X-1 started as a simple idea for a business school project and has quickly grown to become the foremost leader in waterproof, sweatproof,
and weatherproof audio equipment for athletes.
Many factors contribute to the success of X-1, “but new product development is the engine that drives it all,” explains CEO Carl Thomas.
If you are a swimmer, runner, snowboarder, surfer, triathlete,
climber, bicyclist, or any kind of sports enthusiast who enjoys music while you exercise, chances are you’ve seen X-1’s products. The first product, a waterproof case for iPods, served as the starting point for a new-product development process that has added headphones, earbuds,
cases, armbands, and accessories—an entire product line of audio solutions—to the company’s offerings.
The commitment to new products has been so successful that the company now holds eight patents on its technology and was recognized by Inc. magazine as one of the top 500 fastest-growing companies in the United States. It is not surprising, then, to hear Thomas explain that marketing and new-product development “is a very key function for any company, but it’s especially important for us.”

THE COMPANY X-1 has a fascinating history. Its founders were scuba divers who wanted to listen to music while they were diving,
so they investigated how to use electronic devices and speakers underwater. The waterproof case they developed functioned to depths of 300 feet and led to a U.S. patent for a “waterproof enclosure for an audio device.” At the same time, they were enrolled in a business school course that required the development of a business plan. They wrote the plan for their new technology, called their company Diver Entertainment, and began shipping products to other scuba divers.
It soon became obvious that the concept of waterproof audio equipment would appeal to many applications other than scuba diving. The company began developing waterproof headphones, changed its name to H2O Audio, and adopted the advertising tagline “Your Sport, Your Music.”
Swimmers, surfers, and triathletes were obvious potential customers, so Olympic swimmers Natalie Coughlin and Michael Phelps, professional surfer Laird Hamilton, and triathletes Greg and Laura Bennett were signed as official H2O Audio Ambassadors. The popularity of the brand grew rapidly as athletes in each of the sports learned about and tried the new products.

Questions
1. What are the points of difference, or unique attributes,
for X-1 products?
2. What are X-1’s primary target markets?
3. Describe the new-product development process used
at X-1. What are the similarities and differences to the
process described in Figure 9–5?
4. Which of the eight reasons for new-product failure did
X-1 avoid to ensure the success of X-1’s products?
5. Identify one new-product idea you would suggest that
X-1 evaluate.