The FlipCam, by Pure Digital Technologies. 1 million units sold in the first year. 17% of the camcorder market in approximately 3 years. Acquired by Cisco for $590mm. Started by entrepreneurs Jonathan Kaplan and Ariel Braunstein after a failed start-up attempt in the digital camera market. A consumer product start-up's dream, no? For such a simple product, what made FlipCam such a wild success?
Wired Magazine has written a fascinating article, The Good Enough Revolution: When Cheap and Simple is Just Fine, on the concept of the "good enough" revolution. The idea that industries as diverse as camcorders, law, music, the military, and healthcare to name a few, are experiencing a wave of change in the concept of user value. It might be considered a return to a greater focus on user value, in the ongoing battle between features/quality for the sake of features/quality vs. features/quality for the sake of...the people who actually use the product. Companies and products which have long built their competitive leads on continually outrunning the competition with the latest high-quality features and technological advances, are continually having their markets disrupted by low-cost, widely accessible, flexible, "good enough" products.
The article is a great read for many reasons. Start-ups developing user-centric, disruptive consumer products should be inspired by the success of products like FlipCam. Being close to the customer and understanding holes in the market are areas start-ups can often outrun large companies. Large company engineers developing cutting-edge, technologically based features for new products spend more time in the lab and at their desk than interacting with customers. Not that the cutting edge technologies aren't important, they just generally aren't important to the mass market. In the words of Wired magazine author, Robert Capps:
Brisk sales combined with a lack of speedy returns destroyed the company's thin margins, and the camera failed. But the experience taught Kaplan and Braunstein a lesson: Customers would sacrifice lots of quality for a cheap, convenient device. To keep the price down, Pure Digital had made significant trade-offs. It used inexpensive lenses and other components and limited the number of image-processing chips. The pictures were OK but not great. Yet Pure Digital sold 3 million cameras anyway.
Kaplan and Braunstein also learned something important about camera retailing in general. The market had long been split into two main segments: point-and-shoots (including disposables) and single-lens reflex cameras, which use interchangeable lenses and other high-end accessories. Not surprisingly, the vast majority of cameras sold then—as now—were the handy point-and-shoots; SLRs tended to attract only serious hobbyists and professionals.
Oddly, though, there was no point-and-shoot analogue in video cameras—and that's where the pair saw their next opportunity. Home videocams were almost without exception expensive, complicated devices loaded with features like image stabilization, night-vision mode, and onboard color correction. And even with tools like Apple's iMovie, it was a hassle to get footage off the cameras and onto a computer for editing and sharing. In terms of complexity and price, the camcorder market resembled the SLR market, but with no low-end alternative. Kaplan and Braunstein suspected that there might be a place for a much cheaper, simpler video camera. So they decided to make one.
There are ample development opportunities for consumer product start-ups like Pure Digital. In categories where companies must justify massive R&D budgets that result in over-invented, featured-to-death, costly products that the average person doesn't find value in, there are opportunities for the consumer product start-up to tune into user needs and develop low-cost alternatives that offer users 80% of the value, with 20% of the features and cost.
Developing and sourcing products like this is also easier, as a development team can often find existing components in the market, and working with a manufacturer in a country like China or India does not involve pushing them to source and manufacture technologies that are far beyond them. The magic lies in learning from users the combination of features and costs that are good enough to meet their needs. And that magic only requires eyes and ears.
Comments