuclear fusion to become real.
Product Development – Market Disrupters
As opposed to entering the market prematurely, some new product releases offer major improvement over existing devices and can interrupt the best laid plans of manufacturers that may have dominated the market for many years. These market disrupters can quickly grow from a start-up operation to an international technology leader while rendering predecessors obsolete.
- Liquid crystal displays (LCD) not only killed cathode ray tube (CRT) displays but also subsequent digital light projection (DLP) and plasma displays.
- Digital photography has nearly wiped-out consumer film cameras, and wet process imaging. No more parking lot overnight film processors.
- Noisy and slow dot matrix and chain printers were replaced with inkjet and laser printers that not only print letters but can produce high-resolution images.
- Traditional landline phones have become nearly extinct, as they were replaced by cellular and VoIP services. Millions of miles of copper wire that were laid to support land line phones are now sitting dormant.
- Your neighborhood Blockbuster and a host of independent video stores were put out of business by streaming video.
- Local, regional, and national physical newspapers have been nearly replaced by online news services. The concept of paperboy delivery to your door seems quaint.
Additionally, some innovative new devices create entirely new product categories, leaving companies that don’t adapt to face oblivion.
- Apple Computer, Texas Instruments, and Commodore International ignited the personal computer revolution.
- Dating from the mid-1880s, mechanical typewriters that had become an essential tool for every journalist were quickly replaced by word processing software. Even the updated IBM Selectric typewriter, introduced in 1971, could not save the species and the entire typewriter industry collapsed.
- Although the 1992 IBM Simon was the first consumer smartphone, Blackberry introduced the first commercially successful smartphone in 2002, which quickly become a must-have device. Dependence on a proprietary operating system and failure to continue evolving the product caused the company to lose leadership as smart phones became an essential tool of daily life for the masses.
- Our U.S. postal system has seen a huge reduction in the volume of snail mail due to the speed and convenience of email. The obvious solution is a continuous increase in the price of postage stamps. Only a federally subsidized agency could survive such a monumental shift in market preference.
- You would not want to be an encyclopedia salesman in 2001, the year that Wikipedia was launched. Online information access has changed how the world gathers information.
- Developers of artificial intelligence programs have been asked to impose a six-month moratorium to get a better understanding of the potential harm that unfettered AI could wreak on the world. Releasing this powerful technology that has the potential to impact nearly every fundamental aspect of the human experience without fully understanding how it works (and the damage it could do if employed by bad actors) is a hot topic. Not long ago, workers who create, manage, share, receive, and use information, including this writer, were considered to have long-term job security. Emerging AI programs such as ChatGPT have put a bullseye on our backs. Google likes to describe its BARD chatbot as “your creative and helpful collaborator, here to supercharge your imagination, boost your productivity, and bring your ideas to life.” We may all be destined to share the fate of buggy whip salesmen.
Learn more about the development of the technologies that make up our world in Bob Hult’s Tech Trends Series.
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