Moving to Markets of One

The consumer tech industry is reaching a bit of a crossroads as many companies are finding it harder and harder to create megahit products that sell in the tens or even hundreds of millions, such as Apple’s iPad, or Samsung’s Galaxy 5S. In fact, there’s increasing chatter about how we may never see those kinds of huge tech product hits again because of the growing diversity of options combined with the increasing sophistication of buyers. Some have also argued that we’ve reached a stopping point or temporary lull in innovation, at least when it comes to hardware.

I believe there may be kernels of truth in all those different arguments, but as I’ve thought through the issue a bit more, I’ve come to realize there’s another even more important factor at play: the increasing desire for customization and personalization. As technology products have moved into the mainstream and the enormous amount of time that people spend with these devices has turned them into knowledgeable users, there’s a growing awareness and appreciation for exactly what aspects people like and don’t like about their favorite tech products.

Plus, as tech devices become more commonplace, and take an increasingly important—indeed intimate—role in our lives, the desire to make them more of an extension of ourselves continues to grow. Arguably, we’ve seen aspects of this trend for quite some time. For example, the enormous variety of mobile phone cases is a small attempt at trying to personalize or customize the most ubiquitous of modern tech devices.

Though it’s not a perfect analogy, I’d argue that many tech devices are starting to become more like clothing or fashion accessories than anything else. Just as there is enormous variety in the types of clothes or jewelry or watches we all purchase and wear, so too, do I believe we will see more and more demand for that level of variety in the area of technology.

I’ve previously discussed the impact of these personalization trends on the burgeoning wearables market (see “Measuring Success in Wearables: It’s Thousands of Thousands”), but in thinking through this more, I believe it will soon be applicable for many different types of products, from smartphones and tablets to PCs and other devices. The desire to customize and personalize these devices, through a combination of physical differences, accessories and software customizations, will continue to grow, with a direct correlation between the amount of time we carry and/or use a device and our interest in making it our own. Vendors who can offer the ability to customize their devices—such as what Motorola’s been experimenting with on the Moto X line of phones—will have a distinct advantage across an increasingly large group of more sophisticated, design-conscious consumers.[pullquote]Ultimately, the goal is to drive personalization to its most extreme case and start building for markets of one.”[/pullquote]

I believe this trend also goes beyond individual devices. Part of how we now define ourselves is by the “collection” of devices we own and/or regularly use (in some cases, purchased by your employer, for example). Looking past wearables to the whole potential opportunity around the Internet of Things (IOT), it’s not at all difficult to imagine a world in the not-too-distant future where nearly everyone has a unique combination of devices within their personal collection. The challenge will be for vendors to create a variety of different options which can fit within, and work within, the set of devices a consumer already owns.

Ultimately, the goal is to drive personalization to its most extreme case and start building for markets of one. As crazy as that may sound, we’ve already started to see efforts to direct advertising messages to individuals, through the use of big data and analytics tools, so we’re arguably moving down that path. Plus, I wouldn’t be surprised to see more innovations happening in the area of customized manufacturing over the next few years. That may not drive the kinds of mass sales successes we’ve seen in the past, but it can and should drive the creation of more impactful devices that get even more intertwined into our daily lives.

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Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

21 thoughts on “Moving to Markets of One”

  1. Firstly, was this a justification article for Apple’s recent hires? (Two former heads of the fashion industry).
    Second the reason it is nearly impossible to make another megahit product for a company is simple the numbers. The smart phone is a 1:1 device, 1 phone : 1 person on the whole planet. Apple would now have to start selling 2:1 devices (or higher!) in order to get a bigger addressable market. And it would have to be profitable in a similar proportion to the iPhone, which has absolutely insane margins.

    1. To answer your first question, no, it wasn’t, but I do think those are interesting hires by Apple. As for point two, I think it’s possible that there could be other devices that become extremely popular–perhaps not quite as ubiquitous as the smart phone, but close. Many people around the world already have 2-3 devices they use regularly, and as we move to smaller, mobile, inexpensive IOT-type “things”, it seems very likely to me that there will be very much 2, 3 and even 4:1 ratios for devices to people. In fact, that assumption was part of the reason I wrote on this topic.

