5. Segway Finds Niche Markets for Its Human Transporter Technology* Amid heavy media coverage and much speculation, portable insulin pump, the first portable dialysis machine, and "Ginger" made its debut on ABC's Good Morning America on an array of heart stents. This string of successes established December 3, 2001. It thrilled some and disappointed others, Kamen's reputation and turned DEKA Research and Develop- but the technology was breathtaking to all ment Corp., the RAD Lab he founded, into a premier company Now known as the Segway Human Transporter (HT), Gin for medical-device design. ger was the brainchild of inventor and entrepreneur Dean The Inspiration for Ginger occurred during the development Kamen, who is best known for his inventions in the medical of the IBOT wheelchair at DEKA. Developed for and funded by field. While in college, Kamen invented the first wearable drug Johnson & Johnson, the IBOT wheelchair is a gyro-stabilized. infusion pump. In the following years. he invented the first microprocessor-controlled wheelchair that gives disabled people the same kind of mobility the rest of us take for granted. Offl- "This cam was prepared by Dr. J. R. Willimon, professor emeritus, cially called the Independence IBOT mobility system, this six- Youngstown State University wheel machine can go up and down curbs, cruise effortlesslythrough sand or gravel, climb stairs, and rise up on its wheels to and reduced reliance on motorized transport. For postal work lift its occupant to eye level while maintaining balance and ma- neuverability with such stability that it can't be knocked over. ers, the Segway has increased their carrying capacity and deliv ery speed. Test studies with police officers and security The IBOT wheelchair has been likened to a sophisticated robot. personnel have shown faster response times and better sight- As Kamen and his team at DEKA were working on the lines from being higher in the air than pedestrians. IBOT, it dawned on them that they could build a device using In 2002, Segways went on sale to the public for the first time similar technology for pedestrians-one that could go farther. move more quickly, and carry more. The IBOT was also the on Amazon.com at a price of around $5,000. In 2003, the retail source of the "Ginger" code name for the Segway HT during its store Brookstone became the first retailer to sell the Segway development stage. Watching the IBOT "dance up the stairs." HT. By January 2004, it was estimated by industry observers Kamen's team likened it to Fred Astaire-hence the name Gin- that about 6,000 Segways had been sold. Given Kamen's stated zer for its smaller partner with only two wheels! ambition of replacing automobiles and other forms of personal transport alternatives, initial consumer sales were disappointing. 633 Segway's breakthrough technology is based on dynamic sta- However, the Segway HT is still in the early stages of its billization. A self-balancing. electric-powered transport device. the Segway HT contains gyroscopes and sensors that monitor a product life cycle. According to product life-cycle theories and user's center of gravity and respond to subtle shifts in weight. related empirical studies on diffusion of innovations, products Lean forward, go forward; lean back, go back; lean back a bit move through their life cycles in different ways, and the length more and you go in reverse; turn by twisting your wrist; arch of any particular stage varies according to many factors. In gen- your back a tad and you slow to a halt. Exactly how the Segway eral, the speed with which a product moves through its intro- duction and growth stages varies according to product Video C achieves this is difficult to explain, but in every Segway. there characteristics, market characteristics, competition, and envi- are gyroscopes that act like your inner ear, a computer that acts like your brain, motors that act like your muscles, and wheels ronmental factors. The initial marketing strategy for a product that act like your feet. You step aboard and it "oscillates" for a will also affect market acceptance (adoption). A product will move quickly through the introduction and growth stages when few seconds, getting the feel of you, and then it's fully cruiseable at 6 miles per hour in "learning mode," and 12.5 miles per hour it has high relative advantage-cost and benefits-compared to alternative products and is highly compatible with a buyer's cur- "flat-out." It has a range of about 17 to 25 miles per battery charge and can support package weights of 80 pounds. It has no rent attitudes, lifestyle, and usage situation. The more complex brakes, no engine, no throttle, no gearshift, no steering wheel. a product is to understand and use, the slower will be its rate of and gives off no emissions. It is much cleaner than a car and adoption. In addition, if the product can be tried in small faster than a bike. It is more pedestrian-friendly than bikes or amounts, potential buyers perceive less risk associated with ini- tial trial and this will speed adoption. Communication of the scooters and safer than a skateboard. The commercial potential for Segway is enormous. For this new product will affect market acceptance because buyers must first learn about a new product before the buying process can reason, Kamen decided to move development and manufacture be initiated. Thus, a company's com ing of the Segway HT to a new company with the vision to de- ication strategies and the degree to which favorable word of-mouth opinion occurs velop highly efficient, zero-emis ion transportation solutions using dynamic stabilization technology. The new company. Seg will impact sales. Finally, new products will have higher rates of way LLC (changed to Segway, Inc., in 2005) is headquartered market acceptance if market conditions, competition, and envi- ronmental trends are favorable. in Bedford, New Hampshire, and construction of a manufactur ing and assembly plant was completed in 2001. Industrial and government applications for the Segway HT Kamen has openly stated that the Segway "will be to the car continue to be positive. It's ideally suited for use in large-scale what the car was to the horse and bugzy!" He imagines them manufacturing plants and warehousing operations, for use by he police and security personnel in certain types of situations, everywhere: in parks, on battlefields, on factory