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Sell Outcomes, not Devices. Hardware businesses need to change tact

Vishwanathan Sahasranamam
27th Dec 2016
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Take #1 — Edison didn’t sell Electric Bulbs, but Electric Power!

Lots of bulbs were busted in the making of this ad for Apple’s MacBook!

The electric bulb, as the metaphor for ideas or innovation, is perhaps the greatest myth there is, and it’s about time we busted that myth!

What’s all the hype about the electric bulb anyway? Why?

When the truth is this: Edison didn’t start an electric bulb company after very famously inventing it. He actually started the Electric Power Company, which later became the business powerhouse General Electric.

Credit : Shutterstock
Credit : Shutterstock

What’s in a device anyway? Why all the fuss about it?

Electric light was the ultimate consumer product — useful, usable and affordable. The Edison Electric Power Company — actually the utility company - was, and in many ways is even today, an example of the kind of business model that makes a strong case for venture financing — a profitably scalable business model to build a scalable enterprise with high potential for growth, impact, and profits.

The electric bulb then? Well, it was certainly the tool that made it all possible. In households, streets, factories, hospitals, and hotels, all humans had to do was flip a switch, and the electric bulb gave light and dispelled darkness — a severe human problem worth solving. The gas electric bulb — invented 60 years earlier - was unreliable, dangerous, and gave a random mix of bright and dim light. So, Edison solved a real pain with the (re)invention of the electric bulb — the Edison filament electric bulb.

But what made solving this problem — the problem of removing darkness for the millions of people around the world - and solving it at scale possible?

Primarily, tech — the technology of centralised power generation, long-distance power transmission, and localised power distribution. But more significantly, the business model — the profitably scalable business model of the utility company enterprise.

Now, talk about selling the MacBook as the tool for ideas!!!

Apple, more than anyone, should know it best. Imagine iMacs, iPods, iPhones, iPads and Macbooks without iTunes, Apps, Content and the out-of-this-world UX delivered!

Imagine SONY selling the iconic Walkman bundled with music cassettes!!! Certainly, Apple righted that wrong by selling iPod along with iTunes.

The bottom line: The electric bulb was merely a (re)invention! Let’s stop talking about that! We don’t need inventors, but innovators! Ones that can provide electric light to billions, and do so profitably!

Take #2 — Sell Outcomes, not Devices!

“All companies are services companies; some also manufacture products” - Peter Drucker

From Edison’s electric bulb to Xerox’s xerox to Gillette’s razor to Sony’s Walkman, to Apple’s iPod to the latest device that raised $1million on Kickstarter, billion dollar companies never came out merely selling a device — either they bundled compelling services, consumables, content and experience on their own or their partners /distributors did.

Ultimately, driving up adoption of devices is a battle fought in the mind of the target user, aimed at overcoming these barriers:

  • Why will I use this device? What are the benefits I get?
  • Does it help me solve problems more conveniently and at a lower cost?
  • How will I use this device? Is it simple and convenient?
  • What else will I need to use this device easily and conveniently?
  • How reliable is this device? How likely is this to fail?

Simply put, adoption is stimulated by Outcomes — measurable, meaningful and significant gains that outweigh costs (purchase and operating), effort, time and risk.

Devices are tools that we put in the hands of customers, who then create and achieve outcomes. But beware, OUTCOMES are too important to be left to customers! And don’t blame them if your devices don’t sell!

So, innovators of hardware devices, it is but imperative that you bundle your devices with content, easy and simple UX, value added services, APIs, and community offered support, and thereby, help your customers achieve outcomes in a simple, easy and convenient manner.

The bottom line: With the assurance of achieving Outcomes, the business can now move away from selling Hardware to selling Hardware-as-a-Service in a highly scalable pay-per-use model.

Take #3 — Build Platforms, not Devices!

Is GOQii a device or a platform?

Well, if you look at the way people are buying it, wearing it, and importantly, using it, then this is a stupid question, right? GOQii is a wearable device!

But is it?

When we actually observe how GOQii consumers — the health, wellness, and fitness-conscious - are seeing compelling value in using the device to get connected with fitness trainers, wellness practitioners, and doctors, and thereby achieve their health and fitness goals and outcomes, the question ceases to look stupid.

The most iconic devices brands that created billion dollar businesses and disrupted industries were all platforms more than merely products!

Disruptive hardware innovations should serve as platforms that connect multiple beneficiaries and providers in a networked business ecosystem that creates, delivers, and captures value in a scale unmatched by the existing value chain, thereby creating new markets with big business potential.

Inc42 probably calls GOQii and four other hardware devices the game changers of Indian healthtech sector partly because they each have a huge platform play.

The bottom line: Platforms built using smart hardware devices that exploit social networks, mobility, cloud computing, and data analytics will power the next generation of scalable enterprises!

Watch our recorded webinar: ‘Value beyond devices, enhancing market and business potential for hardware startups in building scalable hardware enterprises’.

Register for the upcoming (live) webinar with updated content here: https://goo.gl/PxdBSh

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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