Sunday, 4 October 2009

Innovation vs opportunity

I was having a discussion recently with a work colleague about how some companies are very good at releasing innovative products to the market, whether or not they are fully fit for purpose.

An example of this can be clearly seen with the release of the Apple iPhone. In many ways, this was an innovative product, but it's fair to say that it was released before it was ready. It lacked many of the features that are now found in the current version. In fact, many industry experts have stated that the iPhone 3 represents the version that ought to have been released initially, as only now does it contain the features that make it a fully functioning product.

Other phones now contain similar features to the iPhone, but they have lost ground to Apple who got their first.

It's easy to see why companies release innovative products early. They immediately corner the market, so competitor companies are immediately on the back foot. This gives them an immediate advantage. Releasing an innovative product represents an opportunity. To fully exploit this opportunity, you simply have to get there first. Coming second in a race to release an innovative product is a major blow.

Another example is in the gaming machine market. Sony got there first with its Playstation, long before Microsoft with its XBox. Even though the Microsoft offering is equally good, it has lost huge market share to Sony.

There are some interesting products that may yet prove to be an exception to this rule. The Microsoft search engine Bing has made a huge impact in a short space of time, and it will be interesting to see how much of Google's market share it will steal. It will reciprocally be interesting to see how much of a dent Google makes into Microsoft with its Chrome browser and operating system (targeted to the netbook market).

I'll stick my neck out and say that Google will continue to lose market share to Microsoft in the search engine war, but that Google will still be the dominant player (keeping to the rule of releasing first). I will also predict that Chrome will win the war to be the dominant operating system and browser, but only in the netbook market. Microsoft will continue to be the dominant force across all other hardware platforms (and therefore breaking the release first rule, but only partially).

While it is certainly possible to gain sufficient market share to dominate a particular product or service space by releasing later, it makes doing so much harder. The key rule should always be release first!

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