Global Economics

Tech's New Headache: Feature Creep


When Sony's (SNE) video games chief, Ken Kutaragi, announced in mid-March that the company's new PlayStation 3 console would be delayed, he offered what seemed a good excuse. Sony had risked far too much time and money to settle for anything but the top-of-the-line technology, he said. The main holdups were a copyright protection mechanism for the PS3's high-definition DVD player, and extra features that had been stuffed into the box. Who could blame him for making sure the console wouldn't be outdated the moment it arrived on store shelves?

But ask management gurus what they think and they'll wag a disapproving finger. To them, the PS3 delay is a classic case of a mismanaged project and feature overload. "You can't wait for certainty. In the technology business, that's always true," says Joel Koppelman, CEO of Primavera, a Bala Cynwyd (Pa.)-based company specializing in product planning. "There's always something better coming along."

Sony is just one example of how Asian tech firms have been a victim of their own promises to roll out the latest electronics goods. In recent weeks, a handful of companies have delayed the kick-off of critical products because they couldn't secure vital parts, or costs skyrocketed beyond initial projections.

STILL WAITING. On Mar. 8, Toshiba (TOSBF) and partner Canon said they would postpone the spring, 2006 rollout of new flat-screen TVs -- featuring surface-conduction electron-emitter display, or SEDs -- until late 2007. Three weeks later, Toshiba announced its high-definition DVD player, known as HD DVD, would hit stores in Japan months after its scheduled launch, and wouldn't sell in the U.S. until mid April. On Apr. 3, Korea's Samsung Electronics blamed the rescheduling of its Blu-ray player -- the same technology in Sony's PS 3 and the rival format to HD DVD -- from May to June on copyright protection delays and an add-on for showing high-definition pictures.

Sony gets a failing grade for succumbing to feature creep. That's industry-speak for the temptation to keep modifying a product at the last minute, adding all kinds of futuristic technologies, even as a deadline looms. The concept, first used in the computer software industry decades ago, applies to the corporate dilemma of whether to rush a product to market even it if doesn't have every whiz-bang feature available, or wait and update.

Luckily for Sony, analysts think PS3 might make up for lost time (see BW Online, 3/16/06, "Sony's Delay of Game"). But in the tech world, where consumer trends can rise and fall and product cycles are short, that's more often the exception than the rule. The penalty for a delay can be severe -- even catastrophic. One of the biggest risks in postponing a product launch is being out-hustled to market by rivals.

PLAN AHEAD. SED TVs, for instance, might lose some of their allure if Mitsubishi's new high-definition TVs relying on colored lasers arrive in stores later this year, as expected. "When you delay a product six months to a year, by the time you bring it out, you run the risk of its being obsolete on or near launch," says Rob Enderle, a tech consultant and principal at the Enderle Group based in San Jose, Calif.

There's no golden rule for avoiding delays, experts say. It takes realistic planning, a well-organized supply chain, and tons of vigilant monitoring to pull off any project. That's doubly difficult for tech makers, whose products amount to a gamble on what consumers will want years from now. Most should have a Plan B.

But once a project hits a snag, it can be next to impossible to get it back on track. "One of the things that has been proven time and again is... about 15% of the time into project, if a project is already falling behind schedule, the likelihood of its every catching up is zero," says Koppelman.

CREATING A MARKET. Anecdotal evidence suggests being the first to offer a new technology matters -- even if the technology is imperfect. Consider Apple Computer's (AAPL) iPod flash-memory music players. In January, 2005, the company began selling the 512-megabyte and 1-gigabyte Shuffle, a gum-pack-sized gizmo that held about 100 songs and played them in order or randomly. It was hardly the ideal music player.

But within eight months, Apple had another flash-based player, the nano, which had more memory, a tiny screen, and far more features. Had Apple waited for the nano, the company might not have gotten as many consumers hooked on its iTunes software, a big reason there have been so many repeat iPod buyers.

Consultants Bain & Co. have studied just how much speed matters. A few years ago, the company looked at PC maker Dell's (DELL) switch from 1-gigabit disk drives to 2-gigabit drives several weeks ahead of a big rival that wasn't as alert to the shift in demand. The result: Dell won out. A similar finding emerged when Bain & Co. examined a Mexico-based maker of 3.5-in. drives for removable "floppy" disks in the late 1990s.

LAG TIME. "In the disk-drive industry, if you're late to market with a next-generation product, as little as three months could cost you all hope of ever being profitable," says Mark Gottfredson, who heads the firm's global performance improvement unit based in Dallas. A head-start will give a company a shot at cutting production costs sooner than slow movers.

Even so, setbacks are likely when developing a technology that's years in the making. The first HD DVD players are only now reaching stores, about three and a half years after winning endorsement from a group of tech firms. Sony had to plan five years in advance for its PlayStation 3 console, while Canon first started research on SED TVs in 1984.

PLAY NICE. There are other complicating factors. The digital era has forced companies to make devices that can be compatible with rivals' machines. Both Sony and Samsung had to collaborate with other tech companies and Hollywood studios on the Blu-ray disc player's copyright protection system.

Kutaragi also wanted to ensure his machine played super-clear videos on any high-definition, flat-screen TV. To do that, he had to wait to see which HDMI, or high-definition multimedia interface, would become the standard. "The consortium approach has some fairly severe risks because the folks that are doing it don't naturally cooperate," says Enderle. "We had it with the wireless technologies' Wi-Fi, with Bluetooth. It's a recurring nightmare for these consortium-based technologies." For tech makers, it's a problem that won't go away anytime soon.


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