The Evolution of New Markets should be studied by every entrepreneur who wants to develop and dominate a new market category.
For instance, think of the various versions of smartphones that were introduced in the early 2000s by companies such as Blackberry, Motorola and Sony. Palm, Casio and Apple tried making handheld computing devices that were also smartphone precursors. Early adopters bought and used many of the competing designs, but none caught on broadly.
One way or another, years after an innovation first surfaces, a dominant design gets chosen by the market. In 2007, for example, the market chose Apple's iPhone. Apple at that point had so much public trust, its version of a smartphone instantly overtook the category. When a category is born, it's worth almost nothing in revenue. Few potential customers even understand the product yet. As new entrants pile in and try out different designs, the category gets a little more valuable. Early adopters jump in, but most people stay on the sidelines, waiting.
"The outcome of this consolidation process often comes to define the market," Geroski wrote. "It yields a well-defined, widely recognized product, and a small set of associated producers who form the backbone of pretty much everything that happens thereafter." For an entrepreneur, there's a lot to take away from Geroski's work. Figure out the category the business is in and where it is on the category journey. If the category is just beginning its evolution, expect a flood of competitors until one design wins. If a dominant design has been chosen, the entrepreneur is not likely to get far with a competing design.
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