In an article today in the NY Times titled “Tech Industry Catches Its Breath” the author reported on the Mobile World Congress, typically a show featuring the announcement of new technological breakthroughs, however this year it is much more subdued with only tweaks on the hot new tablets recently announced. As I read through the article I started to think both about the pace of innovation and the rate of product differentiation.
The article reflects on the technology and product breakthroughs of recent years with the netbooks, the iPhone, the Kindle and most recently the iPad. But the reporting on the many variations of devices that are based on the innovation listed above are what made me think about product differentiation. How much does it matter that you are the company that comes up with the breakthrough technology? These days it seems that companies such as Apple and Google come up with a major innovation, the product is then manufactured in Asia, and often times those Asian companies then create variations that are sometime an improvement upon the original design and sold at a lower cost. Is the product differentiation game as opposed to the product innovation game more profitable? More successful? Perhaps also these lower cost improved variations catch on at a larger scale in other countries but at a smaller scale in the US. Clearly for the consumer, we need the innovative companies such as Google and Apple to make game changing technologies, but how sustainable are these product investments? And are these companies getting enough of a return with the rapid imitators and innovators making variations on their products so quickly?
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