What were the major market niches within telephony applications that the company could address with its technology? How would firms in these niches use SR Corp’s technology? How would SR Corp reach these firms and help them to use the technology? What would the structure of the business relationship look like?

Question

What will be an ideal response?

Answer 1

Commercial success for breakthrough technologies depends on far more than working systems. Sometimes a Field of Dreams “build it and they’ll come” approach to marketing works when a technology and market is very new and large corporations wish to buy a “window on technology.” However, it is rarely a basis for building a solid, growing business upon, particularly as markets become more mature.1 Markets must be carefully selected and developed, as carefully as one specifies and develops the architecture of a product.
As stated in the case, the U.S. market for speech recognition was $350 million in 1993. This was expected to grow at an annual rate of 20 percent over the next five years, reaching $3 billion by the year 2000.2
The most attractive elements of the speech recognition industry were telephone-based speech recognition applications, comprising 27 percent of the total market or $95 million in 1993. Industry pundits said that telephony applications of speech recognition were expected to reach $1.9 billion in annual sales by the year 2000.
At this point, the instructor should start a discussion on what often happens to rosy forecasts by industry experts! Forecasts are based on working technology at a cost that customers can afford. Often, the reality of technology that vendors provide fails to live up to forecasters’ assumptions!
SR Corp faced three key market niches in telephony
1. Fortune 500 companies (Fort500)
2. Telephone companies (TelCos)
3. Telephone equipment switch manufacturers (OEMs)
The instructor can then solicit from students the characteristics of these three market niches from the case. Each of the three market niches were large, had significant growth potential, and were characterized by fragmented competition in terms of speech recognition suppliers. However, since SR Corp was a small firm with limited resources, it could not afford to tackle all three markets at once. In fact, being too successful immediately, even within just one niche, would strangle the firm with customer requests for technical assistance—leading to a tainted reputation and potentially early death.