Google managed to surprise both the market as well as the fans by cancelling the Project Ara modular phone. But from a Product Owner point of view it was no surprise. Ara phones lack a fundamental pilar that makes a product successful.

Context: Ara what?

In 2013 Google announced to build the Ara phone. A modular phone that could be upgraded over time and built to spec by the user himself. Want a faster CPU, no problem. Fancy a curved screen? Just click it on. Don’t like the storage, upgrade!

Pillar 1: Technology

Most of the project was concerned with the cool technology. How will the parts work together? What should the OS do? How will the electrical interfaces work? Won’t the phone fall apart? All valid questions, however, for a successful product technology is not the thing a Product Owner should consider. His team will break sweat over it, and it will impact cost and time to market, but Product Owners need to think about 3 main things:

Pillar 1: User Need

For those of you who are following my blogs or have read the Product Samurai, know I am a strong advocate to start with User Needs. Products should solve real world problems, something that really hurts. The more it hurts, the more we can sell. So let’s look at the problem Ara phones where designed to solve:

A.) Building custom phones

Ara phones were modeled after the Personal Computer, as we knew it in the nineties. Literally everyone I knew would build his or her own PC. Get the video card you like, the processor, RAM, hard disks (there was an entire religion of SCSI vs. IDE) and you would build the PC you needed (or could afford.) If you found that too dangerous, you would go to a local shop and have it built for you. It was the pinnacle of customization.

Integrated brands like SUN, Silicon Graphics or Apple were unable to capture any substantial market share because the modular solution was doing a “good enough” job. Only in specialized areas the integrated solution was delivering something more that was worth the price.

Key take away: if the modular solution performs the job that the product is hired to do “good enough” an integrated solution will have insufficient differentiation to succeed.

If that was the case, no-one but some very specific use cases would buy an Apple (or high-end Samsung Phone.)

B.) Upgrade your phone

The second reason is reduce eWaste and upgrade the parts of the phone that have become obsolete, without discarding the whole.

There is a point there, but just as with A, the integrated solution is superior. A new and higher resolution display needs more pixels, hence more data, hence a more powerful GPU. The interdependency is still much too high.

But that is inside-out, lets’ look at this outside-in: no-one asks what processer you have in your phone, or RAM or CPU. Most people can’t even recall the type or model, they just have an iPhone, a Samsung or HTC. The only popular use case would be replacing defective components such as screens (yes please!)

Key take away: no-one (well the general user) cares.

Pillar 2: Pervasiveness, frequency of observation

Now this was the dead give-away. Sure, there was a lot of buzz about the phone. Just not from the regular consumer. All interesting parties represented the tech savvy part of the user base. Almost no-one in the eco-system was stepping up to say they would support such a phone. What if T-Mobile, AT&T or Sprint had started offering customization services?

Key takeaway: the problem you are solving needs meet the criteria of not only the user, but also the eco-system.

The best advice I can give to Product Owners/Managers is to add a field to their Product Backlog items called: “how often have I really seen this.”

Pillar 3: Willingness to pay

There is no money to be made in the phone market. There I said it! Apple has captured the majority of the revenue and defend that position with highly integrated phones that apparently many people want. Samsung captured the remaining profits to be made by creating a phone at virtually every price point.

They are having a hard time maintaining that position because new vendors like Huawai are eating away at their lower segments. So, if no-one makes money in the device business, why would you make money by selling the parts?

What can we learn?

In short: User need, pervasiveness and willingness to pay are key to any product and good Product Owners/Managers make sure they have the right answers before they start building a product.

After thought

Of course Google knows all this, they were just trying to commoditise the phone business to such an extend that it would become a PC market. Because in the PC market the dominant OS captured all the value, and not the component makers. Smart guys!

 


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