Who's next in line to suffer same fate as Nokia?
The business model of the TV industry is ripe for disruption. Hi-tech companies such as Google, Apple, Intel and Microsoft, are all trying to break into the global TV market
Back in 2007 as a new entrant, Apple completely disrupted the mobile phone market. The iPhone moved from beyond just a status symbol to a practical device for consumers worldwide. In the imminent markets of smart spectacles, smartwatch and smart TV, major players will no doubt compete for dominance. However in turn, this makes it extraordinary difficult for unknown brands, and start-ups, to build a leadership position.
Apple was already a brand, and already well established, before breaking into the mobile phone market. Can established companies, but without global brand recognition, break into the global consumer market ? In particular, will well-established Chinese companies – such as Alibaba, Baidu, Lenovo and Xaoimi – break into the global smart device market? And can start-ups such as Kreyos or Pebble in the smartwatch market or Atheer Labs or Meta in the smart glasses market really emerge to become global market leaders?
The emergence of Chinese companies as global consumer brands could be interesting. “Made in China” has connotations for the Western consumer. Chery (cars), Lenovo (computers) and Huawei (telecommunications) have had various challenges in the global market. Instead for the Chinese, acquiring established western brands may be a more prudent route. Volvo (cars) by Geely, Sunseeker (luxury yachts) by Dalian Wanda, Fisher&Paykel (domestic appliances) by Haier are some examples where global brand leaders have become Chinese owned.
Top Chinese companies may have considerable balance sheets to under- take acquisitions. A leading example, Alibaba may soon enter the public markets. Its IPO is expected to value the company of the order of $100 billion, approximately the same value as Bank of America. Alibaba would then be one of the top 30 most valuable companies in the world.
And can start-ups possibly compete against global brands, in stagnant consumer markets which are ripe for disruption? In my view, it seems unlikely. To emerge as a global consumer brand, a pure start-up – with a limited balance sheet – would have to create an entirely new market hitherto completely overlooked by the established players.
It would have to become a globally dominant fashion icon extremely quickly, grabbing global market share, before the established major corporations realised what was happening.
A more prudent strategy for a start-up would seem to be to ride the coat-tails of at least one major established brand, by providing critical technology and know-how which enables a disruption of a specific stodgy consumer market.