Moving To Markets Of One

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 |  Includes: AAPL, SSNLF
by: Bob O'Donnell

Editor's Note: This article was originally published on June 17, 2014.

The consumer tech industry is reaching a bit of a crossroads as many companies are finding it harder and harder to create mega-hit products that sell in the tens or even hundreds of millions, such as Apple’s (NASDAQ:AAPL) iPad, or Samsung’s (OTC:SSNLF) Galaxy 5S. In fact, there’s increasing chatter about how we may never see those kinds of huge tech product hits again because of the growing diversity of options combined with the increasing sophistication of buyers. Some have also argued that we’ve reached a stopping point or temporary lull in innovation, at least when it comes to hardware.

I believe there may be kernels of truth in all those different arguments, but as I’ve thought through the issue a bit more, I’ve come to realize there’s another even more important factor at play: the increasing desire for customization and personalization. As technology products have moved into the mainstream and the enormous amount of time that people spend with these devices has turned them into knowledgeable users, there’s a growing awareness and appreciation for exactly what aspects people like and don’t like about their favorite tech products.

Plus, as tech devices become more commonplace, and take an increasingly important -- indeed intimate -- role in our lives, the desire to make them more of an extension of ourselves continues to grow. Arguably, we’ve seen aspects of this trend for quite some time. For example, the enormous variety of mobile phone cases is a small attempt at trying to personalize or customize the most ubiquitous of modern tech devices.

Though it’s not a perfect analogy, I’d argue that many tech devices are starting to become more like clothing or fashion accessories than anything else. Just as there is enormous variety in the types of clothes or jewelry or watches we all purchase and wear, so too, do I believe we will see more and more demand for that level of variety in the area of technology.

I’ve previously discussed the impact of these personalization trends on the burgeoning wearables market (see “Measuring Success in Wearables: It’s Thousands of Thousands”), but in thinking through this more, I believe it will soon be applicable for many different types of products, from smartphones and tablets to PCs and other devices. The desire to customize and personalize these devices, through a combination of physical differences, accessories and software customizations, will continue to grow, with a direct correlation between the amount of time we carry and/or use a device and our interest in making it our own. Vendors who can offer the ability to customize their devices -- such as what Motorola’s been experimenting with on the Moto X line of phones -- will have a distinct advantage across an increasingly large group of more sophisticated, design-conscious consumers.

I believe this trend also goes beyond individual devices. Part of how we now define ourselves is by the “collection” of devices we own and/or regularly use (in some cases, purchased by your employer, for example). Looking past wearables to the whole potential opportunity around the Internet of Things (IOT), it’s not at all difficult to imagine a world in the not-too-distant future where nearly everyone has a unique combination of devices within their personal collection. The challenge will be for vendors to create a variety of different options which can fit within, and work within, the set of devices a consumer already owns.

Ultimately, the goal is to drive personalization to its most extreme case and start building for markets of one. As crazy as that may sound, we’ve already started to see efforts to direct advertising messages to individuals, through the use of big data and analytics tools, so we’re arguably moving down that path. Plus, I wouldn’t be surprised to see more innovations happening in the area of customized manufacturing over the next few years. That may not drive the kinds of mass sales successes we’ve seen in the past, but it can and should drive the creation of more impactful devices that get even more intertwined into our daily lives.

Disclosure: None.

Disclaimer: Some of the author's clients are vendors in the tech industry.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.