Lessons in Business – From a PDA

The Economist has an article stating that the PDA is already heading towards has-been status.

IS IT time to declare the demise of the handheld computer, also known as the personal digital assistant (PDA)? A lot of people suddenly think so, for despite high hopes that the devices—made by such firms as Palm, Sony, HP and Dell—would someday become ubiquitous, annual sales have stayed flat at around 11m units worldwide. This compares poorly with PCs, around 130m of which are sold every year, and mobile phones, with sales of around 460m units. "The PDA market will never be a mass market," says Cindy Wolf, an analyst at In-Stat/MDR, a market-research firm. Almost everyone who wants a PDA, she says, now has one.

The interesting thing to me is that the PDA was a good technological idea, but a lousy business idea. Despite having patents on some of the technology and being first to market (well, actually Apple was first but that is a whole different topic), Palm hasn't done that well. The problem is that they had a great idea, but no competitive advantage – a problem that plagues tons of would-be entrepreneurs.

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I think about this a lot because I have tons of ideas for new products and improvements on existing products, and my friends always try to get me to do something about them. But, I don't want to go into business without an advantage that will keep me in business. A first mover advantage might be okay, but not in every case. For services it is easier because location or marketing can be a source of advantage. In the product world, though, I think the competitive advantage lies – in most cases – with the big companies that have money to quickly duplicate your product, marketing to spread the word, and distribution channels to get it in front of customers in ways you never could. I think in the future we will see a rise of the idea shops that invent or improve something and sell it to a larger company.