There’s a warning here for Apple, Facebook any other tech player. And for that matter any market leader with a seemingly permanent hold on a given market.
It’s that there’s no such thing as unassailable leadership in any business anymore, particularly in dynamic upgrade-driven markets.
To live in the current world of consumer electronics is to see Apple owning the lion’s share of profits, thought leadership and the category agenda. Competitors are making inroads. Samsung has already achieved the once unthinkable milestone of seizing share leadership in smart phones. Yet Apple’s dominance is still so embedded in the public consciousness that it’s hard for anyone under thirty-five to imagine the world ever being different.
But being of a certain age and gray hair quota gives you the benefit of a bigger data set. If you came of age in the 80’s, you don’t have to imagine a different world, you lived in it.
Sony was Apple. The pace setting innovator. Cream of the crop in quality and user experience. The gold standard against which others were measured. The clear design leader.
Apple at the time was on life support, needing loans from Microsoft to stay afloat. The omnipotent force in search was Netscape, spreadsheet meant Lotus, and gaming meant Atari.
As king of the hill, Sony invented portable music as we know it, paving the way for the iPod.
Burned on great technologies like BetaMax that failed because they didn’t have the content to play on them, Sony had the swagger to say what the hell, let’s gate crash the content business, making the unprecedented move of buying up record labels, music publishers and film studios.
Add it up and what do you get? A company opening new categories in electronics, captivating the public imagination, crossing the line from making gadgets to controlling the flow of content that plays on them, and leading in design. Sound familiar?
But then the wheels came off, bolt by painful bolt.
Sony failed to replicate the kind of category creating disruption embodied in the Walkman.
They guessed wrong on how to approach emerging categories and migration to new technologies.
They failed to leverage the synergy between technology and content that they paid handsomely to acquire.
Bureaucracy killed their inventive spirit and they remained tethered to shrinking markets like video recorders.
Fast forward from the Betamax to 2013. Sony has teetered on the brink of profitability for several quarters, and even eked out its first profit since 2008. But Moody’s downgrade says the recent black ink is unlikely to be sustained. Should today’s 800-pound gorillas like Apple, Facebook and Google be worried? Not about Sony of course. But about history.
It’s a warning that in any businesses fueled by dynamic innovation and rapid product churn, it only takes a few bad calls to tip the mightiest ship.
Unthinkable as it seems today that Apple could be anything other than the epicenter of the tech universe, it was every bit as unthinkable that Sony could go five years in the red.
It is consumers’ appetite for the next big thing that makes dynamic innovation-driven markets so lucrative. But that very characteristic makes them hard to rule forever. And the list of categories where disruption is unseating once-comfortable incumbents seems to be getting longer by the day.
Will your business become the next poster child for market dominance gone wrong?
The world turns faster now. Offense is the new defense. If you’re standing still you’re actually going backwards.
Is it hard to imagine a world where Facebook doesn’t dominate social networking, Apple doesn’t dominate technology, and Starbucks doesn’t dominate coffee? If you’re young enough, yes.
But if you grew up when Sony was Apple, it’s not.