floors, zipping around distribution centers, and especially on downtown side- for meter reading. for corporate and university campus trans- walks. But market acceptance and penetration has been slow portation, and for package and mail delivery. And it has found anumber of new niches in recent years. For example, tour for this engineering marvel. groups are using Segways to move tourists between attractions The Segway HT was initially marketed to major corpora- in cities where tour buses and cars have operational difficulties tions and government agencies. Kamen personally demon- For example, Bill and Emily Neuenschw ander's tours use Seg strated the Segway to the postmaster general, who was keen to put letter carriers on Segways, and to the head of the National ways equipped with a radio on the handlebars that provide a running commentary to guide customers through tours of the Park Service, who wanted to do the same with park rangers. Both were among Segway's first customers. The Pentagon's re- Minneapolis, Minnesota, riverfront and surrounding historic landmarks. Visitors to theme parks, museums, and islands (e.g.. search agency, DARPA, bought Segways to give to robotics labs. The objective was to use Segway bases in the development Amelia Island Plantation Resort) use them. Some lawyers use them between offices and courtrooms. Some medics use them of robots to do menial tasks ( cleaning, picking crops), special- to reach injured people faster. ized jobs (nurses aids), and dangerous missions (bomb removal However, in the consumer market, the Segway HT is still an or rescue work in earthquake debris). Amazon.com, GE Plas- unsought product for many people. Industry observers believe tics, and Delphi Automotive Systems purchased Segways for that the automobile is a preferred alternative for a number of use in warehouses and manufacturing plants. Police depart- reasons, including the infrastructure of cities, commuting dis ments, cities, and airports bought Segways for use by foot pa- tances, weather, and the American family lifestyle. Most people trols, security personnel, and meter readers. Customer studies by these early buyers showed double-digit productivity gains agree that the use of a Segway HT on highways and busy streets is dangerous. Also, many commuters live more than 5 milesfrom work. The need to recharge Segways raises the question of Development, and The Simpsons continue to provide important public sources of electricity. Issues related to public safety also market exposure. have slowed consumer sales. Although the Segway HT is ap- The new positioning strategy emphasizes the leisure aspect proved in most states for use on sidewalks, restrictions have of the Segway HT. New models aimed at the recreation market been placed on speed, helmet use, minimum operating age, and have been introduced. For example, the Segway GT is geared use on streets and highways. At the local level, additional regula- toward golf enthusiasts and includes a golf bag carrier. The Seg- tions apply. For example, San Francisco banned their use on city way XT is the company's off-road vehicle, which can perform sidewalks, and they are outlawed in subways in Washington, DC. Many see the mix of pedestrians, bicycles, skateboards, roller well in a variety of environments. The Centaur is a four-wheeled ATV-like vehicle that can pick up its wheels to climb over ob- skates, ATVs, scooters, and Segways as a dangerous mix on side- stacies or simply glide on two wheels at 25 miles per hour. walks, hiking trails, and other public areas. To further develop the market for Segway technology, the On the other hand, the Segway HT has obvious advantages company has started to market Segway Smart Motion Technol- to walking and other types of personal transport in situations ogy through licensing and partnering with third parties to co- where people need to get from one place to another rapidly and develop new products. Under this program, any number of efficiently using a clean, quiet, and environment-friendly trans specialized products could emerge. port device. The market potential for the product has barely The future for Segway is unlimited. America's commitment been tapped. Early consumer buyers were mostly "techies" who to end its dependence on petroleum and reduce harmful emis- like to own new, high-tech products, and they have played an sions is not likely to change. Segway's technology supports this important role in communicating the benefits and fun of own- commitment. The consumer market for Segway has developed ing a Segway HT. They have established local clubs across slowly. but the future is assured. For this "new-to-the-world" America and have started a number of websites devoted to Sep- product, the life cycle will be long and classically configured. Its way. In 2003, owners and enthusiasts held the first SegwayFest impact on all sectors of the economy will be profound. How we to celebrate all things Segway. The Fest has been held every work, play, and get around will radically change in the 21st cen- year since. tury. From the company's perspective, this is just dandy! Its ul- In 2004, Segway launched a repositioning campaign to timate goal is to "be to the car what the car was to the horse change the image of the Segway HT from "staid," "high-tech," and buggy!" and "serious" to "fun, smart transportation." The new and more I. How might Segway, Inc. further develop the market for Segway traditional marketing campaign included new customer materi- technology? Hint: What types of marketing strategies are als, dealer displays, and cable TV advertising with the tagline associated with sales growth? "Get Moving." Segway also has been increasing the number of 2 What would be some advantages and disadvantages of using a dealerships and distributors worldwide. The new distribution Segway HT to get around on campus? strategy allows potential buyers to see the different models and 3. What types of applications and usage situations are there for to try them out before buying. The dealer network increases the Segway HTs in your area? visibility of the product and lowers buyers' perceived risk 4. What kinds of problems would the use of Segway HTs create in associated with servicing. Publicity, media appearances, and your area? What are some possible solutions for these product placement on television shows such as Frasier, Arrested problems? Explain