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Why Good Products Fail: How to Enhance New Product Development

by John Hogan  |  
September 21, 2004

When we look back, the last 10 years of new product launches provide a sobering view. The landscape is littered with innovative new products that ultimately failed in the marketplace.

Anyone remember the Iridium satellite phone? Using a network of satellites in geosynchronous orbit around the earth, Iridium provided the user with instant phone access at virtually any point on earth—even in areas with no conventional cell phone coverage.

Despite having truly unique differentiation, the Iridium was a failure. After years of struggle, it was pulled from the market and the assets were sold at a tiny fraction of the original value.

So what happened? How could a phone with that kind of capability fail in the marketplace?

Although the phone had significant positive differentiation in the form of unlimited coverage, it was negatively differentiated in one crucial aspect: the phone weighed several pounds and was the size of a large brick. It needed a heavy-duty battery to boost a carrier signal into space.

This critical feature made the Iridium an unattractive alternative for the mass cell phone market. It limited its usefulness to remote industrial applications—such as oil platforms—where mobility was not a key need.

The market was further restricted by the price tag of over $3,000, which was needed to cover the $5 billion investment in satellites.

The bottom line is this: the Iridium is a classic example of a new product that failed because its value proposition was poorly aligned with the needs of the marketplace.

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John E. Hogan is vice-president and director of research in the Boston office of Strategic Pricing Group. He can be reached at To register to receive SPG Insights, visit

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