Tuesday, July 07, 2009

First to Market Strategy

Over the past few months I have had interesting dialog with my students and clients on the viability of adopting a follow-the leader strategy. The logic is to allow the leader to take the risk of developing and delivering a new offering and then you come in with a strong counterpoint with less risk and cost. I believe we are seeing more and more cases where the first-to-market, if done correctly, can present tremendous barriers to the late comer.

At issue is whether the leader can build a system around the offering that links the buyer to the offering’s functionality, economics (life time costs), and most importantly emotive benefits. I believe as networking continues to grow and dominate the business horizon, more often than not systems will be introduced vs. just products (or single services).
The ultimate example is Apple’s iPhone. The following depicts just a few applications associated with the business side of the iPhone.

The challenge of a newcomer, Palm’s new Pre smart phone, was highlighted in a recent article and exemplifies my belief:

Apps Deficit Hurts Palm in Rivalry With iPhone , By JENNA WORTHAM, NYT June 24, 2009

"By all accounts, Palm’s new Pre smartphone is elegant and powerful. On sale for
just a few weeks, it has a crisp touch screen, a pull-out keyboard aimed at
e-mail devotees and a new operating system that can manage multiple applications at the same time
(functionality is great).....
…(however) Industry experts and programmers say that the company needs to cultivate a system of developers eager to write and publish small useful programs, or applications, for the Pre and its core software, WebOS. Palm also needs to provide an easy way for Pre users to download, pay for and install those apps, similar to Apple’s App Store……
…..So far, Palm is off to a slow start. Palm’s App Catalog has just
a few dozen apps, even as Apple boasts that iPhone users can download 50,000
apps that do everything from receiving baseball videocasts to unlocking a rental
….The competition is not standing still. Last week, Apple upgraded the
iPhone’s software and began selling a new, faster model…
…..Palm is urging customers and developers to be patient. “We’ve never really said that we’re in a race with Apple,” said Derick Mains, a spokesman for the company. Rather than compete with Apple on the volume of applications, “we’re building a catalog of quality apps in the store,” Mr. Mains said. (
I think they are in a race!!)…..
….The concern for Palm is that competition for developers’ attention is much
more intense now
(This is a new form of competition. It is difficult to create a
system on your own and therefore competition for the support partners can be as
intense as the competition for the customers) …..
…..For Palm to thrive, the company will have to convince developers that writing WebOS applications will be

There are some critical issues to be sensitive to:

• If you are the leader, try to drive the interaction with the buyer to the emotive state by developing as complete a system as possible. Apple achieved what Slywotzky calls creating The Standard (see earlier posting http://marketdrivengrowth.blogspot.com/2008/07/google-zen-master-of-market-by-steve.html) where the players in the network build their offers around your system (the 50,000 applications)
• If you are number two, really understand what you are competing with. By all measures, the Pre is at least as good as the iPod functionally and in fact has many advantages. However, Palm must realize (and they do)it is competing with the system not just the product:

"…..in a world crowded with iPhones, BlackBerrys and other smartphones, success for the Pre — and possibly the survival of Palm itself — is going to take a lot more than a well-designed device"

I believe one of the classic analyses of defining competitive positions was by Adrian Slywotzky in his classic “Profit Zone” where he defined a series of Strategic Control points:

1 comment:

Jim Lyons said...

I like this! Too easy (still) for students and industry insiders alike to look at the "gadget" for all the market position explanation and insight.

Jim Lyons