Extending the PLC of a Mature Product

Ordinary, a product line goes through a life cycle, known as Product Life Cycle (PLC). The product will go through introduction phase, growth phase, maturity phase then the decline phase. Every product goes through some form of this cycle, whether it’s a year or 30 years.

One interesting area is the maturity phase. This is where a lot of consolidation occurs and the product becomes a commodity, often the price being the only differentiating factor. This is also the phase where companies will use product or market extension to extend the life cycle or introduce a new one.

There are several examples of this phenomenon. Automobile industry is an example. I believe that the auto industry is in late mature /  early decline stage. The recent consolidations show that there will be only a few auto companies in the near future. In the past, the auto industry and the gasoline industry have been locked in step with each other. During the 1980s, GM killed their electrical initiative, EV1, due to pressure from the gasoline industry. However, now that the industry is aging, it’s looking for the new markets where it can continue to survive. Automobiles with biggest engine or plushest interior are no longer features desired by the consumer. Due to a hugely successful "Green" movement, the future for automobile industry may be electrical, Hydrogen powered or hybrid automobiles. This can only be a short term solution but these products will make immediate impact on the market. If the gasoline companies, like Exxon or Shell, are smart, they would move with the trend and a new industry is born.

Is this enough to extend their products in to the future? Probably not. Something more revolutionary are needed to completely change the game but I don’t see anything out there short of a Star Trek transporter type of device. They need to think of themselves as a transportation companies, not automobile companies.

A couple of recent examples in the high tech area that illustrates the shift very well. First, in the storage area. In the past, consumers would go buy a new disk drive when their current internal drive became full. Thanks to ever growing Operating System footprint and multimedia growth, this was a annual event for a typical consumer.

Today, while the storage requirements are growing steadily, the technology surpassed the consumer needs. Most of the current disk drives that comes with the computer have plenty of room for users, thus new drives are not needed for a much longer period. The consumers are less likely to replace their current drives as the needs are not there anymore.

So, the disk drive manufacturers decided to enter the systems market. If you look at the top manufacturers, like Seagate and WD, they have made a successful change from commodity players to a powerful consumer brand. They have become top makers of external storage devices as well as network storage devices in the consumer market. Because the external drives are mostly sold as a backup device, now they can sell those 1TB drives in an external form to customers without having to rely on them to change their internal drive.

Another example is NVIDIA. In the past, game industry drove the need for the fastest Graphics Processing Unit (GPU). Every year, companies like NVIDIA and ATI (now AMD) came out with the next generation of GPU that increased the capability from 2x to 4x from the previous generation. Because the CPU could not handle the high computation intensive graphics data, GPU was used to off load these tasks from the CPU. Every generation of the GPU produced products at different price points so they sold very well among, not only the gamers, but typical users.

However, recently, the technology surpassed the needs of consumers. The increased performance of the GPU did not correspond linearly with the overall gain in performance. A part of the reason is the multiple core CPUs now provide a lot of idle time, which can be used for other tasks like graphics. Also, the applications utilizing the graphics power, such as games, did not need that much of increase. So, like the storage counterparts, NVIDIA had to come up with a product extension. That is the CUDA architecture.

What CUDA allows is to use GPU like the old Floating Point Processor from the 486 architecture days. Since the GPU is very well adapted at processing floating point calculations, they are better than CPU on handling floating point calculations, like Photoshop filters. Using the CUDA, the user can opt to have CPUs off load intensive calculation to the GPU. In tests I have seen, CUDA can increase Photoshop CS4 performance by x4 to x10, depends on the operation.

This allows the NVIDIA to continue with the performance increase curve since it’s not only being used for graphics but any scientific calculations.  I have even heard of academic type creating a supercomputer with a bunch of GPUs connected in parallel with only a couple of CPUs acting as a traffic cop.

So, how do you check to see if you need changes? First, if your industry is moving in to or inside the mature phase of the PLC, it’s time to think about product or market extension. The easy way to tell if you are in a dire need for such a change is look at the main features/benefits of the products. If they exceed in technology to what the consumer needs are, then it’s time for a radical changes. Faster, cheaper and smaller will eventually have a diminishing appeal to consumers.  Next, look for another niche area where consumers are feeling the pain, which your product can solve those issues. Then, adjust the product to fit in to the new niche as well as the current market.

On April 27, 2009, posted in: Uncategorized by
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