A Failure To Launch

With the announcement today of Toshiba abandoning the HD DVD format we have yet another historic product failure. In many ways this most recent stumble is even larger than the attempt by Coke to reformulate a successful product or the earlier Beta failure of Sony. The core reasons for the inability of Toshiba to gain market share demonstrate just how much Sony learned from previous experiences.

The premise was simple, two formats offering true 1080p picture resolution. HDTVs have been heavily promoted for almost two years now with native 1080p format with the only source capable of delivering that quality being Bluray or HD DVD. Toshiba had the support of Microsoft which made the option of an HD DVD player part of the new XBox and Sony of course integrated their Bluray into new versions of their game console. Both effectively targeted the gamer market and least initially there was no clear winner. That quickly changed however over the last few months as one major studio after another dumped the HD format in favor of Sony Bluray.

So what ultimately cost Toshiba the most? First they failed to effectively and efficiently promote their product. Simply releasing the product and touting the benefits of it are not enough to sell what for many was still a $500 DVD player. The name itself was boring and easily confused with many other HD related items including hard drives, camcorders and even desktop computers. There was nothing about the name that brought excitement and although Bluray is hardly breathtaking it captures color and technology within the trade name. Second, they were far too slow in adopting a lower price position and never really promoted that position until it was too late. By the time they became the clear low price leader this holiday season most already heard rumors of the format fading and would not sink the money into what could potentially be an obsolete product. Third as support dwindled Toshiba was unable to maintain studio support which ultimately became the proverbial nail in the coffin. It is prohibitively expensive to stamp movies in both formats. With the sales so low on the HD-DVD side the studios really had no choice.

There are plenty of lessons to be learned that can be applied to just about any business. First and foremost know your competition and know them well. There is an old saying if they are big and you are small they are slow and you are fast. In short use your size to your advantage. Toshiba actually was the little guy in this case but acted way too slowly to head off the challenges it faced. If you are up against giant competitors the chances are great they cannot focus on any one segment or niche in their business. As a smaller company you probably can. Exploit that opportunity to your advantage. Second in order for any product to be successful it has to be appropriately and effective marketed. There are dozens of ways to market your product or service; media advertising, promotional marketing, viral marketing, word of mouth, affiliate programs and co-ops are just a few mechanisms. Whichever course you choose you must be efficient but more importantly fast. Toshiba failed to successfully promote their product and distinguish it from the other available options. It appears to me they failed to do a basic SWOT analysis – strengths, weaknesses, opportunities, threats. In the end Sony played to their strengths and forced Toshiba into a corner which exploited their weaknesses.

You may have the best product in your market but if you fail to successfully promote and advertise the product it will inevitably fail. Just ask the maker of the steam engine.