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How to Target an Early Adopter Market


By Paul Hodges

Paul HodgesSituation
The Company is a venture-funded start-up that developed a next-generation chip for Ethernet data communications.  The chip is a co-processor that processes network data packets, so that large data servers, computer clusters, and supercomputers can communicate.  Many in the industry believed that this new 10 Gigabytes per second (Gbps) transmission speed version of Ethernet had plenty of horsepower to compete with the optical-fiber technologies that commonly link big machines in the data center.  What’s more, the Company saw that each previous Ethernet generation had soon become ubiquitous,    meaning that even at the supercomputer level Ethernet could become a plug-and-play solution with existing data center infrastructure, thus dramatically lowering end-user support costs.

The 10 Gbps standards were slow to finalize, and the market was even slower to develop; potential customers were taking a wait-and-see stance. No market segment wanted to be the first to adopt.  Our business floundered as the big computer vendors entered endless evaluations, wrote preliminary versions of system software to integrate our chip, and weighed the options and costs in terms of “CPU cycles tax,” of using their own processors, rather than a not-invented-here processor from us, to do the packet-processing heavy lifting.

The media’s generous coverage of our technology focused on niche fiber link replacement markets such as round-the-globe networks of supercomputers and scientific clusters. The Company repeatedly won a prominent annual “Worldwide LAN Speed Competition,” but so what? The innovator academic market wasn’t large enough to support our investment, and we were not getting traction with serious commercial customers.  We felt all dressed up with nowhere to go.