'Simplicity' high risk, high reward for consumer tech

Limiting product line and making devices user friendly a high-risk strategy but enables business agility and consumer focus, industry watchers note.

Adopting Apple's strategy of limiting the product range and simplifying user experience may help some companies turn their fortunes around but they will need to carefully adapt product line to market demands.

Creative Technology earlier this month announced that it plans to "curb its innovation tendencies", which had resulted in the company being spread too thin with too many products released in the past. The Singapore-based company now plans to focus solely on the audio and tablet segment.

Many consumer electronics companies are also following Apple's business strategy of a small product range and simple product interface, Nick Dillon, analyst of device and platforms at Ovum said.

However, simplicity, as a term used by many companies within the consumer electronics industry have "unique nuanced differences", Michael Inouye, senior analyst of consumer technology at ABI Research observed. Within the device market, it refers to limiting the size of the product portfolio such as in Creative's case, but it could also refer to user interface which is included on the services offered on the platform, which is Apple's strategy of leveraging design and attention to user experience, he explained.

That said, simplicity may or may not be the solution or struggling technology companies, depending on whether the company chooses to simplify product line variety or user experience, he noted.

"While it is fair to say that most conumer technology companies would benefit from some degree of simplification of their product range and products, it would be unwise to pare down their offering too dramatically for risk of cutting off existing revenue streams."
-- Nick Dillon,
analyst, devices and platforms,
Ovum

Simplification works both ways
Apple has shown the value of "putting all creative resources into one product", and this will work for companies with limited resources, Shalini Verma, principal analyst of Gartner noted.

However, when a company "puts all its eggs in one basket", there are high risks involved as its entire success rides on that single product, so if the product is not successful, it has no other products to generate income, Nick Dillon, analyst of devices and platforms at Ovum warned.

"While it is fair to say that most consumer technology companies would benefit from some degree of simplification of their product range and products, it would be unwise to pare down their offerings too dramatically for risk of cutting off existing revenue streams," Dillon remarked.

On the other hand, if a company creates a product which appeals to everyone, it might ultimately serve most people's needs inadequately, Inouye added, likening it to the "Swiss army knife concept"--creating a product with a knife, spoon, fork, compass, magnifying glass, screw driver but is inferior to each of those discrete products.

The benefit of a smaller product portfolio is that it enables the company to be more nimble and more readily redirect the company's focus and ultimately consumer perception, Inouye noted.

Simplify user experience, adapt to market
Ultimately, consumers will choose the product that is easiest to use and this is where simplicity should take "center stage", Inouye observed. Simplicity hence pertains more to user experience than business strategy, and should remain a consideration when evaluating a company's strategic initiative, he noted.

Furthermore, not all vendors have the same brand presence as Apple, and the best solution is to adapt products to the changing market landscapes, he remarked.

A product strategy pegged on the simplicity concept will work only if it is accompanied by attention to detail and a deep understanding of the market needs, Verma noted. The product engineering must also be rooted in market needs such as consumers looking for user-friendly features, she added.

"The important question is not what design or product management philosophy a company has but rather is the company marrying its core competence with changing market needs," Verma said, citing that Samsung had shown that product diversity can also be an effective strategy.

Just this week, Samsung made another stride toward consolidating its position at the top of the mobile industry with a forecast that its latest smartphone Galaxy S III would clock in 10 million unit sales by July--its fastest selling handset in history. The South Korean company also held its position in the top two for tablet sales for the first quarter of 2012.

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