Report

To Ship or Not to Ship – Product Launch in the Smartphone Era

Table of Contents

  1. Summary

Analysis

When Palm announced the Foleo in 2007, the device — developed to stop the company’s financial skid — was thought to be a potential groundbreaker thanks to it using the processing power of a smartphone.

Palm was intelligent enough to prematurely share information about this new device, and also conducted tests throughout the production phase. Though neither hardware nor software in the Foleo had defects, the concept that consumers would buy a restricted-use laptop that did nothing without the additional purchase of an outdated smartphone was seriously flawed. As information on it became known, the Foleo garnered such negative reaction Palm killed the product just prior to release. Analysts were shocked, but in the end agreed that the device would not fly.

Producing and launching products is a daunting task in mobile technology, what with the competitive nature of the ecosystem, consumer demand for new devices and the pressure to ship as fast as possible to recoup on investment. That a device with design flaws will hit the market every now and then is inevitable, but when a company realizes a product may not work in the market, there are two options: Release it anyway and bear the (often costly) consequences or cancel the flawed product, as Palm did with the Foleo.

The right choice, it turns out, is none too easy to make, as seen in recent examples from two of the ecosystem’s largest players.

Microsoft’s Kin

Microsoft boasts some of the brightest minds in the tech business, but that wasn’t enough to prevent the launch of the Kin smartphones.

The Kin One and Kin Two were a radical departure for the smartphone industry, as they were not full featured by design. Microsoft aimed the Kin at teens and young adults wanting to connect with popular social networks. The Kins were launched with great fanfare by Microsoft and Verizon, but Microsoft pulled the plug on the device after only six weeks, citing a lack of sales and negative reactions. Just a few weeks later, Verizon stopped selling the Kin phones.

Why did the Kin fail so miserably (and quickly)? Kin testers reported that functions commonly associated with social networks weren’t supported, or performed clumsily. Microsoft had conducted focus groups throughout Kin’s long development process, so why the phones were released with those flaws is not clear. The problem points to poorly handled focus groups or perhaps a failure to lend weight to what the groups must have been telling the team, among other factors.

Microsoft has stated the failed Kin launch will cost the company at least $240 million. That’s a high number, but more costly may be the negative impact the Kin failure could have on the Windows Phone 7 launch later this year. Though an entirely different device from the failed Kin, the new phone is nonetheless similar to its predecessor in appearance. That alone may slow partners and customers to rush to the new product line from Microsoft. If such a scenario plays out, the financial impact of the Kin debacle is huge.

Apple iPhone 4

Apple, meanwhile, has long been known for the enthusiastic consumer reception of its products; the recently released iPhone 4 sold millions in days.

Trouble, however, materialized as soon as the iPhone 4 was in customers’ hands; reports of connection failures appeared as it became apparent the phone would lose signal when held normally. Apple denied any design problems, indicating the issue was simply an error in the way the phone calculated the number of signal strength bars. Owners questioned this explanation; advocates at Consumer Reports published findings that the failure was indeed a design flaw having to do with the new antenna design and could not recommend the iPhone 4 to consumers.

It’s hard to believe a company as good at product development as Apple failed to identify — or at least address — this problem prior to launch. Possibly Apple felt compelled to meet its announced release date in spite of the flaw. And while we can’t predict how this will affect the company in the long run, it’s clear Apple has a significant problem on its hands, not to mention a class-action lawsuit.

Lesser of Two Evils

Delaying a new product launch can have tremendous financial impact on a company’s bottom line, but releasing a flawed product can cause an even greater hardship. The decision by Palm executives to cancel the Foleo right before launch, though hardly an easy one, was obviously the right one; Palm was able to focus its resources on producing the webOS platform and releasing the Palm Pre. It may not have set Palm on a blazing course of profitability, but it added significant worth due to the technology of webOS and led to the significant buy-out by HP.

Microsoft, meanwhile, is certainly going to feel the affects of the Kin debacle for some time to come. The company’s mobile efforts have been flagging for a few years; it’s counting heavily on the upcoming Windows Phone 7 to reverse that drop. Partners and prospective customers have to wonder how solid Windows Phone 7 will be as a platform based on Kin’s shortfalls. It doesn’t create confidence in Microsoft as a mobile provider, that’s for sure.

Apple has long been able to brush aside problems in products due to a loyal customer base. iPhone owners put up with AT&T network problems without losing affection for the gadgets, for example. This situation with the antenna on the iPhone 4 may be overlooked by the loyal customer base too, but it’s certainly not something even Apple can afford to make business as usual; Apple is giving free cases to iPhone 4 owners to deal with the signal drops some are experiencing, and this program alone is going to cost the company $175 million.

Preventing flawed products from hitting the market

Perhaps both Microsoft and Apple should have followed Palm’s lead, re-examined their products and considered delaying or altogether killing release. Other companies would also do well to bear a few basics in mind when considering product launches:

Start early: Think about potential flaws early in the production phase of a new product. Listen to your team working on the product; companies put bright people working on a new product and it’s vital to hear to every single individual involved, and early on too.

Focus groups: In a world where consumers are more savvy than ever, conducting focus groups at proper stages of product development is vital to identifying how customers will react to the gadget. Make absolutely sure the focus group is designed to gauge the reaction to those core functions the gadget is expected to perform. And bring in experts and make them an integral part of the product team. This is the time to spot failures in the usage design.

Release advance models: Apple is legendary in its insistence on secrecy about future products; that may have bit the company on the iPhone 4. But other companies often release advance models of a new gadget to beta testers, then use the information gleaned to refine the product prior to launch.

It’s easier to lose trust than gain it: So you have the next big mobile device ready to hit the market. Your internal testing has identified a significant problem that will negatively impact the product’s reception in the market. Maybe your new laptop has a tendency to crash when unplugged from power and switching to battery operation. Do not, under any circumstances, proceed with the product launch. Your brand identity, your very integrity will be called into question by the technology sector, and more importantly by the consumer. The old adage that it’s easier to lose trust than gain it is especially applicable here. Damage to the reputation can be extremely long-term and is not worth the risk.

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