An article today in News.com “How to succeed in the gadget biz” about a book by George Bailey and Hagen Wenzek titled “Irresistible! Markets, Models and Meta-Value in Consumer Electronics“.
“In our industry the prices fall very quickly, unlike appliances where manufacturers can sell the same product the next year,” said Sean Wargo, director of industry analysis for the Consumer Electronics Association. “We’ve succumbed to a constant source of deflation.”
Innovation helps you stay that deflation, Wargo said. Take portable CD players. Ten years ago, you could buy a decent one for $50. Now, instead, people are buying $300 MP3 players. “The benefit of new technology is allowing the industry to grow revenues at a substantial rate. (Consumers are) willing to pay more for a new product, (but you must) convince them to by the new product at a premium over the old product,” he said.
The article talks about innovating rather than becoming a commodity play.
According to the article, Apple as an example does two things: It innovates, and it gives customers what they want.
“That’s sort of the secret formula for success that the book talks about,” said Bailey.