Sunday, March 8, 2015

Innovation vs. Differentiation

I'm seeing a lot of press on the new Apple watch.  I love seeing new technology, and even better scoring new technology for my personal use.  I hear some of the Apple watches will cost thousands. 




Perhaps prices as rich as that reflect excitement for the new wearable technology. 

The last few large product introductions Apple rolled out are mere differentiation rather than innovation.  For example the iPhone 6 and 6+ both seemed to build on the success of the Galaxy line of phones.  while the 6 and 6+ were likely innovative for Apple, they seem to be a method to hold on to a limited product market.  The same is true of the watches.  Ebay has plenty of blue tooth watches that will work with any phone, 2,281 for sale on March 8th.  Apple's will be fancier, cooler, and designed better than the examples on E-Bay, but functionally will be similar to what came before.  Apple seems to be trying to catch up to Samsung, because an Apple Watch seems to be a direct parallel of Samsung Gear.  Coincidentally Samsung Gear is Samsung's line of already introduced watches.

This means the innovation cycle is starting to peter out for phones and phone tech just like it has for desk top computers.  By the way, desk top style computers are supposed to post a 1% increase in sales this year, which proves the form factor is still needed.  Everyone who needs a desk top computer now has one, and sales are based on broken or time obsoleted computers. 

I think Berry, Kim and Kim (1993) expressed this trend well:

 Preservation  of market  share  emerges  as a key issue,  and  investment  shifts  from  innovation
to  product  differentiation  in  the  attempt  to  create  and  protect  market  niches.  Image  is all
important  in  the  process  of  introducing  “new  and  improved”  products.

The phenomena of differentiation emerges once innovation has run its course. 

Everyone should enjoy the excitement the genius marketing promotion Apple will start.  Teh energy will be wonderful, but the long and short of it is that Apple's new  product will be differentiation rather than innovation.

On an interesting side note, Berry, in his book, Long-Wave Rhythms in Economic Development and Political Behavior predicted the Great Recession of 2007-2009 based on the conjunction of Kuznets and Kondratiev cycles in 1993. 



 Berry, B. J. L., Kim, H., & Kim, H. (1993). Are long waves driven by techno-economic transformations?: Evidence for the U.S. and the U.K. Technological Forecasting and Social Change, 44(2), 111-135. doi: 10.1016/0040-1625(93)90022-Y