The way I see it, there are types of product categories in consumer electronics:
- Kingless Categories
- Categories with Kings
- Mature Categories
Definition of Category King: The undisputed leader of a product category, with a huge market share advantage over the next closest competitor.
Here’s what each category looks like. More details below the illustrations:
Figure 1: Kingless Categories
These are either usually newer categories without an established dominating power (for example, the 3DTV category), or less interesting markets (like, say, wireless routers) which don’t really excite consumers and/or don’t enjoy heavy manufacturer investment.
In the case of newer, fresher categories, many lesser known companies (a,b,c,d in Figure 1) are working feverishly to become the Category King. The market is wide open, and no dominant leader exists. If a King rises, there will be endless opportunity and profit. This is the most exciting kind of consumer electronics category. It is, essentially, an untapped market of consumer need.
One year ago, the tablet computer market was a Kingless Category. Apple changed all that. Before the Kindle, the book reader market lacked a king. And don’t tell me the Sony Reader was king, because nobody owned one!
In the case of categories that are kingless due to a lack of consumer interest and energy, there are few companies working to lead that category. These industries are either aging with high consumer penetration (modems, routers, PCs; that’s right, I said PCs); or simply not terribly exciting (hard drives, flash memory).
Figure 2: A Category with a King
This is what you want to become. These are large markets with high consumer interest and media attention.
The Kindle is King of its category. The iPod is the King MP3 player. The iPad is King. Google is King of search. Google is also King of web mail. Microsoft is King of operating systems, for whatever that’s worth these days.
A King is the undisputed leader of a category, with a huge market share advantage over the next closest competitor. A Category with a King is usually a newer category, one where a single company leapfrogged everyone else and connected with consumers. With time, almost always, the competition catches up. But before that happens, the King can make a boatload of money.
Figure 3: A Mature Category
Mature categories do not have undisputed leaders. As popular as the iPhone is, it is not King of the smart phone category, because Blackberries and Android devices are also popular.
The wireless carrier industry is an example of a mature industry: Four companies enjoy the title of “big wireless company.” A fifth carrier, US Cellular, has recently entered the discussion. But none of these companies can become King without buying a couple of the other companies.
Computers, HDTVs, digital cameras, and video game consoles are all examples of mature categories, where it is all but impossible for a King to rise.
You want to be King — but to do so, you must capture the imagination in a new or developing category, of which there are very few.
It’s great to King. It’s just damn hard to become King.