Category Archives: Technology

Is Kindle adware-able?

Posted on November 26, 2007 | 6 comments

Amazon came out with their much talked about e-book reader – Kindle. The device is no doubt impressive, but it is $399. To place it one way, well if you can buy a music player for this much (remember iPod early days?), why not an e-book reader? This is fair, and yes, Kindle will get its share of early adopters. But what Amazon must be wanting is to get this reader in as many hands as possible so that it can build and sell its exclusive library of e-books. I think it will be really hard for the company to get deep penetration with the reader if it is sold with this price tag. So what are the alternatives?

Well one alternative is to subsidize the reader and sell it at a loss with the hope to make it up with e-book sales. This is a time tested strategy used by everyone from printer manufactures, betting on cartridges, to gaming console manufactures, developing market for the video games. Thought this might not work that well for Amazon, because Amazon is selling e-books for $9.99, and this includes royalty costs for the publisher/writer and transfer cost for the wireless service provider. So it is very much possible that the lion share of Amazon profits are coming from selling the Kindle hardware, and not the e-books.

But there is another, much compelling and hopefully much more successful alternative. That is to make Kindle adware-able. Adware is the growing source of subsidizing cost of many things online, be it news, search or communication applications. So why not an e-book reader? Kindle has wireless access powered by Whispernet (runs on Sprint network in USA, and by other cellphone providers globally as and when Amazon takes it to global markets.) Amazon uses this wireless access to download e-books, newspapers, and even wikipedia articles on customers’ Kindle device. At the same time, it is very much possible for it to download advertisements on the device. Amazon has an added benefit here. It can very well serve contextual or location based advertisements to make them more effective for the customers and compelling for the advertisers. I believe customers won’t mind seeing advertisements on bottom corner of their reading screen every ones in a while if they get the Kindle for substantially low price, or may be for free. Amazon can of course use its creativity to make ads as less obtrusive as possible.

Amazon can make this adware enabled Kindle optional. They can sell a premium version of the device for the existing price tag, which will have no ads, and sell an adware version of device for the ones willing to go for it. Even if Amazon is making its money just by selling the device, I believe it will be an incredible business opportunity for Amazon to try an adware based Kindle, as it will be a win-win for both the customers and the company.

6 Comments

Posted in Advertising, Business, Technology

Change is constant

Posted on November 4, 2007 | 3 comments

Change is inevitable. There is nothing that stays constant for ever. Things change, businesses change, markets evolve, customers move and to succeed in this continuously evolving world, you need to stick to only one constant, and that is change. Any entity, be it an individual, a group or a business needs to change with time to succeed. Businesses change and evolve in many ways, sometimes to lead a change in the industry and sometimes to adjust to the changing environment, sometimes using an experimentation approach and sometimes using a gradual approach, and at times even out of desperation to succeed.

One of the best examples of change, as described by Jim Collins in his book Good to Great, is the change in the retail industry led by Kroger in the early 1970s. Kroger understood and managed radical change in the way Americans wanted to shop, and changed the way Kroger stores sold goods to the people by shutting down its small stores and opening superstores. Kroger understood what customers wanted and gradually went on to replace all its small grocery stores into big superstores. This exemplifies the importance of change very well because during the same time, other grocery chains like A&P did not feel the importance and need to change and suffered major losses loosing most of their market share.

Another way change occurs is when companies explore different ways to sell their products to the customers. An example that comes to mind for this type of change is the change and development in the software industry. With the advent of Internet and increasing penetration of broadband connections, more and more software companies are operating like service companies providing services to customers by hosting their software and letting customers access it through the web. The change is making the world of software better in many ways like reducing the cost of the products for the end customers, better manageability of the software at central locations and faster evolution of the software over time. With more people spending more time on the Internet, and increased budget of ad money spent online, another change that has been seen in the software industry is the way companies make money. The software companies can now subsidize their services which they provide to the end customers with the help of targeted advertisements alongside their services.

