Looking Outside

July 2002 Corporate

A danger in all firms is myopia. Companies can focus too long on creating excellence using internal data while the competitive landscape changes and the value proposition becomes obsolete. While academics are encouraged to spend multiple years perfecting the understanding of a subject, businesses can’t afford this luxury. Business must always focus on their value proposition and the effects of industry evolution to their value proposition.

At two recent wireless events, I had the opportunity to meet some of the talented Motorola employees working in the wireless user experience area. These are engineers and business leaders whose focus is to improve the user interface on Motorola’s wireless devices. Some of the individuals work in the wireless web browser and data input interfaces area while others have greater responsibility over both technology and business issues. One of them was Josh Rubin at the e-Business Roundtable of the GSB. If any group should know about the wireless web browser wars, it should be these people.

Not long ago, the WSJ reported Nokia’s licensing agreement with Matsushita on their Series 60 web browser software. Matsushita is Nokia’s second licensee after Siemens AG. Combined, these firms represent a 47% global market share in the cell phone handset market. Nokia’s licensing of their web browser is not opportunistic. It is an important strategic move to defensively prevent market traction by Microsoft’s and Palm’s entry into the market. Microsoft has been targeting the wireless networks and has successfully reached a licensing agreement with Samsung covering their SmartPhone 2002 software.

In light of these competitive moves, it seems probable that the Motorola handset user experience team would be concerned that Motorola might abandon its proprietary browser and adopt an evolving industry standard. Could Motorola adopt Nokia’s solution? When I ask of this possibility, Motorola employees consistently respond with incredulousness towards the prospect that such a question would even be asked.

Their response may be that of triumphant expectations in their battle for global market share in the handset industry. Likewise, Motorola may not believe that Microsoft poses a serious threat to their proprietary browser nor their handsets. Perhaps Motorola can keep their own interface and use it to differentiate their product.

These are possible industry evolution paths, but industries tend to evolve in manners that meet increased customer demands and improved overall economic efficiency. If each handset web browser is slightly different, software may be required to be customized for each browser. Such a high level of differentiation, subsequent customization, and overall end-user cost will decrease the benefit proposition. Alternatively, the adoption of a wireless web browser standard could improve the feedback in network externalities and increase the total demand for the product category.

Alternatively, the Motorola team might be simply unaware of the changing industry environment.

Excessive internal focus has cost many major corporations a few points in market share. Too often, firms get caught up in their own rhetoric and forget to expand their source of data and expectations to include outside sources. They focus on the problems that are discovered internally to the detriment of any focus on problems raised by external factors. Internal problems are easier to see. But major changes in the industry landscape, such as Microsoft’s entry into the handset browser market, deserve observation and response by the firms in the market.

This wouldn’t be the first time that Motorola has missed a major industry trend. They were slow to make the switch from analog to digital wireless communication and their conservative approach cost Motorola significant market share. It would be a shame if Motorola was repeating its mistakes so quickly in the same industry.

While Motorola may be correct to not adopt Nokia’s proposed standard, their employees should be prepared to speak about their vision, why they feel the market will evolve differently than Nokia’s or Microsoft’s vision, and how they intend to ensure that the Motorola vision is executed. Otherwise, they simply look uninformed, like deer in the headlights waiting to be struck by an oncoming car.

The May Report, TECH BUSINESS BRIEFS, July 19, 2002

About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

Tim J. Smith, PhD
More by Tim J. Smith, PhD