      1. I agree that people will be wanting more than one of these accessory devices, but they will tend to be from a myriad of manufactures, with lower prices and margins, and they will not be out paced by future versions quite as fast as a smart phone currently is. However, the phone will eventually go the same route as the PC where future versions are less and less compelling (2 or 3 years out), and so sales will slow down. It is important to be in the next growth technology market.

      2. Whether something takes on a “fashion” like status is in part a contextual issue. If I visibly wear something I am more likely to consider the item within a context of coordination, complementing need, etc. Aesthetics are vitally important to “many” so they will have this feature on their list of high wants. With my phone I chose a case that met these kinds of wants while at the same time not in any way detracting from its functions.

        So who can ever solve in an elegant manner both wants and needs is likely to do very well

  2. I’d differentiate between cosmetic and functional differences, with a lot of the former and not much of the latter. People understand and want unique expressions in physical appearance, which is why iPhone cases, jewelry and clothing options abound. But functionally, my hunch is that people want things to be largely the same. They may change their background images and ringtones, but they get to Facebook the same way, every device, every time.

    I’d argue for lots of fashion differences and few (if any) differences reflected in software and UI.

    1. I would agree that most of the differences are likely to be cosmetic, but I still think we’ll see some differences of functionality–think integrated accessories or not–on some devices. The core functionality will be the same, but at the edges, so to speak, is where I think we’ll see some differentiation. Plus, things start to get really interesting when we start looking at how different combinations of devices and/or services start working together. A little too early to say for sure, but I get the sense that that could be a very interesting to consider when thinking about markets of one for tech.

      1. Interesting indeed. I wonder if the comparative ease of use of current smartphones (relative to the old Windows desktop model) will “spoil” people and favor accessories within integrated solutions. In the Wintel model, there were many, many commodity-priced products, but the quality of interaction was generally very low. Once large swaths of people become accustomed to stuff that “just works” AND has high personal value, expectations are raised for interaction in multiple dimensions. I admit to doubts that commodity-priced accessories will ever generate a lot of love for that reason, perhaps resulting in too much fragmentation for meaningful adoption.

          1. Not in the consumer market. Fragmented solutions may appeal to geeks, but that is a vanishingly small market that is increasingly disconnected from the mass consumer market.

  3. In the near term it will be the Apple Network of Things that succeeds in the consumer space.

      1. The Apple Network of Things will expand or contract depending on what you have, and what jobs you want to do. This network concept, in my opinion, requires integration, security, privacy, and curation. If it’s going to be easy enough to work in the consumer market, that is. You won’t need all Apple to make it work, just some Apple, and that’s a heck of a lot of consumers these days.

        Also keep in mind that Apple is creating platforms for third parties, and that will be part of this. Many non-Apple devices can be part of the Apple Network of Things. But everything will be ‘certified’ and curated so the experience is easy and good.

  4. So you cited the Moto X as an attempt at this. How did that go for them? It didn’t exactly set the world on fire, even with its cheap price and “advantage” of letting a customer “design” their phone.

    Customers don’t want to do a designers job for them. They want choices, sure, but they’d rather be a customer first. PC manufacturers for years thought that overwhelming customers with “choice” was what the customer wanted, until Apple became successful, and now they’re dialing back how much they overwhelm the customer with options. I remember how confusing it used to be during the PC heydays. I’d rather not see that again.

    1. While it’s true that Moto X didn’t change the world (and I’m not proposing going back to the days of building your own PCs), but I do think there’s a middle ground when it comes to incorporating “extra” features or not. Plus, as we move to wearable devices, I think this factor will be more important.

  5. I think that this is cyclical and kicks in when the pace of technological advancement slows down (all products are perceived as good-enough from a technical/feature standpoint). If a major innovation causes consumers to desire new features, it recedes.

    Fashion is important, but is not a must have. It only kicks in when technology stops mattering.

    Before the iPhone, the cell phone market was also approaching this point. Stuff like the first Prada phone is a good example, but at least in Japan, we had quite a few phones that had individualistic designs and sold extremely well ( http://www.itmedia.co.jp/mobile/0310/31/n_infogets.html ). The iPhone swamped all of these out and now fashion is left to the phone cases (in Japan, we also have many people who adorn their phones with fake jewelry).

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