Yet another way change occurs is in the way products are developed and owned by the companies. More and more companies are moving to a more open model of development as compared to the closed model with strict ownership. One of the most clear evidence of this change is the change in the way Apple operates and develops on its platform. A traditionally closed company Apple, even after striking gold with its end to end controlled platform of iPod, now plans to open up to let third party developers and individuals develop software on their iPhone framework.

There are lots and lots of examples of how companies drove change or adapted to change to succeed in the industry. At the same time, there are equal number of examples of times when companies refused to change and suffered in the long run. The success of any business largely depends on how well it manages change and sooner they move in the right direction to implement change, stronger it builds the foundation for success.

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Posted in Business, Technology

iPhone and the Chasm

Posted on October 30, 2007 | Comments Off on iPhone and the Chasm

There is one important thing to notice in all the activity and development in the iPhone world over the last few months. It takes us back to the discussion about the Chasm and the Tipping Point. The attempt of Apple to increase the adoption of iPhone can be seen in two ways:

First, Apple is trying to take the product across the Chasm. This brings up a case when companies take steps to push its product across the chasm. When this happens at a normal pace in the technology world, the mavens act like an important force to enable this push. But when companies try and force this by measures like price cuts, they are always taking the risk of loosing the support from the early adopters. For Apple, the risk was relatively low because of its track record of creating design geniuses over the years and the die-hard loyalty of the customers. 

Second, Apple is trying to increase the number of early adopters. If you see the potential size of the cellphone market around the World, having a million users for your product is not even scratching the surface. So one way to look at this is the early adoption base that Apple is trying to create in order to have a more profound force to take it across the chasm, may be in a few years.

I am more willing to go with the latter argument. It is true that Apple iPods have been a massive success and people pay a considerable premium to buy one of these. But when it comes to cellphones, the ballgame changes a little. We are looking at a two year contract with a minimum of $1200 for cellphone plan over this time. More important, we all know that in these two years, the iPhone and the likes would have taken at least a few major jumps both in terms of design and features, and the early adopters will not be able to move to the newer device till the contract ends (just look at an iPod from two years back and compare it to what is offered today). So I think it is a good strategy for Apple to get as many happy early adopters with it as possible so that when it comes out with the next version of iPhone in more models and variations to target a bigger market, it gets enough push from these mavens to cross the chasm. 

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Posted in Marketing, Technology

For me, it’s still primarily a bookstore…

Posted on October 10, 2007 | 2 comments

I have criticized the brand extension of Amazon.com for selling things unrelated to books sometime back. Since then, I have spent quite a good amount of money buying books from Amazon and the stock price of AMZN has increased 200%. So what exactly is working for the dotcom giant? In a couple of words: extensive personalization. When I as an individual go to Amazon.com, it still comes up primarily as a bookstore. Yes they do have a link to 42 product categories they sell, but the first thing I see there is a list of books related to my taste as a reader followed by a list of bestsellers, and then some seasonal stuff like in October, Halloween story books and costumes followed by anything else like promotional products.

To compare visually, this is the first thing I see when I am at Amazon.com (note that I have not securely logged in, it is based on the information stored in Amazon cookie on my machine. If I purchase something, before checkout I will have to log in to my account). And this is what any new user sees on going to Amazon.com at the same time. The two pages have remarkably different content because my landing page is personalized for me based on my shopping history and activity on Amazon stores, while the other one is for generic user. Similarly, if you look at the landing page for any other user, it will have a completely different content based on their interest.

Amazon is a standout example of how you can do brand extension in unrelated fields if you concentrate on each customer as an individual and provide them with what they are looking for. Amazon uses technology to its benefit by empowering the site with a search box right at the top to help you find what you are looking for instantaneously, and hence taking you in a whole new world where you will find Amazon.com as a completely different store. If you search for kitchen appliances, Amazon will turn itself for you as a kitchen appliances store, and same for anything else. The crown jewel of Amazon is recommendation engine. No one has got this one thing as well as Amazon did. This engine helps Amazon take individual customization to the next stage.

