Being First Doesn’t Guarantee Success

The latest buzz in the technology world is Amazon’s “coup” at having what is being called “cloud-based music storage”. The concept is pretty simple: you can keep your music on cloud-based storage hosted and managed by Amazon. Playback is done via one of their clients. I could go into the various limitations of the service, and how in my case it won’t work. However, what has me chuckling is the general tone of how this is some kind of amazing first-mover advantage for Amazon, and the implication that it will somehow hurt Apple and Google. I have a hint for you: an astonishing number of the dominant products and services that have existed over time were not the first ones out the door. There are many, many, many examples.

GM, Toyota and Volkswagen are the 3 biggest car companies in the world. None of them existed when the first cars were being built. GM was started in 1908, but didn’t start to outsell Ford (founded in 1903) until the late 1920’s. VW was born in the 1930’s under the Nazis. Toyota didn’t really take off as a car company until the 1960’s. GM’s peak didn’t come until the 1960’s and 1970’s, where at one point they made half of all the cars sold in the US. GM didn’t start until nearly 30 years after the first car was produced, and didn’t dominate the market until nearly 70 years after the market got started. Who invented the first, modern, commercially available automobile? Karl Benz in 1885. Yes, Daimler Benz is still around, and they hold a leadership position in the car industry, acting as a benchmark in the luxury car market, but they don’t dominated the car market overall.

Microsoft Excel wasn’t the first spreadsheet for computers. It wasn’t even Microsoft’s first spreadsheet product, being predated by Multiplan. Visicalc and Lotus 1-2-3 are all older. None dominate the spreadsheet market like Excel. The same can be said for Microsoft Word, which came after WordPerfect, but is the defacto standard for word processing today.

The iPod wasn’t the first MP3 player, and wasn’t even the first hard-drive based device in this class. MS-DOS came after CP/M and a host of other PC operating systems. The Treo, Windows Phone, iPhone, Android and Blackberry weren’t the the first smartphones. The compact cassette came out after 8-track tape. DVD’s came out after Laserdisc. McDonald’s wasn’t the first fast-food restaurant, wasn’t the first to use franchising and wasn’t the first with things like the drive-through. Walmart wasn’t the first discount store.

Being first can sometimes appear important, at least during the initial launch and for the first few months of sales. The iPad jumped out to a huge lead, but Android tablets are cutting into that. Whether the iPad can continue to dominate the market in terms of units sold remains to be seen (although it will probably dominate in terms of perception, much like the iPhone, even if it isn’t the sales leader). The first Walkman continued to sell well, but it didn’t take long for it to come under sales pressure from other portable cassette players.

There is also no guarantee that being first with a product or service will allow you to lead the industry in terms of mindshare, even if you don’t own the outright unit sales title. The iPhone continues to hold a leadership position in the smartphone market, despite it not owning the sales crown. The first smartphones came from Nokia, and they are rarely, if ever, considered when it comes to deciding where smartphones are going for features or technology. Other early platforms were the Treo with PalmOS and Windows Mobile. Both have disappeared in their original form, to be replaced by devices that so far have failed to set the world on fire. Neither seem to be factors when looking at the future of mobile platforms.

How can you tell if a product “wins”, at least in terms of mindshare? One indicator for me is when the product is the noun used to describe other products in the same category. People didn’t buy “portable cassette players”, they bought Walkmans, even if their “Walkman” was actually from Sanyo or Toshiba. People typically refer to MP3 players as “iPods”. They ask for “aspirin” or “tylenol” when they want a painkiller. How can you tell that you’ve fallen out of favour? When your product is no longer the generic noun. There was a time when you didn’t make a photocopy, your made a “xerox” of a document. I haven’t heard that general term used in ages, except perhaps from my grandparents.

The service Amazon is providing appears to be something of a stop-gap, and more an attempt to be able to say “we were first” than a serious effort at changing the music landscape by shifting technology paradigms. The new service does nothing to add revenue for music publishers and artists, and comes with a number of limitations. This isn’t to say Amazon has failed, I just don’t see this iteration as the final one. It seems to be more of a press event than a technology event.



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