We get all excited about inventors and first to market, but sometimes, fast follower is the best strategy.
In the early 2000’s, the company where I worked (called Agere Systems at the time) was the partial inventor of and first to market with a technology that ultimately transformed everyday life for most of the globe. We called it WaveLAN, and then bewilderingly, ORiNOCO. My guess is you’ve never heard of WaveLAN or ORiNOCO.
But you know it by the more ubiquitous term, WiFi.
At the time, WiFi wasn’t a thing. Not only the term, but the technology itself — unless you had Apple gear. They were the first one’s to push wireless networking into the consumer world at scale. They called it AirPort and it comprised almost 100% of the early consumer WiFi market.
Our stuff, i.e., Agere’s WaveLAN, was inside all of the Apple products — the desktops, laptops, and the wireless router itself (called AirPort BaseStation). We had a one-size-fits-all solution for all three components. Therefore, we also enjoyed almost 100% of the early consumer WiFi market. At its largest, the WaveLAN business for Agere was between $300 and $400 million. Thank you, Apple.
And within about 18 months, the WaveLAN business went from almost $400 million to zero. Totally gone. 18 months.
Our solution, although functionally solid as a system, was expensive, power-hungry, kludgy, difficult to program, and required a ton of engineering customization throughout the entire system, from the IC design and manufacture to embedded and application software and the PCB board design. We filled in sinkholes and shortcomings in one area of the system by making adjustments in another.
Then, once the market was established, more computer and router companies jumped in. To support them, more semiconductor companies jumped in to improve on the shortcomings of our system. The IEEE 802.11 spec continued to evolve and new versions came out that increased speed and took less power.
We just couldn’t keep up. Our initial solution was basically a one-off that relied so heavily on our vertical integration, that not only couldn’t we quickly introduce new features, we couldn’t scale. We lost it all.
The fast followers ate our shorts.
Being second in the market has some advantages. You get to see where the first one made mistakes. You get to think about how to apply economies of scale. You get to see what customers really care about. You get to move the state of the art forward in the areas that matter.
First is sexy, but second may win the day.