As for the stock price, I have a slightly different theory. With the Internet boom and bust settling down and the web becoming more ingrained in the life of the masses, the analysts have started comparing Amazon and the likes to the brick-and-mortar stores. This instantaneously gave a kick to Amazon because they can sell a lot more than any brick-and-mortar store, or many of these stores taken together, because for one, they have a global presence, and next, they don’t have to maintain shelves and window displays like the physical stores. Amazon does maintain a real state on its website, but that is customized for each individual customer.

Just compare going to Sears stores with shopping at Amazon. At Amazon, it might take you less than a minute to find what you are looking for, while at Sears, it might take you 10 minutes to reach the end of store where you will find what you are looking for. But then there are some natural advantages at Sears and other physical stores like customers can touch and feel stuff, customers go to buy one thing and finds something totally different at the store and buys it as well and so on. With the help of software, the likelihood of Amazon filling these gaps is much more than Sears filling the voids like personalization and a near infinite inventory at a physical location.

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Posted in Marketing, Technology

Online Advertisement Immunity

Posted on July 30, 2007 | Comments Off on Online Advertisement Immunity

Online advertising is the biggest revenue generator in the Internet business. Google struck gold with its contexual advertising model and led to a whole slew of companies to enter this fascinating World of online advertising or in Malcolm Gladwell‘s words, led to an online advertising epedemic. But is this epedemic here to stay (or expand further) or is it reaching a point where people are getting ready to develop immunity to the advertisements alongside the information they are looking for on the Internet?

The online advertising business is revolutionary. But this is not the first time something like this has happened. Every once in a while a new medium of information broadcasting comes along and marketers look for ways to use it by putting a part of the trillion dollar advertising budget on to it. For example with the advent of telephones, marketers jumped on to use tele-marketing as a source of selling products. Same thing happened as fax machines took on the mainstream and when people started using emails to interact with each other. But gradually, people became more adapt to these technologies and developed an immunity to these sales calls. They started to ignore, if not hate, most of the marketing messages on these mediums.

Where does online advertising stand? To analyse this, it is very important to understand the different types or classifications of online advertising. It will be a big mistake to generalize the customer immunity to online advertising as a whole. We can classify online advertisment budget in a couple of broad ways.

First type of classification is based on how the advertisers pay for the advertisements. Based on this, there are two main categories of advertisements – click based advertisement model, where the advertisers pay per click on their text ads, and impression based advertisement model, where the advertisers pay per visual impression of their advertisements on the website. If we look into the immunity of the audience to these two types of ads, I think impression based advertising has an edge. As the Internet users get more adapt to using the online resources, they are less likely to click on the advertising links in general. The audience are more likely to be attracted to the relevant information they are looking for on the Internet. But on the other hand, for visual impression of advertisements, audiance are more likely to glance at them while on the website.

Another way of classifying online ads is based on where they appear. Based on this premise, advertisements can be classified into two broad groups. First, the ads that appear next to search results. These ads are mostly click based contextual text ads which appear next to the search results. Google, Live and others do a good job of clearly marking the advertisements as sponsored links. This broad group can be further classified in two parts – ads next to product searches and ads next to information searches. Analysing this group, it is somewhat obvious that audiance are going to develop a high immunity to the advertisements next to the information searches. Reason being, when they are looking for certain information, they would tend to go for the search result that is closest to their request rather than on some sponsored link. On the other hand, in case of product search or local search, where people are looking for a certain product or service, they are more likely to click a sponsored link because that is some page where they will find the product. In this case, it also makes sense for the customer to click the sponsored link because these advertisers are trying to attract the customers to buy the same stuff they are looking for.

Second type of advertisements based on their location are the contextual ones that appear next to the information on the web. Advertisements on these websites largely depends on the context of the website. If the context of the website is like an online mall where people are looking to buy products (like eBay or Amazon.com), the customers will be less immune to the ads. On the other hand, if the context of the website is more informative like news, the immunity to the advertisements will be comparitively higher.

