Wired magazine carries a very important story this month. The article talks about evolving business models and a level of development in the technology industry that – excuse the pun – puts a premium on cheap. The piece is titled, “The Good Enough Revolution” and has received wide pickup from other sites and blogs, including the very popular LifeHacker.
The observation that we are now at a point in the evolution of most consumer technology (and increasingly, enterprise tech too) that “good enough” at a low price is what wins most of the time, is crucial for entrepreneurs and companies to truly understand. Unless you have a really killer niche application that solves an otherwise incurable pain point for a very rich set of customers, you have no hope in succeding against cheaper competitors who are “good enough”, even if your products are significantly better.
Some examples Wired cites are the Flip camera, which has a lower resolution that most other digital cameras, but a low price point. The Predator drone, which does the job considerably cheaper than, say an F-35 or F-22. After all, a bomb truck is a bomb truck is a bomb truck. Single use digital cameras, Skype, Hulu and many other examples abound. I would include Netbooks and under $400 laptops as part of this trend too.
You could, frankly, also call this the “China Phenomenon”. In reality, that is the mentality that China has built its massive industrial strength on. They start off by barely doing the job at a super-low price point, and then eventually drive volumes high enough to work in a little better quality. At that point an adequate, high-volume, simple product becomes impossible to beat!
So, the new formula for success seems to be, cheap, fast and simple. A certain level of quality, of course, is essential. That said, you definitely don’t want to overshoot that minimum level of quality required if you are forcing a significant pricing premium on your customers as a consequence. Is this anathema to innovation? Does this phenomenon spell the end of companies like Apple, that may try to be simple, but are certainly not cheap and fast?
What do you think?
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