First-to-market innovation challenges: An Arena Customer Spotlight

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IRX

IRX Innovations, a Dutch-based developer of highly specialized e-paper and e-ink technology, knows first-hand that timing is everything when launching a product in a new industry. As a branch of Royal Philips Electronics NV in 2004, the IRX team helped develop the Sony Librié, the first ever e-reader. The team left Royal Philips Electronics to create iRex Technologies, a developer of three top of the line e-readers between 2006 and 2009.

In spite of being the first-to-market with an innovative product, the company fell into bankruptcy five years after launch. In 2010, the company re-launched as IRX Innovations—this time with a new focus on highly specialized business and enterprise markets rather than consumer markets.

IRX knows that sometimes it takes more than innovation and hard work to successfully launch a company—sometimes, timing is everything. We spoke with Daniel Wiermans, senior electrical engineer at IRX Innovations, to learn more about the risks that come with innovating in a new field.

Interview with IRX Innovations—a leader in e-reader device technology

Alyssa: Has IRX Innovations benefited from embracing innovation?

Daniel: Ultimately, our ability to innovate and adapt has helped us, but not without some bumps along the way. We’ve learned that while innovation can be very important for company success, it is possible to be too innovative, too early.

We developed our e-reader before the market existed—before the publishing world had embraced electronic books. In fact, our device was so new to the United States market that TSA airport security wasn’t sure what to make of our device the first time they encountered it.

We released our first e-reader in 2006, with amazingly advanced features, but it was very difficult to sell the device without the available technology to get PDF books onto the device. Publishers were hesitant to take a risk on electronic books due to piracy concerns, and we had a hard time convincing them that electronic books were the future. We told them this was an opportunity to pioneer the e-reader field, but it was very difficult to find support.

Alyssa: What did you learn from breaking into a highly competitive and foreign emerging market?

Daniel: Companies looking to break into an emerging market, and small companies in particular, have to be ready at a moment’s notice to adapt to swift market changes. Emerging markets are highly unpredictable and the decision to enter often comes down to the question of when and how. Timing is everything.

When iRex introduced its first e-reader, our 3G technology inside e-books was still considered uncharted territory. The FCC had not yet determined an acceptable level of radiation from 3G modems inside e-books, which meant our wireless enabled e-readers sat on the warehouse shelves, unsellable. We lost a lot of money waiting for the green light from the government. The capital exposure that resulted proved too much for our small company and we did not survive the transition.

Alyssa: How did company size impact your ability to compete in the new market? 

Daniel: Larger companies are at an advantage in emerging markets because they can afford to create and influence the market themselves, which lends a much greater sense of control over uncertainties. Smaller companies simply do not have the same resources to bounce back from a major hit.

Once our devices made it to the shelves in the United States, we immediately felt price pressure from larger companies who could afford to sell their products at artificially low prices. Amazon and Barnes & Noble, who produced and Kindle and Nook e-reader devices, respectively, were able to subsidize device hardware costs with e-book sales.

The specialized technology in our devices also drove up our prices. We provided the fastest screen refresh capabilities, the highest storage capacity and the best quality touch screen of any device on the market—but that doesn’t come cheap.

At the end of the day, the price sensitivity of the consumer market drove competition to a level where we could not compete.

Alyssa: When you re-launched as IRX Innovations, how did your company protect itself from falling into the same pitfall?

Daniel: As a smaller company, we took advantage of the ability to go back to the drawing board. We went back to basics and developed a two-pillar approach to match our core business values and expertise.

Firstly, we realized that our strength was our technical expertise in e-ink and e-paper devices, which meant we were not going to sacrifice quality to lower cost. Secondly, we stopped producing devices for price-sensitive consumer markets and turned our focus to relatively price-insensitive markets with highly specified device requirements—such as the military and aviation fields.

By rethinking our strategy based on our product specs and expertise, we have found a niche that works for us.

Alyssa: What unique approaches have helped IRX achieve success?

Daniel: IRX has survived several rounds of setbacks in a highly competitive market because of our flexibility as a company. With fewer than 25 employees, we can respond and adapt well to market changes. We also run all our operations in-house, including engineering and logistics. This allows us to oversee our day-to-day processes and respond better to customer needs.

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About the Author

Alyssa Sittig
Alyssa played an instrumental role in the development of the Arena Blog and social media channels from 2011 to 2012. Joining the team with a background in public policy, Alyssa ... Read More 

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