Moore says you can rank customers on a technology adoption scale. These customers can be companies, organisations or individuals.
There are five ranks. Moore divides the five into two clear groups and the gap between these groups is large. Or in his words, a chasm.
Moore’s first group are early adopters. They feel they must have the latest technology. This can be about prestige or perceived competitive advantage. They are willing to pay a high price to get hold of technology early.
This high price is important. Technology companies get a big margin which funds further development or marketing. The companies love early adopters.
Chasm between visionary and mainstream
The next group are visionary customers. They need a product to gain competitive advantage or control costs. They accept immature support and absorb any technology risk.
They’ll pay a premium, often less than the early adopter premium. This allows companies to develop marketing channels and support infrastructures. These are important in the next phase.
Moore’s third phase is the bulk of the market. Moore calls them early majority or pragmatic customers. They look for clear pay-offs from a technology investment. They deliver the profits and locks a technology into the mainstream.
The fourth group are reluctant adopters. They buy mature, proven technologies if there is a sensible business case. They look for commodity products.
The last group are those who may never adopt a technology. There are companies that still don’t use email, mobile phones or computerised book-keeping.
Crossing the chasm
Moore says for any technology to succeed it must cross the chasm from the first two phases and enter the third. It’s an Evil Knievel leap, many technologies can’t make it.
The bridge across the chasm might be technical. It can be about channel organisation or support infrastructure. There are political matters such as establishing a standard or it might come down to old-fashioned marketing.
To pick winners, focus on the product or technology’s ability to cross the chasm between visionary and pragmatic customers.
Besides Moore’s chasm, there are common sense ideas of price and utility.
A product which meets certain key standards can sell. The number sold depends on price and function. A lower price or more functionality means higher sales.
If the first two phases allow a maker to build in enough functionality or reduce price through economies of scale then it’s easier to cross the chasm.
Standards are successful
Standards are a further good indicator of likely success. Yet you need to read the signs.
Many so-called standards are anything but open. Accepted standards aren’t always the ones which prevail. Think of market dominating companies like Intel or Microsoft.
The standards used in a particular product or technology are not always fixed. For example, developers can change a non-standard communications protocol with a software upgrade.
Work, rest and play
Moore started out looking at business technology. The principles also apply to consumer products such as smartphones.1 The rules don’t change much between the suits and the open-neck shirts but their interpretation does.
Building up a head of steam to cross the chasm is harder for makers of consumer hardware. Consumers rarely look for a return on their investment in the business sense. They are less willing to pay top dollar for new products.
Complicating matters further is the way many products now straddle both markets. In some areas the consumer market influences business purchasing strategies. For example, the first customers to adopt the iPhone were consumers.
There’s a clear connection between Moore’s chasm and Gartner’s Hype Cycle. While the two look at adoption from different points of view, both recognise there is a hump to get over before a product or technology can succeed.
- In general I prefer not to use the term smartphone, here we need to distinguish modern iPhone-like devices from those that went before. ↩︎