Growth Strategy for AI-Powered Consumer Devices (Part 3)
Pitfalls in Growth
Two-sided markets
Two-sided markets refer to those that have two types of participants, with benefits for one side being a function of the number of participants on the other side. Consider the conundrum of the early Android devices. The smartphone makers were stuck in a classic chicken-and-egg situation, in which the number of consumers buying their devices depended on the number of high-quality developers working to create applications for the devices, and vice versa. The same is true for game consoles, and today’s VR/AR devices.
Today’s AI-powered consumer devices are or will soon be in a similar situation. The number of highly valued SaaS products integrated into the device, or even better created as native applications for the device, will define how useful the devices are and significantly impact sales. At a time when there are many devices available, applications will prioritize those that already have a large user base for the sake of their own growth. So it’s crucial to have a clear business model and create a fluid two-sided market.
Some tactics for building such liquidity include leveraging influencers with a large follower base, laser-focusing on a wow feature to win consumers’ hearts, subsidizing developers, or using a pricing strategy like the one by Quest 2 that we discussed in Part 2.
Source: Valve, RoadtoVR
Look matters
In an era where the camera is the most important feature on a smartphone and social media posts with images receive more attention, the look and feel of a consumer device can’t be underestimated, even though the form factor and design are notoriously hard to get right for everyone.
While technical teams focus on the features and functionalities of a device, marketers need to advocate for the importance of aesthetics because it can create an emotional appeal to users, differentiate a product in a crowded market, and sometimes determine whether users will be drawn to or reject it at first sight. Consumers don’t want to be negatively labeled, misunderstood, or laughed at for carrying such devices.
This is especially true for products designed to be easily spotted in public. Consider Google Glasses for everyday users or AR glasses not long ago. Aside from tech enthusiasts, ordinary consumers are unlikely to wear bulky and weird devices. AI-powered wearables represent the next wave of consumer gadgets that will require vision, hearing, and speaking capabilities. The challenge for product designers is to make these devices and user experience look more sensible.
Left to right: Google Glasses, Xiaomi AR Glasses, Ray-Ban l Meta Smart Glasses
More or less
In the realm of product development, some believe that the more you give to the user, the better. However, marketers and users may view this notion as a double-edged sword. While adding features and functionalities can enhance a device’s utility, it also runs the risk of diluting its core selling points and cluttering the interface, making it challenging for users to navigate and identify useful applications.
In recent years, I’ve observed a growing appreciation for products that prioritize subtraction over addition. This design trend, known as minimalism, seeks to simplify user interactions and enhance usability. Examples include minimizing the number of steps in the onboarding and setup process, streamlining the user interface to reduce button clutter, and incorporating voice and eye controls as intuitive alternatives to traditional hands-on input.
Ultimately, users benefit from products that save them time and effort. By simplifying the user experience, reducing cognitive load, and enabling faster access to desired features, these products foster increased usage and loyalty.
Positioning & Messaging
In a competitive market, differentiating a consumer product effectively involves smart and meticulous positioning and messaging. A novel product aiming to disrupt the status quo demands clarity and persuasiveness for its success.
Rabbit’s launch video attempted to position the R1 as a replacement for smartphone apps, leading to a heated debate about why it couldn’t be an app and the value of adding another device to our hands. The messaging was later revised to present the R1 as a pocket companion, a prudent move considering the significant efforts and time required to displace the smartphone as a primary computing device. Making bold claims when most features are still in developmental stages is a rather risky strategy.
Another aspect AI-powered consumer devices will need to balance is how to convey the ingenious features of AI without alarming users about being controlled. I've encountered users strongly objecting to messages like "I (the product) know you more than you know yourself". A successful product understands that its intelligence is a means to an end, that end being the seamless solution of a user's problem or the effortless enhancement of their experience.
Moments of Truth
The Moment of Truth is defined as the time when a customer interacts, online or offline, with a brand, product, or service to form or change an impression about them. Throughout my experience, I have observed certain practices that fall short of delivering a positive customer experience during these crucial moments.
Me-too attributes. These products closely imitate the features and design of popular products without introducing substantial advancements or unique value propositions. The Zune, a portable media player introduced by Microsoft in 2006, failed because “they either fill a gap in the market, or they are so radical, they dominate. It did neither”.
Left: Zune; Right: iPod (5th gen)
Complicated onboarding. We must assume that users are “lazy” and they already possess sufficient born or acquired skills to use your products. Instead of requiring them to learn new skills, a better strategy is to give play to or augment skills they have already had. Introduced in 2001, the Segway initially gained attention but later faced challenges in achieving broad adoption due to the difficulty users had to learn maintaining balance and the authorities’ struggle to integrate it into the existing transportation system.
Misleading assets. It’s inspiring to use computer-generated assets to depict a vision in presentations or videos. However, when it comes to product launch assets, such as images and videos, marketers need to accurately capture scenes from the actual device. Failure to do so creates a significant gap between user expectations and the actual experience, leading to distrust and potential abandonment of the product. To avoid this pitfall, it’s imperative to strictly adhere to the principle of authenticity, leaving no room for ambiguity. Learn from Google’s Gemini launch videos.
Invisible products. Hardware devices, particularly wearables, inherently become a part of our physical presence and personality. An optimal design approach involves ensuring that these devices are readily visible and identifiable to others when worn. Snap’s Spectacles serve as a prime example, featuring a distinctive design with vibrant colors and dual circles on the upper edges of the glasses. This design choice made them instantly recognizable and transformed them into a fashion statement.
Snap Spectacles (original)
Privacy
Privacy is increasingly important to consumers. Without proper handling, products could lead to their own demise. Google Glass, for instance, was notoriously rejected by the general public despite its innovative features. Since then, smart speakers with cameras have started adding a physical shutter to give users an option. Federated training has gained popularity for smartphone computing because it doesn’t transmit users’ private information. And Google recently announced Gemini Nano for on-device tasks, which can help address privacy concerns related to off-device computing.
If a device has an ecosystem involving developers and their applications, device makers must clarify who will store the user data needed for those applications and ensure that developers explicitly inform users and obtain their consent. Marketers should assist in developing and reviewing messaging and communication to ensure user satisfaction.
Camera cover of Amazon Echo Show
The growth strategy for AI-powered consumer devices requires a holistic approach that considers the unique challenges and dependencies of the hardware industry.
Marketers need to prioritize product-market fit, establish a compelling value proposition, and implement effective pricing strategies. Partnerships play a crucial role in ecosystem lock-in and market penetration, while continuous product development and community engagement ensure user retention and satisfaction. By leveraging these strategies, companies can navigate the complexities of the consumer device market and achieve sustainable growth.