In developing new products, product managers use a variety of tech- niques to reduce risk and increase chances of success. First, product managers (particularly in highly technical fields) have learned to begin next-generation products immediately after the launch of prior- generation products. Intel started this approach in 1990. Second, devel- oping simultaneous products based on a corporate strategy leverages the success of both products by adding momentum. Intel demonstrated this as well with its ProShare family of products. Third, generating sev- eral products from a common platform spreads out development costs and allows products to be brought to market more quickly and at a lower price. Hewlett-Packard benefited from this knowledge in the introduction of its color Deskjet printer. Finally, establishing barriers to entry for the competition affords at least a temporary competitive edge. Here again, Hewlett-Packard discovered this in its work in inkjet printers.
Intel’s Next-Generation Products
Companies are finding it necessary to bring out more products faster, particularly in high-tech fields. Intel, for example, has been picking up the pace of product development in the face of competition. It used to develop microprocessors sequentially, bringing them out about four years apart, as shown in Figure 10.11.
The sixth- and seventh-generation chips, on the other hand, were in process long before prior versions were introduced, with an empha- sis on new applications and strategic alliances. Note that both the P6 and P7 were already under development when the Pentium was intro- duced. The P6 is focused on new applications, such as voice recogni- tion and videoconferencing. The P7 is being designed under a new architecture with Hewlett-Packard. In 1994, an agreement was signed to meld Intel’s traditional data-processing methods with H-P’s reduced instruction set computing (RISC) technology.
To enhance the future launch of the P6 chip, as well as increase market potential for the Pentium, Intel developed and rolled out a new family of desktop videoconferencing products for PCs. This new fam- ily of products will enable computer users to work on the same docu- ment simultaneously over regular phone lines. The new-development activities are consistent with Intel’s vision of bridging the gap between communications and computer industries, as Tim Clark explains in the Business Marketingarticle “Intel Sets $8 Million Campaign”:
Intel is positioning the new line as convergence products. “Along with our many partners, we are facilitating the convergence of the com- munications and computer industries, turning the personal computer into a personal conferencing tool,” [said] CEO Andrew S. Grove.
Working on simultaneous product platforms along with mutually beneficial product entries, as Intel has done, represents a couple of techniques companies have used to improve their product development processes. They’ve demonstrated the need to be proactive and plan strategically for new-product development, as has Hewlett-Packard.
Figure 10.11 Intel’s Product Introduction Schedule
286 386 486 Pentium P6 P7
Start of design 1978 1982 1986 1989 1990 1993
Introduction 1982 1985 1989 1993 1995 1997 or 1998
Hewlett-Packard’s Inkjet Printers
In an effort to maintain its dominance in printers, Hewlett-Packard has beaten Japanese competitors by using their own tactics. Over a decade ago Japanese companies had taken away the lead in hand-held calculators, a market H-P had pioneered. The success was due to a mass-market strategy with low-priced, well-designed products. This time, H-P took that approach with inkjet printers, as Stephen Kreider Yoder explains in “How H-P Used Tactics of the Japanese to Beat Them at Their Game” in The Wall Street Journal:
H-P engineers adopted two Japanese tactics: They filed a blizzard of patents to protect their design and frustrate rivals, and embarked on a process of continual improvement to solve the inkjet’s problems.
They developed print heads that could spit 300 dots an inch and made inks that would stay liquid in the cartridge but dry instantly on plain paper. One engineer tested all types of paper: bonded, construction, toilet, and, for good measure, tested sandpaper, tortillas, and socks.
Hewlett-Packard established a solid foothold in the black-and- white inkjet printer market using these techniques. However, it faced another challenge in 1990. At this time, H-P engineers were working on a color printer, intent on bringing out a full-featured, mechanical marvel. Marketing suggested they build on the platform they had already established, since they felt this approach, though less sophisti- cated, would satisfy the needs of the customers:
There was a near mutiny among the engineers until a product man- ager named Judy Thorpe forced them to do telephone polls of cus- tomers. It turned out people were eager for the product the engineers considered a “kludge.” H-P learned that “you can tweak your not-so- latest thing and get the latest thing,” Ms. Thorpe says. By sticking to the existing platform, H-P was able to get the jump on competitors in the now-booming color-printer market.
One other thing: H-P’s “blizzard of patents” set up a barrier to entry for competition. Competing engineers lost valuable time negotiating H-P’s maze of fifty patents covering how ink travels through the head.
By the time Canon became a serious competitor, H-P had sold millions of printers and had practiced continual improvement in manufacturing.
Later, when Canon introduced a color inkjet in 1993, H-P was able to cut the price of its version before Canon even reached the market. As
a result, Hewlett-Packard “owns” 55 percent of the world market for inkjets. And, like Intel, H-P is leveraging its knowledge of inkjets in other areas such as fax machines.