2005 Product Hits and
Misses
19 December 05
Each
year since 2001, I’ve highlighted a few new offerings that may be on the
point of making the leap from small appeal to large appeal. These are
personal choices -- product and service innovations that I find
particularly interesting. Some are obscure, others well-known.
For
the last couple of years, I’ve reviewed my innovation picks at the end
of the year to see what happened to the new offerings highlighted at the
year’s beginning. This week I’ll review the products; the next update
will look at the services.
At the beginning
of 2005, I highlighted three products to watch:
Ø
The
Airbus A380 jumbo jet
Ø
Nintendo’s DS handheld game console
Ø
Sony’s
PSP handheld game console
Each of these
products represented major new platforms for the very large companies
launching them. All three are still early in their lives -- their full
story has yet to be revealed.
At this stage,
however, here’s how I’d evaluate the performance of each:
2005 Product Hits and Misses
1. Airbus A380 gets competition
from Boeing
Over
the past decade, Boeing had held off on launching a new jumbo jet
development project, cancelling four potential designs in early stages.
It has maintained that the market for big airplanes is quite limited,
and instead has focused its development efforts on mid-size aircraft.
Boeing changed
its position on 15 November, and announced that it would be designing
and delivering a new larger version of its iconic 747 jumbo jet. The
747-8 will come in a cargo and a passenger version. It will use newly
designed jet engines from General Electric, enabling it to operate more
efficiently than the A380.
Because it will
be built on the 747 platform, the development costs for the new 747-8
should be substantially lower than for Airbus’ A380. Industry analysts,
interviewed in The New York Times, estimate that Boeing will
spend about $4 billion to develop the new 747-8, compared with at least
$14 billion for the Airbus A380.
Boeing’s 747-8 (Artist’s Conception)
Airbus maintains
that Boeing’s new plane will not be much of a challenge:
“Customers are looking for far more than a warmed-over '60s design ….
Adding a few rows to an old airplane isn't going to be a big draw."
Airbus spokeswoman MaryAnne Greczyn in Business Week, 16 Nov 05
But competition
from Boeing can only hurt the fortunes of the A380. As Stanley Holmes,
a reporter for Business Week, noted recently:
“The A380 business case looks far
better as a monopoly.”
Stanley Holmes in Business Week, 15 November 05
2. Nintendo edges out Sony in this
round of gameboy wars
“We are stepping back and saying
‘we have to disrupt this marketplace that we helped create 20 years ago
in order to be successful and … move forward.’”
Reggie Fils-Aime, Nintendo EVP for Sales and Marketing, 4 November 05
Sony
is pursuing a “more is better” approach to game hardware innovation.
Sony’s PSP, launched in March 2005 in the US, is an impressive piece
of technology that combines an MP3 player, movie viewer, and game system
in a portable package for around US $250.
Nintendo’s
approach, on the other hand, is “different is better.” Nintendo’s DS is
a single function handheld game console – it doesn’t play movies or
music. The DS has a variety of features that allow developers to build
very different games for it than for other consoles – wi-fi, a touch
screen, and two playing screens rather than one, are all unique and
unorthodox. The DS retails in the US for about $130.
Nintendo appears
to be winning in the early skirmishes between the two systems –
outselling the PSP in the US and in Japan. For example, here are weekly
unit sales in Japan of both the DS and the PSP from end 2004 to
mid-2005:
Courtesy of Media Create
DS outsells PSP in Japan, 2004/5
“Must-have” games often drive unit sales of game players. This summer,
Nintendo released “Nintendogs,” a simulation game that can only be
played on the DS. By November, the game had sold 2 million units. This
represents a 24 percent penetration of the DS installed base and is
“huge, absolutely huge,” according to Nintendo EVP Reggie Fils-Aime.
Nintendo will soon be launching a couple of quiz games called “Brain
Training” and “BrainFlex,” which will be unique offerings for the DS.
There
are no “must-have” games for the PSP, according to game reviewer Seth
Schiesel, who writes for The New York Times.
His choice for best PSP game would be something called Grand
Theft Auto: Liberty City Stories. In keeping with Sony’s “more is
better” strategy, this game breaks little new ground. Instead, it is an
extension of the very successful Grand Theft Auto franchise.
“More is better” or “different is better”? We’ll see these two
approaches compete for sales and success over the course of 2006.
More Information:
1.
My 2005
Product Innovations to Watch update was published on 7 March
2005.
2.
Boeing announces its new 747-8, reported in Business Week, 16
November 05.
3.
Transcript of a 4 November 05 presentation by
Nintendo Sales and Marketing EVP Reggie Fils-Aime.
4.
Here’s
the source for the data on
DS and PSP sales in Japan.