This gives us a general understanding of how more web savvy customers would react to different advertisements. Based on this, more informative decisions can be made on what kind of advertisements should be displayed at what destinations. For instance, if a customer is doing a product search, or is on an online shop, it is better for the advertisers to display click based contextual text ads. While on the other hand, if the customer is searching for some information, or watching some video or surfing some news site, visual impression based advertising should be the prefered model.

I think immunity is something that is prone to be developed for Internet advertising. But to tackle it, the ad placement need to be done in a smarter ways. Like any other epedemic, in order to let this epedemic grow and spread, there need to be ways to counter the immunity towards it, and with lessons from the history and endless supply of monetary muscles from the ad based revenues, it doesn’t seem to be an unattainable task.

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Posted in Advertising, Technology

The Swiss Knife Concept

Posted on July 16, 2007 | 1 comment

Product designing is one of the most challenging and interesting jobs in any industry. A good product design is something that can provide a great competitive edge to any company. I think there is no golden formula that can define a good product design, but by analysing some successful products, which have good designs, we can find some characterstics of a good design. One such characterstic is to cover all the features of a product under the wrapper of simplicity and provide pivot points to access these features. This is what I call the Swiss Knife Concept of product designing.

Swiss Army Knife, or the “Offiziersmesser” (original name), has a really great product design of its own. The way a small pocket device, that looks like a knife handle, contains half a dozen tools hidden in it is really fascinating. The adoption of this product from Swiss Army and its enormous success speaks great volume about what a consumer is looking for in a product. I think the basic design principle here is to have one really transperent product feature for which the product is primarily known (in this case, a blade) and along with that have lots of other useful features. Then provide the product a real simple user interface and make it easy for the customer to access each feature individually.

Now let’s see how this very concept of product design is consiously or unconsiously adopted outside the World of this pocket device. Search giant Google seems to be built on the Swiss Knife concept. The most transperent feature being search and this surrounded by a few dozen other products is what defines this multi-billion dollar company. The simplicity with which Google has created its primary user interface with a search bar and “pivots” to reach to other products makes the product design as closely related to a Swiss Knife as it could be.

Another place where you can see this concept is in the SmartPhones. The basic feature of these mobile devices, for most of its customers, is to use it as a phone. But along with that there are a lot of other features that almost make the phone as feature rich as a personal computer. These features are discoverable by its customers using the software interface which provide options to the customers to reach to each one of these individual features. Apple iPhones took this even a step further. The iPhone includes iPod music player as an additional feature on the phone, and as the iPhone ads puts it so beautifully, its (Internet, music player and what not), on your phone.

Microsoft Word is a Swiss Knife of its own. Microsoft Word, that looks like a real simple word processor, has a lot of really useful features in it. Same is true with other products in the Office Suite. Normally, 80% of the customers end up using only 20% of these features. In order to ease the discovery of the zillion features that are there in Word and other Office products, The Office 2007 product suite has a ribbon at the top instead of the normal menu list. Word has always consisted many features, or what we can say is it was always a Swiss Knife, what this ribbon has done is added those much required more visible pivot points to make discovery and use of these features easier.

Of course you can not apply this concept to all the products out there. So how can we find out whether a product is right for Swiss Knife Concept? I think this can be done by analysing some things about the product like its primary feature, how its secondary features complement the primary feature, what problem is the product trying to address for its customers and how it is doing so. So if a product is having lots of complementary features, along with the main product feature which is essential for the product to exist, and all these compementary features should be there for the customers to access on demand, Swiss Knife Concept can be worth exploring for the product designers.

Basic thing here is to make the use of a product easy for the customers. How the Swiss Knife Concept does it is by providing customers with a real user friendly interface, which makes the adoption of the product seamless, and along with that provide other features that are easy to discover and use. Swiss Knife Concept gives the unique ability to a product designer to have lot of features in the product without taking away the similicity element out of it.

