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Standing on the competitive edge

Standing on the competitive edge

One of the things I love about the IT industry is the constant change and competitive jostling that goes on within it. As I write this, I read that AOL has sold ICQ for $188 million, HP has acquired Palm for $1.2 billion and HTC and Microsoft have signed a patent licensing deal involving HTC’s Android phones.

It struck me while reading the associated stories that there is something of a common thread tying them all together. ICQ was once the leader in its field, in fact it could be argued that it was the first widely successful social media application. Palm was once the leader of the pack in the mobile device and applications category and Microsoft was once a leader with regard to smartphones. So that got me thinking about what went wrong in those three cases and, again, I suspect there might be a common thread or two.

ICQ was originally developed by a very small team and rose to prominence by pretty much inventing a new product/service category. If product development success is measured in terms of the number of features added and the rate at which new versions are released, then the original ICQ team was very successful. The problem, though, was that the product’s user interface rapidly became a mess and extremely confusing to use. In addition to stalling progress, this created an opportunity for other players to emerge and Yahoo and Microsoft were quick to pounce on ICQ’s mis-steps. The moral of this story is that product innovation is a wonderful thing, but if you are not delivering what the customers actually want, somebody else will surely do so.

Palm’s position in the mobile device market has been eroded dramatically over the past decade or so. At one point (at least the way I remember it) they made some of the best and most popular devices around. Fast forward to today and it is pretty much to my mind irrelevant in what has become one of the fastest-moving categories in IT.

So what went wrong ? It seems to me that during the mobile innovation race, its resources and capabilities were outstripped when it came to developing new features – in particular building and maintaining its operating system. I suspect such difficulties were behind the decision to split PalmOS off as a separate company and to build devices running Windows Mobile (I’ve had two of those phones – the first was made entirely by Palm and was a wonderful device. The second was manufactured by HTC and made a great paperweight and not much else).

So, onto Microsoft. I think a similar point is self-evident here. It has, for reasons which used to endlessly frustrate me while I worked there, surrendered what was a substantial smartphone market share lead to Apple. What went wrong? I think it’s pretty similar to what ICQ and Palm ran into as their respective markets and competitors evolved around them. Microsoft was not able to innovate at the pace or in the way demanded by increasingly sophisticated users and competitors (primarily Apple, although Android is now making inroads too) worked out its shortcomings and jumped in to fill the gap. Windows Phone 7 is Microsoft’s last chance to succeed in this space and I, along with thousands of their employees and millions of their shareholders, am waiting to see if it has got it right.

I read a great quote on Twitter recently which went something along the lines of “find something your competitor does badly and do it well” and I think that pretty much sums up the point of this column and the examples above. If your business is succeeding today it will be because there is something you are doing which is better than the way your competitors are doing it. The reason your competitors are succeeding is because they’re doing the same thing as you. What are the things that you aren’t doing well ? If you can’t identify them, I can guarantee your competitors and customers can.

Brett Roberts is a partner at business strategy consultancy Business IQ and Microsoft’s former CTO. He can be contacted at brett.roberts@businessIQ.co.nz


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