A Success and a Failure in the Smartphone Industry

Photo by Phil Roeder 

An overview of the markets in the last five years shows that the high-tech companies were getting the biggest part of the cake and they were realising enormous profits. Whilst all big firms were suffering due to the last financial crisis and lack of demand, Software corporations like Apple and Microsoft kept on performing and maintaining growth. In this paper I will highlight two products that were launched last year in 2010. The iPhone 4 , a great, new success for Apple and the Kin Smartphone  from Microsoft that was discontinued just six weeks after its launching; no doubt analysts did not consider it a surprise failure! It is useful to mention that Microsoft and Apple, considered the best two software companies in the world, have access to the same market, same labor, same minds and same technologies; and both are multi billionaires companies. Therefore we should ask why Apple’s products vastly outperform by far Microsoft’s products; and why the iPhone 4 was a real success while the Kin Smartphone couldn’t even survive for more than six weeks. Here are three of many factors that were behind the reasons of the iPhone’s success and the Kin’s failure.

iPhone 4’s success:

Innovation, Differentiation and redefining the standards:   Apple was not first on the market. So we can not talk about the first mover advantage. Blackberry was first. And while other high tech companies were trying to imitate the new Blackberry’s smart phone features and design, Apple did the unthinkable. A totally new design and new features were created; starting with the iPhone 1 and ending up with the new iPhone 4 today. Using differentiation, competitors did not want to imitate Blackberry anymore, it has become old-fashioned. They wanted to imitate Apple which was impossible because of the innovation and the differentiation that Apple was coming up with. The iphone4 is a multi-task tool (internet browser, camera, GPS, organiser, etc…) with hundreds of applications which made it difficult for competitors to imitate it.

Marketing and Public relations:  After the iPhone 3GS, people were wondering what would be next? This is when Apple PR enters the game. Apple uses secrecy and misdirection to generate buzz around its products announcements. The launching of the iPhone 4 resembled to a military assault with months of denials, waves of rumors and a massive barrage of publicity. The iPhone 4 became the “talk of the town” even months before its launching.

Standardisation and Globalisation: Apple’s products in general are all subject to standardisation. Apple already possesses market shares all over the globe. The applications on the iPhone 4 are the same for every country. On one hand, the standardisation gives Apple the advantage to converge its efforts towards the development of specific standardised applications and on the second hand it maintains the customer satisfaction in every place on the globe.

Kin’s failure:

The lack of identity:  One of the Kin’s hugest problems is that it did not have an identifiable identity. What was supposed to be a smartphone did not look like one. It was a combination of a smart phone and a normal one; by that time sliders had become old-fashioned and most of the smartphone’s features were outdated.

The Price: Besides its “incomplete smartphone” definition, the price was high. The pricing strategy did not comply with the market niche (The youth) this phone was targeting. Even though you were able to get a Kin for 100 USD, you should at least pay a minimum of 70 USD per month to keep operating the applications, for people between the ages of 15 to 30; that cost was out of the discussion.

The timing and the competition: The Kin smartphone was delayed 18 months. Microsoft management decided to delay the launching to convert the Kin from the Sidekick platform to windows CE. It took them 1 and a half years to launch the product with the old features, when other companies were already competing on a higher level. What could have had the chance to attract a segment of consumers 18 months before couldn’t even compete on a small market share. Without doubt the Kin was released at the wrong time.Considered as a historical market leader in software and technologies, Microsoft finds itself today obliged to allocate all the resources it has to penetrate the smartphone market and gain a market share.

So will Microsoft do the unthinkable? Or will we just witness the fall of what was considered the king of technology?

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