Apple has a new smartwatch coming in the fall and Amazon has a new Fire smartphone coming in July. That should be good news for consumer technology fans, but the reality is that both products are “me-too” plays that should be setting off all kinds of warning bells for Silicon Valley watchers. Instead of launching truly innovative new products and opening up entirely new markets, the best and brightest companies are seemingly content to make a more conservative play for market share and rely on incremental innovations to win over customers.
Take the Apple “iWatch,” for example. Even die-hard Apple fans would have to admit that the iWatch sounds like a “me-too” tech play that has the company struggling to catch up with the likes of Samsung. It’s almost like Apple is unwillingly being pulled into creating an iWatch just because its top tech rivals also have a smartwatch. True, there’s an opportunity to create a market-changing digital fitness product using the iWatch – but smartwatches have had trouble gaining any traction to date.
Or, for example, consider the new Amazon Fire phone. Do we really need another smartphone that helps us buy more products? Amazon’s decision to roll out a new smartphone when the entire smartphone industry is nearing its saturation point seems a lot like a lot of reactive strategy. In short, a big company reacts to what’s going on around it rather than really mapping out a strategy for the future. Yes, there are some features that sound innovative — but the bigger picture is that an Amazon smartphone sounds a lot like a Facebook smartphone, and we all know how that did.
Not that there aren’t some big ideas out there in Silicon Valley.
You have Google launching Internet balloons, building a fleet of driverless cars and developing quantum computers. But, oh, by the way, Google’s Nest plans to acquire Dropcam for more than half a billion dollars. A company that promises to change the world ends up buying a webcam company.
Amazon wowed the world with its delivery drones last year, but followed that up with tepid adventures in innovation such as Fire TV and the Fire phone. No word yet if the Fire smartwatch is next.
Facebook has its share of innovative concepts in the works — like a plan to use satellite drones to provide Internet access to the world – but on a day-to-day basis, Facebook seems more interested in carrying out little tweaks to its algorithms. Meanwhile the company rolls out ever more apps that seem like “me-too” plays in an effort to keep up with innovators around it. The latest is Slingshot, which sounds a lot like Snapchat.
Apple has a futuristic new headquarters in the works and a vision to change the way we think about digital health. But it follows that up with the so-called iWatch — a smartwatch that reportedly comes in a variety of screen sizes and colors along with sensors for tracking health.
The problem, quite simply, is that the recent moves by the likes of Amazon, Apple, Facebook and Google actually make too much sense. From a purely business and analytical perspective, the moves are designed to maximize market share, increase user engagement, and hit any of the various other metrics designed to measure their performance. Wall Street analysts, even if they’re not in love with the moves, have to respect them. If the Amazon Fire phone succeeds in signing more people up for Amazon Prime and selling an incremental number of products on Amazon, does it really matter that the phone never acquires the market cachet of an iPhone?
Follow the arc of the rise and fall of any industry leader, however, and that’s exactly how smaller companies with inferior technologies begin to chip away at the market leaders. As Clayton Christensen has pointed out in The Innovator’s Dilemma – still one of the classic innovation reads – what makes true innovation so hard is that the business case for “business as usual” just makes so much sense once you’re the market leader. It becomes a matter of continual improvements and tweaks to “what works,” while ceding the ground to upstarts when it comes to new technologies.
So here’s why the infatuation with the latest product du jour is so dangerous – in the pursuit of incremental gains to quarterly financial numbers, America’s most innovative companies risk ceding more and more ground to upstarts who are coming up with disruptive products. It almost seems impossible to think of a company more innovative than Google or Apple these days – but the same was once surely true of great American companies such as IBM or Kodak. When the best and brightest in Silicon Valley are buying the likes of Nest or Beats, one wonders if they are doing so because they are one step ahead of the curve – or one step behind.
Disclosure: Amazon chief executive Jeff Bezos owns The Washington Post.