TechPotential: Thinking About Benefits

[Josh] This is our second post about the new service TechPotential. For the original post, click here.

The thing I notice most about new devices -- especially those that fail -- is that people aren't thinking carefully enough about the benefits of technology. Consumers adopt stuff because it helps them to do something useful, fun, or interesting. Sometimes it seems like technology companies, from Sony to Microsoft to startups, build products because they can.

This is where timing comes in. For new consumer technologies, the timing is right if the product can be immediately useful to people based on the technology they already have. iPod takes flight when people have a lot of MP3s already. Home networks build on broadband and multiple PCs.

In 2000 (!) we formulated these rules for new technology and benefits, which still hold true:

• Benefits must be simple extensions of existing behaviors. The iPod took off in 2002 because it extended established behaviors: listening to music on the go and collecting digital music on computers. Benefits vary widely — some products enhance entertainment, while others save time or money — but no matter the benefit, timing is crucial. For example, Research In Motion (RIM) wisely delayed the launch of its BlackBerry product by a year to 1998, waiting for enough users to adopt the POP3-enabled email systems that its product needed to work properly.

• Benefits must be in line with costs. Sales take off when costs match benefits and not before. When digital cameras cost an average of $590 in 1999, only 300,000 sold. By 2000, the average price had fallen to $354, and more than 4 million sold. Contrast this with WebTV, whose $21.95-per-month fee was out of sync with a benefit — Internet access on the TV — that was of little value to the consumers who could comprehend it. The cost-benefit equation varies based on the economic situation of the buyers. Career-oriented professionals are quite willing to pay $40 per month for broadband, while less-affluent consumers waited for $150 DVD players before surging into stores.

• Benefits must be more visible than the technology. In 1998, home networks demanded the technical expertise of a network administrator. But when Windows XP shipped in 2001, the benefits of wireless routers became more visible than the technology, and the market grew. Marketing must help make benefits obvious. TiVo's initial marketing promised to help consumers "take back control of their TV," but few could translate this into a clear benefit at the time.

Click on this chart and see why you think some took off and some didn't. Are we right about benefits?

 

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