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Posted in Business, Technology

iPhone – iPod way or Mac route?

Posted on July 1, 2007 | Comments Off on iPhone – iPod way or Mac route?

Apple released its much awaited iPhone on June 29th. The wait, the hype and the buzz around the product was expected, but still it’s really hard to believe the overnight queues outside the AT&T and Apple showrooms on June 29th. People waited hours in the queue to buy a mobile phone. In the industry where the service providers give away the phone for free, or sometimes even with cash back, people are eager to buy a $500 iPhone. Well they are the loyal Apple early adopters, but the million dollar question is: will iPhone do an iPod or will it go down the memory lane like the Macintosh?

iPhone is a very closely protected product like Macintosh was in the early 80s. Steve Jobs is well known for controlling the end-to-end development of his products. (If Apple had the strength of laying down their own cellphone network, it would not have surprised me if they went for that.) So in order to control its product closely Apple released the product only with At&T as the sole service provider. This is not the only tight coupling in iPhone. Apple has its Mac OS on the iPhone, and through it Apple controls what software can run on the phone and what cannot. Like Apple has put Google products like Maps and YouTube on the phone. In short, Apple is doing the same thing that they did with the Mac, creating a closed ecosystem for its product. This makes me wonder if this is a call to a Microsoft to come up with a more open ecosystem and concur the World?

iPhone is a design genius just like iPod. Each reviewer who reviewed iPhone gave great reviews. Walter Mossberg of WSJ and Steven Levy of Newsweek describe iPhone to be revolutionary and the best product in its class that lives up to the expectation. People admire the design work of Apple. iPod is the most sold personal music player in the World.  So just like Apple took over the personal music player market from Sony and others, there is no denying of the possibility of them doing the same with the iPhone.

iPhone does differ from iPod in some significant ways. The release of iPod was a modest release. The expectations were limited and there was no hype. And as expected, the big players in the personal music player market did not take it that seriously. But in case of iPhone, the case is different. Steve Jobs has become a design icon with each successful release of iPod and the expectations here were set as high as possibly can. And of course, all the major players in the mobile phone as well as other related business are on high alert to take on the iPhone. As per the early reviews, iPhone meets or beats the high bar set by Apple for Apple. Another significant difference is the product dependency. Apple went all alone with the iPod with its own software, music store and the hardware. But in case of iPhone, if they want a similar global reach, they will have to do partnerships with service providers around the World (which Apple is known for not liking that much).

iPhone release has stricking similarities with both iPod and Macintosh. iPhone is sure to change the entire dynamics of the cell phone device business. I think they also got the price equation pretty correct (people who are willing to buy iPods for $300, will happily pay $100 or $200 extra to get the best phone in the market, which is also an iPod). Within a few years, Apple will have a whole range of iPhones in the market with different functionalities and price tags to meet the needs of different customer segments. The thing to watch for is the partnership strategy of the company. Will the company learn from its past and go for a better approach to be more open for partnerships or will the competition come up with better strategic positioning and send iPhone the Mac route? But if they get this one aspect right this time, there is no denying that iPhone is going to rock the World the iPod way!

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Posted in Marketing, Technology

Techno-centric or Customer-centric

Posted on June 19, 2007 | 4 comments

The rate of failure for high-tech products is remarkably high. For every Facebook or YouTube, there are thousands of start-ups that have failed. Why? Were their products technologically inferior? Most of the time, no. They fail because they are more focused towards the technology they are trying to develop than the reason for which they are developing the technology. They are, what we can call, techno-centric companies.

Techno-centric high-tech companies are the ones that think of technology as the center of their universe. They focus on technological innovation in product development without considering the potential customers of their product. The strategy adopted by these companies is to let the engineers and designers come up with the product and then sell the product to the potential customers. But this approach has a major flaw. People are always a bit reluctant towards adapting new technology. In general, masses do not accept new technology unless it is absolutely required to solve some problem they are facing. Of course, there will be early adopters who like to be at the cutting edge of technology who will readily go for the innovation, but in general, the common person will not go out and buy an expensive gadget if it is not absolutely essential. This makes it harder to cross the chasm, making it even harder for the products to become mainstream.

