Digital Products a.k.a connected hardware-devices, are an intrinsic part of our everyday lives. Learning tools, productivity and entertainment are a few of the ways we interact with these on an everyday basis. According to IHS Markit, Smart TV Share Jumps to 70 Percent of TV Shipments in 2018 From Less Than 50 Percent in 2015. In September 2017, during the launch of Apple Watch Series 3, Apple CEO Tim Cook revealed that Apple displaced Rolex as the number one watchmaker. If you add the Internet of Things IOT to this list, we wouldn’t be scratching the surface. Connected hardware products are undeniably the future.

What’s different about connected hardware devices?

Despite the increasing adoption numbers, the development process for these kinds of products is complex. A basic yet crucial lesson that I have internalized is that …

… Digital Products are different from pure software products and traditional hardware products.

Digital products are characterized by “Smart” interaction. End users expect speed, intuitiveness, connectivity and (lately) a flavor of personalization when using digital products. These characteristics have an impact on the overall user experience of digital products and hence an impact on the product development process.

Key Challenges In Developing Digital Products

• Additional upfront investments

Investing in connected-devices manufacturing adds an extra element of risk tied to the success or failure of the product. The very physical nature of these products necessitates this additional investment when compared to pure software products.

• Changing requirements

Device makers constantly face continuously changing requirements. There are two main drivers for it. Firstly, in this internet-age, technology has lowered barriers of delivery new products and services. End users have multitude of options, which drastically effects their preferences. Secondly, in an intensive competitive landscape, companies are pushing technology into the market, changing the expectations of stakeholders in the value chain. This in turn compels companies adapt their road-map.

• Variable costs

Every additional hardware unit manufactured incurs costs. This additional costs of goods sold is unlike that in pure software products. The unit-economics for pure software versus digital products is thus drastically different.

• Long development timelines

Lastly digital product development often appears to be progressing at a snail’s pace. This is due to the need to reserve time-slots in the assembly lines, or often due to the traditional linear development practices or due to the lead time involved in sourcing parts and components. All of these together add up substantial time in the product development process.

The Impact & Key Learnings

Not dealing with these challenges results in dissatisfied customers, delays in product shipments and hurting brand equity. Ultimately hurting the financials of the business – revenues and the margins. How do we minimize this impact? Can we look for some inspiration perhaps in the world of evolving product development methods? The “Agile Manifesto for software development” was published back in 2001 and over the years variants of agile development practices have gained ground. Studies conclude that agile projects have shown higher success rates compared to traditional linear projects. Can we pull out some learning from the agile development process for software products and apply them to the world of connected-hardware product development?

I’ve had three key learnings that help reduce the time to market, de-risk the investments in the early stage of product development and optimize delivering value.

• Rethinking prototyping can speed things up
• Platform decisions are business-critical
• Rethink the rules of prioritization for these ‘connected’ devices

In the following post, I will outline a three-point framework tied into each of the above three learnings. Read the next post here to know more.