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Core competencies, cell phones & caution

I am amazed at the amount of money and time that has been wasted on products in the cell phone space by companies that haven’t built up their core competencies in the right areas. There is an important lesson here – if you launching new products in an area that hasn’t been in your area of core competency be cautious!

For example, take the Google Nexus One phone. Google has no core competency in selling phones. They know nothing about retail. They have never sold consumer hardware products before. So what happened? They launched the Nexus One phone and the result was a disaster. There were all kinds of problems with it. For one, the pricing and buying experience was horrendous. I thought about buying one, until I looked at the return policy. It would have cost me something like $350 (restocking fee lol) to try out the phone and return it if I didn’t like it. Plus I would have had to make a two year commitment (incidentally this was very similar to Apple’s iphone policy several years ago, which stopped me from trying it out at the time). They should have done exactly the opposite and made it incredibly easy to purchase. What kind of consumer product can be a success if there aren’t hoards of people using it, bragging about it and telling the world how great it is? Incidentally, Google killed the Nexus on phone today. I’d like to know how much money was spent to launch this product!

As a second example look at the Microsoft Kin. Kin was an offshoot of Microsoft’s purchase of Danger, makers of the hiptop phone. This has to be one of the biggest wastes of money in the history of tech. In the first place Microsoft couldn’t run the data centers correctly, and at one point lost all of the user data for hiptop owners (everything was stored in the cloud and not locally so their users were hosed). Microsoft has shipped lots of consumer hardware products. However, they hadn’t shipped a cell phone. Microsoft went on to launch the Kin (successor to the hiptop), which was pitched as a phone that was connected to all of your social media usage. They did expensive commercials, etc. only to kill the product AFTER ONLY 40 DAYS in the market (I saw something that said they only sold something like 600 units). Total cost to Microsoft for all of this? I am betting it is a billion dollars.

Last but not least is Apple with the recent antenna problems. Apple’s core competency is making computers (and ipods), and the iphone is a great handheld computer, but cell phone antennas and corresponding design aren’t (yet) a core competency for Apple. Companies like RIM and Motorola and Nokia have been making great phones for more than a decade with reception being a huge priority, so they understand antenna issues. I have always questioned the reception on the iphone, and found when I tried it that calls would get dropped in places where my other phones seemed to work fine. With the iphone 4 Apple got caught having made a poor decision about the antenna design. In my opinion the focus on any phone should be first and foremost call quality and reception. I suspect that the other phone companies would have delayed the release of a phone that had antenna and call-dropping problems. What surprises me about the situation is that they didn’t find the flaw very early on (or ignored it). I would hope they have several hundred beta testers using the product. Didn’t they report the problem? Maybe what happened is that the beta testers, in order to keep the product “secret”, had the phones in cases (like the one that engadget got their hands on) and that stopped users from experience the problem. In any case, Apple has provided a solution. The good news for iphone fans is that future iphones are likely to have great reception and Apple will make it a higher priority.

If you are a product manager I would urge you to be extremely careful if you are in a new product area for your company. Shipping a massive failure can be a career-limiting move. :-D

3 Responses to Core competencies, cell phones & caution

  1. Dave Jul 22, 2010 at 3:01 pm #

    Best blog post ever! Launching new products is one of the most important things a company can do. The smallest details can make a massive difference. Google’s launching of their own branded handset just seemed out of the left field to me. Perhaps they just wanted to send a strong message to their partners (Motorola, HTC, others) or maybe it was a case of executive hubris. Microsoft? Well, you could write a book on how they handled the acquisition of Danger. Ironically, Andy Rubin founded both Danger and Android.

    Apple got just about everything else right, but the antenna. I suspect ALL future iPhones will have stellar call quality. It’s also another excuse to move beyond their exclusive US agreement with AT&T. To me, that’s the biggest mistake Apple made in launching the iPhone. They should have simultaneously introduced it on all the major US wireless carriers….

  2. Christine Crandell Jul 27, 2010 at 10:39 am #

    These are great examples of a problem that plagues every high-tech company – launching a product that doesn’t sell. It’s easy for product managers to get distracted by the grind to churn out products faster, but when 49 percent of product launches fail, the other priority – making sales – becomes harshly apparent. Getting the product almost isn’t good enough; product managers need to rethink innovation and have a systematic, holistic and data-driven way to make the right decisions, every time. Their company’s success depends on it. Making a profitable product requires an approach to innovation management based on a single system of record for more confident decision making, real time alignment between company and product strategy, visibility and predictability at all levels for full traceability and uses data and analysis from the market instead of intuition and opinion.

    -Christine Crandell, Accept Corporation

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