On the other end of the spectrum are the companies that do product innovation focusing on the needs of the customer. These customer-centric companies identify the problems faced by the customer and then develop solutions for these problems using technological innovation. The basic difference here is that the product or the service which is delivered is addressing a need of the customer, making it comparitively easier for the product to get mass adoption. By being customer-centric, it also becomes easier for the companies to develop the complete solution, because the basic reason for development is solving the problem.

Of course, there are exceptions where companies have hit the jackpot by just concentrating on the technology and then marketing the product to the customer. This can be attributed to the right timing of these companies, the massive backing of the early adopters, or coincidence of the technological innovation addressing an important problem faced by the customer. But I think the probability of this happening is too low for anyone to bet their company’s future on it (unless you are one of the blue-chip companies with deep pockets and great R&D budget).

It is also important to make sure we understand that just by being customer-centric, the company will not attain the ultimate success. You will always find products which are developed focussing on customer requirements but are not very successful. Customer-centric innovation is just a piece, a really big piece, of the puzzle. Along with this, you need to get a lot of other things correct to make your product a real success. Some of the important ones are good marketing set-up, ease of adoption, competitive pricing stategy and great customer service.

Ted Levitt, author of the Marketing Imagination, once wrote, “When people buy quarter-inch drill bits, it’s not because they want the bits themselves…they want quarter-inch holes.” This summarizes the high-tech marketing success mantra in very simple words. To be successful in high-tech marketing, you need to identify what your customers want, or what problems they are trying to fix, use technology to address those problems and then make sure you market the solutions to the problems. That’s customer-centric techno-powered innovation bound to sell!

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Posted in Marketing, Technology

Customer segmentation – it’s all about the connection!

Posted on June 3, 2007 | 1 comment

Customer segmentation is no longer a good to have feature. With more and more companies using customer segmentation as the base of their marketing and advertising efforts, it is something that is required for success in any industry. Effective use of customer segmentation will no longer give you a competitive edge, but in-fact it has become a feature that will keep your company competitive in the market. So what is the use of customer segmentation? You can find good amount of literature on this topic, but to sum it all up in a few of words – effective customer connection.

Online stores like Amazon and retailers like Best Buy have done great work in this area. Amazon pioneered the space with customized recommendations for the customers and a personalized home page. Best Buy’s application of customer segmentation in the brick-and-mortar World is very impressive. They remodelled their specific sections and at some places entire stores based on the segmentation data, trained their store associates accordingly and sent out coupons and set discounts based on this data. Best Buy now has radically different strategies to target different segments from young professionals to soccer moms.

To put it in very simple words, what these companies are doing is trying to get their customer what they think the customer is interested in. To lay parallels with an everyday example, you go to your favorite deli or coffee shop around the corner and the person attending you comes and asks – “the regular?” and (most of the time, if you are not in mood for the complete opposite or something else,) you say yes! That’s customer connection in its purest form. But if your business is not the deli or coffee shop where you can remember all the customers, with the help of computing power and analytical software, you can very well “remember and recall” what the customer is looking for and connect to the customer in a proactive way.

Another way customer connection can be enhanced is by proposing the customers what meets their requirement based on what features they used or products they purchased in the past. This can be done using the techniques of inference. Going back to our analogy of the deli, you order a specific sandwich most of the time, and the deli just came up with something that goes well with that sandwich or is a new sandwich similar to your favorite one, the person attending you can suggest it to you and most of the time you might go for it. Customers love suggestions or recommendations when they are sensible and unobtrusive. By forming segments, it can be inferred what the customers in this virtual segment will be interested in and can be served accordingly.

