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Summary:

I am a firm believer in the concept of open platforms, open standards, and commodity hardware, when mixed together can lead to interesting things. This concept of “insta-company” which I wrote about long before it became fashionable first played out in the data centers, and then […]

tapwaveI am a firm believer in the concept of open platforms, open standards, and commodity hardware, when mixed together can lead to interesting things. This concept of “insta-company” which I wrote about long before it became fashionable first played out in the data centers, and then in the enterprise, as we started to see the appliance-ing of software. Infoblox and Neoteris (acquired by NetScreen/Juniper) are good examples. In past 12 months, we have seen the same forces make their entry into the consumer market, with mixed results. iPod, arguably the most successful consumer device thus far in the new millennium is an apt illustration of powers of commoditization harnessed in a proper manner.

At the same time things have not worked out quite as well for other consumer device makers. Last week Tapwave, a Palm clone maker kicked the bucket. Gizmondo, the gaming handheld is gone before even it got a tan. Why did these companies fail? Four reasons.

  1. In the consumer market, however, there are some intangibles that can make or break a product. In case of Apple iPod, the intangible was the coolness factor and the iconic white headphones, and lots of love from the hip-hop community. Apple could not have predicted it, but it happened. In comparison, Gizmondo went looking for B & C-list celebrities and well, we know the story.
  2. Tapwave & Gizmondo were trying to establish themselves as gaming platforms, at a time when most of us knew that Sony PSP and Nintendo DS were coming. Those two are more established names in the gaming market, and in mass markets, established brand names win. Apple is a good example. When Sony PSP is on the market, as a consumer you are going to gravitate towards that device because you know Sony has a bigger brand, more titles and you can expect after sales support. As a consumer, there is no hesitation in handing over your dollars.
  3. Techdirt is right in pointing out that the lack of titles for these two platforms was a main reason they never got traction. There was a lot of things which needed to go right, before Tapwave and Gizmondo got market traction. Both companies had to seed an ecosystem of developers, so that they could get games for their platforms. And while they were doing that, they had to build a brand, and develop hardware. In other words, it took too much effort and too much money to do all that. As a start-up, you just don’t have the resources (and money) to make it happen.
  4. There is another little thing which many start-ups ignore: they try and cram too much in one device. One of the biggest reasons why people love iPod is that it does one, and that is play music. Tapwave and Gizmondo could not figure out what they really wanted to do best – play music, surf the net, play games or what.

So if you are a consumer electronics start-up (and there are many given the number of VCs scrambling to fund one or more such efforts) you need to avoid the four mistakes made by Gizmondo and Tapwave. Here are four things you can do to make your chances better:

  1. Focus on one function and forget about multitasking. Impress customers with your best feature.
  2. Ignore the early adopter, and make the device easy enough to pass the “mom test.” Mass market makes companies, A-list geeks don’t.
  3. Looks matter – regardless of what people say, like in love, looks matter. People like beautiful and aesthetically pleasing objects. They are willing to pay an extra $200 for a simple hard drive. Steve Jobs knows that.
  4. You can’t buy buzz – buzz happens, because people love your products. Simple as that. If you are great, in this over-connected web-enabled world, people will find you. Learn from Slim Devices.
  1. Om,

    You make some great points that every company trying to tackle the consumer market should heed. Oftentmes we forget that us early adopters and gadget hos of the world are not the target audience. I might want all kind of features that don’t gibe at all with the mass market.

    One thing to note is the iPod had the built-in Apple cult following behind it while the Tapwave and Gizmondo were starting from scratch. Still it’s because of the reasons you give that the iPod was able to move beyond it’s audience to achieve it’s current status…

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  2. Victor Blake Friday, August 5, 2005

    Or buy a tablet that can run any of this stuff as add on software apps. aka motion computing or sony.

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  3. Charlie Sierra Friday, August 5, 2005

    I think the Tapwave situation is even easier to figure out.

    Palm, their platform partner, has a dubious future at best. These guys have no vision, no direction, have wasted tons of cash on non-revenue producing OS’s (ver. 5 and 6), are slow to react to the market, and no longer can control the relationship with the buyer, because carriers have the final say.

    Since the next release, aka Palm on Linux, is not due until late 2006 (2007?), you’d be a fool to continue the Tapwave business, which was predicated on a different future path at Palm.

    Maybe the Tapwave people will regroup and try again with their own linux-based product, with connectivity.

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  4. Would Tapwave have been sucessful if they were running an open linux envoronment that encouraged third party development?

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  5. i am pretty sure that if they were using an open platform, they would have been more successful. i think.

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  6. Gizmondo are still in business… where did you get the idea they had failed? They are moving their business to the USA to make it cheaper to produce and sell over here, also all the games are to be released on the US release date.

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  7. [...] Gizmondo, the gaming device maker is not selling many devices, has a questionable future, but that hasn’t stopped company’s executives to get fat-off-the-company’s coffers. Mob Happy has the latest skinny, but I leave you with this little something about the extracurricular activities of some of the execs. Tamela Sainsbury, the corporate secretary of Gizmondo Europe, is the co-habiting partner of Steve Carroll, a director of the Company. In 2004, Gizmondo Europe paid Ms. Sainsbury $149,844 in base compensation, other compensation and bonuses of $82,954 and provided her with a luxury automobile valued at $69,108 at the time of acquisition. In addition, in 2004 the Company issued Ms. Sainsbury atotal of 160,681 shares of the Company’s common stock valued at $467,213. Ms.Sainsbury’s base compensation for 2005 is $192,777. In Moore’s Claw Posted Thursday, September 29, 2005 at 12:33 PM PT [...]

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