The tools for producing really smart, connected products are getting cheaper and more sophisticated every day. Last year, TI announced the CC430 technology platform, a low power microcontroller with integrated RF transceiver for wireless applications and a 10 year plus battery life. Cost per unit? Under $2 for high volume orders. The 430 is powering product innovations such as a smart pill that transmits data from inside your GI tract and energy monitoring applications for smart meters.
TI, weren’t they famous for making calculators? Products like the TI-85 had brains to spare; it was programmable, had a PC interface, and could calculate polynomial roots in the blink of an eye. But embedded intelligence wasn’t enough of a competitive advantage even way back then. All but cheap commodity and special niche calculators disappeared into the chips that powered them, to emerge as a free application on billions of PCs, mobile phones and other devices.
Conclusion: Smart products alone are not going to make you a leader in today’s ultra-competitive, technology-on-steroids market. You need a smart ecosystem to leverage those products into a sustainable and profitable strategy.
Great, iconic product design is harder to imitate. But Amazon’s Kindle proved that smart ecosystems can overcome second-rate design, at least long enough to establish the lead in a new market space. Amazon knew it couldn’t compete with the iPhone (
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Alert) on design, but it had no trouble adopting Apple’s ecosystem model. Of course, following Apple’s formula too closely is an invitation to Apple to eat your ecosystem for lunch and use your product as a toothpick. Analysts are waiting rather gleefully for the iBook Kindle-killer to appear in 2010.
Conclusion –If you aspire to market leadership, it’s a good idea to craft your own smart ecosystem strategy. That gives you an edge in establishing your lead and makes it harder for competitors to imitate you.
If you want an insider advantage in developing smart product strategies, are wondering whether to join some other company’s smart ecosystem, or just enjoy being the first to know whose strategy is likely to win, and which products have a smart ecosystem behind them, you have come to the right place. SPEC covers the strategies behind the stories on smart products. If your company is making or using smart products (aren’t we all?), watch this space. SPEC is your source for news and insight on smart mobile, smart auto, smart homes, connected health and fitness and personal energy management products.
Ready to get started? Here are my five rules for developing smart ecosystems:
- Create an integrated, interconnected platform for delivering innovative services that will quickly scale the value of your smart product for ecosystem partners and customers. (If you think that the product’s intelligence itself is enough of a value proposition, come back and read my next few articles.)
- Partner with an established power base in the industry where you are focusing first – this power partner can be a connectivity provider, a customer channel, a premier source of content or play some other critical role; chose carefully and make the best deal you can.
- Create new revenue streams from disrupting someone else’s business model, but share the wealth strategically to lock in loyalty. It’s OK to squeeze market leaders to improve your margins as long as some of your new ecosystem partners are becoming visibly and dramatically richer in the process.
- Make your customers full ecosystem partners, not just marketing and revenue targets. Review whatever you are already doing to create active customer roles inside your inner circle
- Develop a cross-industry strategy from the outset. Smart products and services are driving industry convergence at an ever- faster pace. If you aren’t already thinking about how your ecosystem can partner across industries to replicate its model in another market space, you will be blindsided by convergence-savvy competition.
I’ll be digging into smart product examples and applying these rules in my analysis of the smart ecosystem strategies of global brands and innovative new entrants in future articles. Stay tuned.
Dr. Cronin is a Professor of Management in the Information Systems Department at Boston College. To read more of her articles, please visit her columnist page.Edited by
Michael Dinan