Situation: A company has developed a disrupting technology that will allow OEMs to produce high-end circuits at a fraction of their current cost. A non-exclusive OEM partner is using this technology but doesn’t have a channel to high-end users, and the company is too small to reach these customers themselves. How do you reach high-end users?
Advice from the CEOs:
- Your dilemma is having a disrupting technology in a market with a strong division between OEMs servicing the low/medium-end market and those servicing the high-end market.
- Your technology collapses the division between the low/medium and the high-end markets and OEMs and proposes a full-scale technical shift.
- This shift disrupts the current business models of either group of OEMs, as well as their technology development plans. This is why you are finding resistance.
- Therefore, you need a channel partner that is either:
- A low/medium-end OEM who is just as much a disrupter as you are – highly promising but not yet well-established – and who is capability of developing a high-end sales and marketing effort; or
- A high-end OEM that knows the market but is collapsing under their current strategy and needs an entirely different solution to revive their prospects.
- Your near-term task is to simply gain market capability – both manufacturing and marketing/sales – and to use this capability to gain early market acceptance.
- Your investors want to see early “Blue Chip” partners, but given market realities, this may not be the wisest strategy.
- If, over the next 12 months, you can begin to impact the market shares of the high-end OEMs, this is the surest way to gain their attention. Once you start to gain share, a likely outcome is that one of the high-end OEMs will buy you to lock up your IP.
- Another company recently used a similar strategy entering a new market by collaborating with a high-visibility partner.
- In one year, they took 30% market share from the market leader.
- The next year the market leader bought them because “it was less expensive to buy you than to spend the marketing dollars that we would have had to spend to compete against you.”