So let’s look into the specific contribution of segmentation over here. I think segmentation provides a couple of very important handles in the entire concept of customer connection. It helps companies deal with large number of customers. Most of the times it is practically impossible to connect to each customer one-on-one. So in order to give a close to one-on-one experience, the marketers can segment customers into buckets and connect with a segment of customers in the same way. Another benefit of segmentation is adding relevancy. By reviewing the activity of customers in a segment, a pattern can be derived and used to target that particular type of customer. The basic concept is to add relevancy to what customer is looking for, whether it is in form of showing relevant advertisements, promoting products or providing relevant content. By adding relevancy to the advertisements, they are not obstructive, but in-fact informative. Same is true for product promotion. If the product you are promoting is useful to the customer, it is not hard-selling, it is being helpful to the customer.

To sum it all up, segmentation basically provides the touch of practicality to the entire process of customer connection. In today’s World, where customers have lots of options and their time is more valuable than ever, proper customer connection is becoming a required feature. And to scale this to millions of customers in this global economy, customer segmentation is nothing but an essential tool.

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Posted in Business, Marketing, Technology

Integration vs. Innovation

Posted on March 4, 2007 | 1 comment

Innovation is the well known recipe for a success. Innovation in Product Development makes a company’s product (or service) stand out above competition. But it is not always true that the companies that makes the most innovative products are the most successful ones. So there got to be something that beats innovation. If we look carefully, success in most of the industries is dependent on mass production and distribution. Creating a breakthrough innovative product is just one piece of the puzzle. The product needs to take into account the different ways the customer is going to use it, the accessories and support system for it, the partner network and so on. It is important that the product attains mainstream adoption. Without all this, any level of innovation is of no use. Therefore, the one thing that I think challenges innovation is Integration.

By integration I mean creating an ecosystem for the product. Success of a product depends greatly on the packaging of the product. How well the product meets the complete requirement of the customer? How much percent of the market actually uses this product? How many products in the market use this product as their base? Answers to these and many other questions define the success of the product. The product, along with its ecosystem, should be the market leader and should meet all the requirements of the customers.

Let’s look into videocassette recorders (VCRs) format war to see how integration out beats innovation. Producers of Beta format for VCRs were the first to develop VCR commercially in 1975. Beta got substantial technological head start due to the innovative product they brought to the market. The producer of rival Video Home System (VHS) format were the follower to Beta in the market. But there was one difference between the operations of the two companies. Beta kept the exclusive rights for production and distribution of its format of VCR. They were reluctant to share the technology or form alliances with other producers in the market. On the other hand,VHS formed strategic alliances with other producers, producers of prerecorded tapes and distributors to manufacture and market their VCR format. This integration strategy gave VHS an early lead in the sales of its VCRs giving it a dominant position in the market. By the end of 1980’s, Beta was no longer in production making the VHS format the de-facto standard for VCRs. The VHS format VCRs were neither technologically advanced nor cheaper as compared to Beta format VCRs. But they were able to beat competitions in the global VCR market due to the creation of the ecosystem around its product.

There are numerous other examples that shows the importance of integration. Windows operating system can be another prime example in the category. The number of applications that run on Windows exceeds the numbers on any other commercial operating system. This acts like a base for the success of Windows. More than ninety percent of the computers in the World run Windows. Microsoft has a networks of thousands of partners who make applications for Windows enabling the ecosystem. So any company with innovation alone cannot take on Windows operating system. They will have to do the complete integration and create an ecosystem to make their offering attractive and usable by the customers.

It is important to note that integration in no way is a substitute for innovation. Innovation in product development is still required for the success of the product. But as we just saw, integration is something that can challenge innovation. So the new recipe for guaranteed success of a product – Integrated Innovation. Let’s keep on innovating and evolving the product, let’s keep beating the expectations of the customers, let’s keep challenging the competition, but at the same time, make sure that the ecosystem is moving along with the product. The bigger and denser the ecosystem, more is the integrated innovation and higher are the chances of success.

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