Sunday, March 21, 2010

Iridium V iPod - A Short Case Study

IRIDIUM: A dream project by Motorola started in 1989. The plan was to provide connectivity anywhere in the world using satellites. After 9 years of intense R&D, the product was launched in 1998. This was a break through innovation as far as technology was concerned. Never in the history there was an offering so unique and innovative. The project was huge in terms of money spent and new technologies developed for the purpose (about USD 6 billion, 1000 patents). During its launch, the handsets were offered at USD 300 and call rates were between $3 and $8. Motorola went into deep financial trouble, main reason was at the same time GSM services were offered at USD 30 and call rates were as low as USD 1. Though the technology offered was unparallel, the premature launch of technology found no takers in the practical world.

IPod: Free digital downloads were offered free on the web by napster.com which became a rage among music lovers. Napster got into patent issues with the music industry and had to wind up free services. Apple a predominantly IT company saw business opportunity. Apple started a new concept iTunes, the affordable downloads made the customer happy and its licensing policy made the music companies also agreeable to the downloads concept. Apple integrated music and Sony’s Walkman idea and gave a new offering called iPod. The rest is history; iPod created waves and made successful innovation.

The Key Learnings:

1. Though both the products had technological innovation, iPod saw huge success because it incorporated entire technology with business model.

2. Premature launch of a superior technology made IRIDIUM to lose ground. (IRIDIUM is now used for high-tech warfare by US army)

3. For any innovation to succeed it must necessarily be useful and also affordable to the end user.

4. Innovation based on user’s expectation often finds success.

5. Proper management of Innovation is very crucial.

Moderator: Dr.Nirmalya Bagchi
Centre for Innovation and Technology, ASCI - Hyderabad
3rd March 2010

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2 comments:

  1. UnknownMarch 22, 2010 at 7:56 AM

    OK - a little like comparing apples and chicken. I think you can create a comparison between two things, but I'm not sure you've really drawn any relevant comparisons between a business that initially didn't work, and one that did. By the way, the Iridium system today has about 370,000 users, and just generated $134 million US last year in profit, and the USG only makes up about 10% of the users - the rest are ships, aircraft, tracking applications, etc - ie, non-consumers (which was incorrectly the first target of the original business model).

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  2. UnknownMarch 24, 2010 at 12:13 PM

    It also had lot of issues with US Government to go ahead with the business proposals. Do you know another fact it is named as Iridium because it had 77 satellites to cover the world and it resembled the Iridium atom.( I think my memory is alright.

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