If you’ve analyzed the handheld market recently it is amazing to see how devices are converging. And you will be surprised to see how fast the market dynamics are changing.
Why is the convergence happening? As size of semiconductor chips shrink, you can add more of them into the same form factor to achieve new functionality. With better operating systems and APIs, software is making it easy to deploy many applications. Moreover, companies not only have to compete with new players in their verticals but are also looking to capture adjacent markets to grow their revenues.
While convergence is probably good for end-consumers (they can do with one device instead of many and have more choice), it presents the biggest strategic challenge for companies today. Probably the simplest way is to analyze the problem by using porter’s five forces for an external strategy and a kaplan map for the internal roadmap, but here are few things for business leaders to think about…
Companies playing in this market may need to give some thought to the following…
- How do you define your company/division?
Is it cell phone company, a camera company, a GPS company or a gaming device company. The lines between these different aspects are getting so blurred but a vision and mission is so important to take your company ahead.
- Who is your competition?
A new company emerges everyday and encroaches your turf. Is your strategy taking them into account or are you busy looking at competition in the markets that you want to enter into.
- What is your market size?
Can you accurately estimate your market size? Keep in mind that consumers will probably buy less and less gadgets as the technology improves because one device does it all…
- As a Product Manager, what will your roadmap be?
So you have a GPS now, what’s next? Would you rather put everything in and sell it? Or will you focus on certain features that you are good at? Or will you just focus on software and deploy it on other gadgets (like Tom Tom’s App on Iphone).
- WRT Marketing, what is your Product positioning?
Apple now positions the Ipod touch as a gaming device (not an MP3/Video player). They also face a challenge in differentiating products within their own company forget the competition. So how will you position your offering for customers?
- Last but not the least, what role will regulations play if any?
AT&T asking FCC to investigate Google for Google Voice recently is great example of how tough it is to define or know what regulations may apply. What should the company lobby for and who can use the regulations against you is something companies should think about.
And for companies that play in this ecosystem, while opportunities depend on where they are in the food chain, here are some things to think about…
- Semiconductor companies
The challenge is to make programmable low-power chips that will work for all purposes. Baseband is already a commodity (very low margins). Will other areas become the same? With devices converging will you sell fewer chips with more functionality. If so how is it going to affect the revenue projections. ARM is one company thats going to win no matter what because their cores are everywhere.
- Operating System companies
If you are an OS developer, should you be thinking about capturing other devices too? Who should you partner with? Will device manufacturers use their own OS?
- Software Applications (Apps, games)
What platforms should you focus on? I can guarantee every device will go the App Store route so are you prepared for it?
- Monetization (Mobile Ads, Mobile Payments)
With all these devices hooked up to the network, it is a great opportunity for ad and payment companies to step in.
- Security Issues
With devices on the network and pretty much all your data going on it, device and data security on the network will be a big concern. This is an opportunity for security companies like RSA etc. to step in. Read more about network security issues in my post “DDoS is back… Is your network equipped?“
- Wireless Carriers & Network infrastructure companies
Ah imagine the amount of data flowing into the pipes from these networked devices. Obviously the carriers will win as long as they keep up with the increased data. Read more about network infrastructure issues in my post “More bars in more places…. but no connectivity?“
- Social Network/Media companies
What we’ll see in future is Facebook connect and/or Google Friend connect getting on each of these devices. You’ll be able to manage, communicate and collaborate with your social network instantly.
All in all convergence will change market dynamics in the next few years and it will be interesting to see who takes advantage of it and who gets booted out.