Follow my lead?
News of Samsung’s launch of the Galaxy Tab this week serves as a useful reminder that the market leader rarely has everything his or her own way.
It is undeniably glamorous to be the market leader, and a great many businesses make the attainment of leadership their core business strategy (if only through an inability to see any other approach).
In the case of tablet computers (and most other categories of mobile computing come to that) the leader is of course Apple. The Galaxy Tab is designed to go toe-to-toe with Apple’s new iPad.
Apple has earned its leadership position with a track record of innovation, of being first to market and of opening genuinely new product categories. And there is no doubt that the advantages of this are many.
The company holds the largest market share in these categories; it is able to command a considerable premium for its products; and it enjoys an outstanding brand loyalty that makes marketing seem the simplest thing on earth – just announce the product and watch the news go viral.
But for all its appeal, market leadership also has its challenges. For a start, it has to be defended. Away from pharmaceuticals and a handful of other sectors, the days of long and meaningful patents are largely over. In their place Apple maintains its leadership with a constant programme product innovation. This is fine while it works and keeps working, but it is both costly and risky – too many new product flops and even the brightest of brands will tarnish.
And what of the rest? Well, the many companies following and challenging Apple enjoy plenty of advantages of their own. It is much cheaper to watch the results of someone else’s R&D and market testing than to conduct your own. There is an undeniable appeal in watching which product launch actually works before responding with your own version.
In this case, while the iPad has the premium brand and Apple’s brilliant music and content distribution system behind it, the Galaxy Tab offers key user advantages – it is smaller, lighter, can make calls (even video calls) and can use Flash technology. Samsung has been able to watch Apple open (in this case, arguably re-open) a new product category, and then react. As a result they will have been able to make efficient use of a smaller R&D budget, and can potentially leverage a much higher profit from a smaller market share. By adopting this strategy they can also engage as a follower across a much wider range of product categories than Apple can as a leader.
So although the reputation and glamour of being the leader is undeniably attractive, don’t feel too sorry for the rest. It’s perfectly possible to win from second place.