Technology and ‘me too’ strategy

One of the strategy trends in technology that I find most interesting is the one of copying well – often known as ‘me too’ strategy. Technology innovation moves so quickly that companies are often left behind in the wake of technological change. However, technology in many cases can be easily copied and companies that follow well are often rewarded. In the short term the best ‘copy cats’ may not be the largest player in the market, however, they are often a close second. Equally, over time the ‘me too’ company may overtake the first to market by out innovating the company they began to copy in the first place. On the other hand, there are also some notable failures in ‘me too’ strategy in tech.

The theory…‘Me too’ strategies tend to be deployed when there is a product that has successfully found ‘product market fit’ and where barriers to entry are low (i.e. copying the technology is sufficiently easy). It typically follows that a company introduces a new technology or product which is taken up by early adopters. As it crosses the ‘trough of disillusionment’ and reaches mass market, the copycats pounce to make their mark in the expanding market. ‘Me too’ entry at this stage is a much faster route to market than being a first mover.

As more companies digitise, ‘me too’ strategies it can be argued, should be considered by more than just pure technology players. This article looks at 2 examples (one hardware, one software) of tech companies employing ‘me too’ strategies and the lessons learned for others looking to do the same.

Microsoft Zune and the iPod

Almost nobody remembers the Zune. And if you do, chances are you weren’t a ‘pod person’ during the height of iPod fanaticism. Launched in 2006, the Zune was Microsoft’s attempt to copy the success of Apple’s iPod which revolutionised portable music in 2001. Apple had been unrivaled with the iPod for 5 years so Microsoft sort to take a portion of a very large market with its own me too music player. The Zune was pulled in 2009 (3 years after launch) and 2 years into the rise of Apple’s iPhone launched in 2007. At the time Zune had 2% market share of portable MP3 players compared to the iPod’s 75%. The interesting fact was that 25% of the non-iPod market was up for grabs and Zune’s ambition was to take this and hopefully convert a few ‘pod people’ on the way.

Lessons for ‘me too’ strategies:

a) Following fast makes a difference: Microsoft was about 5 years too late into the portable music player market. By 2007 it was already developing a replacement in Windows Phone smartphones and the iPhone had started to remove the need for a separate music player device.

b) Follow fast in a strategic domain: Microsoft at the time was a software company playing in a hardware battle. Pre-iPod touch, portable player software was pretty marginal and Zune brought the benefit of great software to the table. Keeping up with hardware requirements was not Microsoft’s core competency which made it difficult to convert great software experiences.

c) Make a choice to follow and go hard at it: A few things about Microsoft’s approach to distributing and marketing Zune felt like they were ‘dipping their toe in the water’ – It was was only sold outside of the USA at the end of its life and its marketing was no match for the iPod fanaticism drummed up through clever marketing at Apple or the large effort put into marketing other Microsoft products like Bing or Windows 7.

Snap and Instagram

A different type of ‘me too’ strategy is currently playing out between Facebook and Snap Inc. In particular, Facebook’s photo sharing app Instagram is playing ‘me too’ to Snap’s flagship vanishing-messaging app and shows in Snap’s first quarterly earnings. Snap’s first quarterly report since their IPO was relatively underwhelming for low advertising revenue growth QoQ but moreover their lower than anticipated user growth. Snap struggled to maintain strong user growth 5% QoQ and 36% YoY which only just beat Twitter in its first quarter as a listed entity 4% and 30% over the same respective time frames. A big part of this is due to Facebook’s copying strategy. Through Instagram, Facebook has been quick to replicate features on Snap – Stories, interactive filters and messaging. Unlike the Zune example above, Instagram is making a different ‘me too’ play – a defensive one. It already has a 100 million active users (who do the same with Instagram as users of Snap – ‘kill time’) and has just started to increase monetisation efforts through advertising on the platform. With this number of users the strategy here is to not give any user a reason to want to use Snap. For Snap this makes user acquisition (a major determinant of success as a business) just that little bit more difficult.

Lessons ‘me too’ strategies:

You don’t have to be the challenger to employ a ‘me too’ strategy – Facebook/Instagram are the incumbent in this situation but it is clear they have kept a keen eye on the innovations made by Snap to messaging, photo filters, stories and advertising. In this case, ‘me too’ is being used by Facebook to protect the core (their network) against the challenger Snap.

Defending a competitor employing a ‘me too’ strategy against you is hard if barriers to copy are low – In the case of Snap and Instagram the biggest barrier to copying is network. However, Instagram (and Facebook) have one of the largest networks in the world. The only major barrier therefore is software development. This however is a barrier easily overcome with Facebook’s ability to attract talented developers.

A little more ‘me too’?

The best copiers in tech (e.g. Samsung, Facebook) appear to have explicit strategic ambitions but use copying as a choice in ‘how they win’ in their chosen markets. Copying well requires the capability to keenly monitor innovations of others and produce (if needed) replicas to defend or grow in a category. With the pace of technological change, it is a wonder why copying well isn’t more prevalent in ‘pure play’ technology companies and those beginning to use technology to support their strategies.

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