Hedonic Market Buzz in a Social Media World

Interesting observation in the NYT re the increasng speed of killing one's mistakes:

Seven weeks after it was put on sale, Hewlett-Packard killed its TouchPad tablet, the company’s competitor to Apple’s iPad. Hewlett-Packard killed the TouchPad after 48 days, cut the price and created a buying frenzy.

Last year, Microsoft pulled the plug on its Kin mobile phones only 48 days after they went on sale.

In recent years, technology companies have been cutting their losses with increasing speed. Google proudly released Wave, its platform of collaborative work tools, to the general public in May 2010. It canceled Wave 77 days later. Palm announced its first tablet, the Foleo, on May 30, 2007. By Sept. 4, the company halted development and the product was never sold.

This is a change from a few years ago and is apparently due to Apple:

When Microsoft released the Xbox 360 in 2005, there were widespread reliability issues and the console faced serious competition from the Nintendo Wii, yet the company stayed the course, and now the Xbox is one of the best-selling video game consoles of all time. That kind of tenacity seems to be in diminishing supply.

Some analysts trace the origin of this blockbuster-or-bust mentality to Apple. Each release of the company’s popular iPads and iPhones crosses over into being a mainstream media event. Al Hilwa, an analyst at the research firm IDC, described the accelerated lifecycle of high-end hardware as “Darwinian.”

Are other companies misreading the game plan though,and thus making wrong decisions? When we did the TEDxTuttle II session, Dr Caroline Wierz of Cass Business School explained that Apple spends a lot of time and effort winding up the market before any launch, so there is a pent-up demand at product release and thus the product appears to achieve its market penetration levels very fast (Pre-Hedonic Buzz marketing, I believe it is called) and thus makes the competition think the game is over.

Halwa also thinks Social Media has exacerbated the speed of the post-launch feedback loop:

The crush of tech bloggers and Twitter-using early adopters who chronicle every bit of news — good and bad — about new phones and tablets also raises the stakes around how well new products perform in the marketplace.

“You know pretty quickly, and in a very public way, whether a product is successful or not,” said Mr. Hilwa.

However, this is not necessarily all good news- Dr Wierz went on to talk about how Social Media was probably having a measurable impact on movie success on the first weekend of release as early moviegoers gave the thumbs up - and down - for later attendees.

We think there is something in this - if it is true for movies, why not for consumer tech too?

This also ties in with other work we have done recently, where we have found that the reputation for customer service for existing customers - now that it is all over the web - increasingly impacts the buying decision of new customers. We think its the same dynamic in operation here.

So Apple's real skillis not just the Pre Hedonic Buzz, but also making products that people love to have without a lot of iteration.