Five Breakthrough Innovations to Watch in 2003
For the past couple of years, I’ve highlighted a few breakthrough innovations that may be on the point of “crossing the chasm,” making the leap from small appeal to large appeal.
The list is subjective. These are products and services that I find particularly interesting.
It also is often wrong – breakthrough innovation is often about failure, and about half of the products and services I’ve highlighted over the past several years have not yet met their aspirations.
With that as introduction, here are five breakthrough innovations to watch in 2003:
Netflix is an internet-based subscription service for DVDs.
Netflix combines existing technologies and business practices to meet an existing need in a new way:
It
uses the US Postal Service to deliver DVDs to your mailbox.
It
uses Firefly
technology to recommend DVDs you might like based on DVDs you’ve
rated.
It
has revenue-sharing arrangements with movie studios to limit its risk of over-
or under-purchasing DVDs.
The company went public in May 2002 at about $17 a share. Its stock price was as low as $5.00 a share in October, and is now back around $16.
Blockbuster and Wal-Mart are both expected to launch competing services this summer. Perhaps by this time next year Netflix will have been absorbed or overcome by competition. In the meantime, I think it will demonstrate the mass appeal of a DVD subscription service.
Segway fills a need that most people didn’t know they had – for a new type of personal transportation. I have not tried one, but those who have them seem to love them.
The Segway costs $5000, and is only available via Amazon.com. It seems misguided to offer a product that requires training and trial exclusively via mail-order, and it underscores the many kinds of errors to be made in launching a breakthrough product.
The company has recently run into a host of problems – its President resigned in December, and it had originally targeted sales to state and local governments, but many of these customers have major budget shortfalls, making the purchase of a fleet of Segways hard to justify.
Global sales of personal computers declined in 2002. The current high- end user market is saturated. But one large market is not well-served – a large number of people don’t know how to type, or have needs that require writing rather than typing.
Tablet PCs have been around at least since Apple’s Knowledge Navigator in 1987. Microsoft has been working on operating system software for Tablet PCs for many years. In this iteration, according to a recent Business Week story, they may have a hit. Tablet PC sales are exceeding anyone’s estimates.
4. Google
News –Google recently applied their search
technology to News gathering. Google
explains:
It
is an automated grouping process that pulls together related headlines and
photos from thousands of sources worldwide -- enabling you to see how different
news organizations are reporting the same story.
Google
News is highly unusual in that it offers a news service compiled solely by
computer algorithms without human intervention … without regard to political
viewpoint or ideology.
The
service occasionally misses a breaking story, as
was the case with the Challenger tragedy in February.
Google
is constantly
innovating and extending their core search technology to new areas – they
are testing a shopping site (called Google
Froogle) and recently bought Pyra Labs, the company behind Blogger.com.
Some
of this works, some of it doesn’t -- see Business Week’s pan
of Google Froogle, for example.
Regardless of results, Google keeps moving.
Hybrid vehicles are moving from novelty to mainstream. According to a January 2003 J.D. Powers survey, more than half of all new vehicle buyers in the United States would consider buying a hybrid electric vehicle.
Ford is launching the 2003 Escape, the first Hybrid SUV.
Those are my five for
2003.
What are some of the
innovations you’re watching? Drop me a line and let me know.
Next
week: Hank Chesbrough will write a guest
Update on his new book “Open
Innovation,” just published by HBS Press.
Definitions and Clarifications
There are many definitions of “breakthrough” innovation. Here’s the one I use:
Breakthroughs are products or services that create a new need and / or fill an existing need in a fundamentally new way. The Palm Pilot was a breakthrough product. Reese’s Flavored Cocoa Puffs was not.
This is a mass market listing:
The
focus is on branded products and services that are available for general use
rather than on the enabling technologies that underpin those products and
services. So “Linksys wireless routers” rather than
“wi-fi” or “Trillian
Pro Software” rather than “instant messaging services.”
It
doesn’t touch on industry-specific innovations which may be breakthroughs for
an industry, but have relatively narrow applications, like the Avid
Video Editing system in the early 1990s.
Last year’s Innovations to Watch
In the spirit of full disclosure, it’s worth noting my Innovations to Watch of 2002. Some of these had a major impact; some did not.
1.The Rocket EBook. As Amazon notes,
This item is not stocked or has been
discontinued.
2.Priceline. It didn’t make the leap from narrow to
mainstream. Standard & Poor’s
expects revenues to decline by 3% in 2003.
The stock is around $1.40. I love
their hotel reservation service, but most of their revenues come from plane
tickets.
3.The Euro. Twenty years from now, the Euro will be seen
as a momentous success or a major problem.
Either way, it’s a big deal.
4.Everquest. The multiplayer on line game with its own
economy. Currently, it has more than
430,000 subscribers, growing at more than 50% a year. As Gamezone describes
it, it has “become a gaming and cultural phenomenon.”
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