Of Segways and space
by Jeff Foust
|The Segway demonstrated a different kind of failure: the failure to meet overhyped expectations, the failure to compete effectively against cheaper alternatives; in short, a solution looking for a problem.|
What was known was that IT was some kind of transportation technology. The Inside report, based on the book proposal, said that the device had wowed over luminaries like venture capitalist John Doerr, who invested in the project while claiming it was as revolutionary as the Internet; Steve Jobs, the Apple co-founder who reportedly claimed that “cities would be architected” around the device; and Amazon.com founder Jeff Bezos, whose trademark laugh could be heard echoing through the halls of Kamen’s New Hampshire headquarters as he tried out the device during a June 2000 visit. The potential upside of this device was seemingly limitless, providing a sharp and hopeful contrast to the dot.com world, which was crashing to Earth at the same time. The speculation spawned a web site, theITquestion.com, where visitors traded the latest rumors on just what IT might be.
Kamen officially unveiled the Segway on the ABC TV show “Good Morning America” in December 2001. The response was… underwhelming, in many quarters. “I’m tempted to say, ‘That’s it?’” co-host Diane Sawyer blurted out when the sheet covering the Segway was pulled away. “But that can’t be it.”
But that was it. From a technological standpoint Segway was a revolutionary invention: a computer-controlled, self-balancing “human transporter” that was highly maneuverable yet easy and safe to use. However, to the public, whose expectations had bloomed in hothouse of hype fueled by the media and the Internet over the last year, the Segway seemed more like an odd-looking scooter than the device that was as revolutionary as the Internet and would force people to rearchitect cities.
That was only the beginning of the problems for the Segway and its eponymous company spun off from DEKA. While unveiled in December 2001, it would be nearly a year before the Segway was available for sale to consumers. When it did come out, it cost a whopping $5,000: a hefty sum for what is essentially a fancy scooter. People who might have been curious about they might use such an innovative device experienced sticker shock at that price and rapidly became disinterested.
|It turns out there are some interesting, if painful, parallels between the Segway and the space industry, lessons that must be learned if future space ventures are to be a success.|
It’s little surprise, then, that Segways failed to sell at anywhere near the levels its backers hoped. When the company issued a recall notice in September 2003 to correct a software problem, it said only 6,000 devices had been manufactured to date. Kemper, in his book Reinventing the Wheel (the softcover version of the book about the development of the Segway that was originally published under the title Code Name Ginger), reported that as of summer 2004—the last date sales figures had been released—less than 10,000 Segways had been sold. (Segway’s media relations office failed to respond to a request last week for updated sales figures.) That’s a far cry from the pre-release belief, voiced by Doerr, that Segway would make its first billion dollars faster than any other company in history. No one seems to be in a hurry these days to redesign cities around the Segway; after all, when was the last time you saw a Segway rolling down the sidewalk?
So what does any of this have to do with space? It turns out there are some interesting, if painful, parallels between the Segway and the space industry, lessons that must be learned if future space ventures are to be a success. Both, for example, are relatively high-profile subjects. Even today, four and a half years after its formal introduction, the Segway still grabs media attention (and, occasionally, ridicule) disproportionate to its sales. Likewise, space in general, and launches in particular, get attention far beyond one would expect from their contributions to the economy or share of the federal budget.
Part of the reason for that attention is their novelty. People’s heads turn when they see a Segway glide by because it looks unusual. And why does it look unusual? Because you don’t see one that often. If Segways filled the sidewalks, no one would give it a double take. Likewise, part of the fascination with rocket launches is their infrequency: after all, you don’t see something launched to space every day.
That infrequency, in turn, is linked to their high prices. At $5,000 each, the Segway is simply too expensive most consumers. Similarly, with the cost of a satellite and its launch in the tens to hundreds of millions of dollars, space is beyond the reach most potential customers. That makes businesses and consumers look for less expensive, and sometimes more capable, alternatives. For $5,000 one can buy a used car (albeit not a terribly new or upscale model) that can do far more than a Segway. Alternatively, for a fraction of the cost, one can get a motor scooter. Similarly, faced with the high costs of space, companies turn to terrestrial alternatives. The microgravity and vacuum environment of space might be an ideal place to manufacture semiconductors and ball bearings, to cite two more infamous examples in the annals of space manufacturing, but terrestrial methods are good enough technically and far more affordable financially.
|The Segway and the space industry, in essence, share a common conundrum: they offer advanced technical solutions that fail to solve the problems of most of its potential customers, and their high prices suppress the casual experimentation that might stimulate the development of new markets.|
This leads to the central problem with both the Segway and the space industry. In his book, Kemper recounts a December 2000 meeting between Segway officials and several investors and advisors. At one point in the meeting an associate of John Doerr asked a simple question of Segway management: what was the device’s “value proposition”? In plain English, why should someone buy a Segway? What will this do for them that existing products can’t? The Segway management stumbled, failing to offer a credible value proposition, to the growing annoyance of Doerr. In essence, the Segway team had crafted a wonderful technical solution, but had failed in clearly enunciating the problem it could solve. Who would buy such a product, particularly at high prices? That should sound familiar to space advocates, who often bemoan the lack of a “killer app” (to use an increasingly tired phrase) for space, a problem than only space—and low-cost space access in particular—can solve.
While both the Segway and the space industry have yet to find widespread success, they have developed some sustainable market niches. The ones in space are well known: communications and, more recently, remote sensing. The Segway, meanwhile, has found some success in law enforcement, giving beat officers more mobility than if they were on foot. (A few weeks after seeing the Maryland trooper on a Segway in the Baltimore airport, I saw an airport policeman on a Segway at the Detroit airport; the Segway is no doubt useful in the sprawling terminal there, which stretches out for more than a kilometer.) The company has even developed a version of the Segway that can carry a set of golf clubs, effectively turning it into a personal golf cart. That last market is ironic given that, during the Segway’s development, company officials derisively said that they wanted to be more than just a golf cart company.
The Segway and the space industry, in essence, share a common conundrum: they offer advanced technical solutions that fail to solve the problems of most of its potential customers, and their high prices suppress the casual experimentation that might stimulate the development of new markets. For the Segway, there’s little sign of the mass-market acceptance once predicted for the device, although the company is doing well enough now that it is considering an IPO in the next few years, according to recent reports.
Many in the space industry, meanwhile, look to space tourism as its killer app, creating a virtuous cycle of lowering prices and increased demand that, in turn, could open up other markets inaccessible at today’s high space access costs. That market has yet to fully materialize, though, and it will be several years before once can make any definitive conclusions about whether tourism will live up to the lofty expectations that exist in some quarters. Without it—or some other unforeseen market—the commercial space industry will be like the Segway, mired in a few unsatisfying niche markets, and remembered more for what it failed to do rather than what it has accomplished.