Commentary

Apple's Acquisition of Metaio Proves Products Aren't Disruptive - Business Models Are

Over the years, many innovative products have been misinterpreted as “disruptive.” No technology – no matter how innovative – is inherently disruptive. Google Search is a classic example of an innovative product that only truly became disruptive after a smart business model was introduced (AdWords).

Similarly, iPod and iPhone were both well-designed products, but only became disruptive due to the creation of iTunes and the App Store, respectively.

The recent acquisition of Metaio by Apple highlights another example: an innovative product based on Augmented Reality/Image Recognition (AR/IR) technology that couldn’t become disruptive.

On one hand, we can see Apple’s move as validation for the potential of a technology that, thus far, has struggled to gain traction with mainstream audiences. With the launch of Apple Watch and, now, the Metaio acquisition, Apple can be added to a growing list of the world’s most influential companies who are quickly expanding with significant investments in wearables, AR/IR and virtual reality (VR) products.

advertisement

advertisement

While many made similar statements around Google Glass as a sign of the industry’s arrival, it’s hard not to view Apple’s involvement as proof that the wearables era will finally go truly mainstream.

Yet, the acquisition also highlights a sad fact about the industry and its slow growth to-date. While seemingly a win for both Metaio and Apple, the deal will likely deliver nowhere near the full potential value Metaio investors may have expected years ago.

Metaio holds a tremendous amount of IP; content which is unlikely to be reflected in the purchase price. Nor should it, to be fair.

The reality is that Metaio followed the path of many other classic technology companies and focused on products rather than creating a sustainable business model to build long-term consumer behavior.

In taking the buyout, Metaio is somewhat acknowledging that it hasn’t identified a way to deliver on the potential of its range of content.

Strategically, this isn’t a bad move for either company. In fact, it’s a good one. Apple gets proven software and an established customer base to kick start its AR wearables efforts, while Metaio gets a nice exit and joins a team with a stellar reputation for innovation.

So while not a bad business decision, it’s still disappointing to see a low appetite for risk from an emerging industry that has such strong potential for growth and disruption. This space is exploding, with many predicting that AR, IR and VR technologies will drive a transformation not seen since the introduction of mobile.

And yet, despite all of the recent industry activity, it’s still a pretty nascent market as companies develop new strategies that will forever change how we consume and engage with content.

As we stand on the cusp of a new stage in how consumers will interact with the world around them, it’s important to remember the distinction between an innovative product and a disruptive business model.

It’s easy to point to Google Glass as an example of a situation in which the scope of the technology outpaced the demand for it. That doesn’t mean that it was a failure. Rather, it means Google learned a lot from user feedback and will come back stronger as a result.

In any quickly growing market, the industry’s ability to innovate new technologies is exponentially faster than its ability to identify valuable utility for the end user. Identifying a business model that provides strong value to its customers and allows the business to scale is a challenge every company faces. The process requires strong leadership and patience from investors.

Finding the right business model to match an innovative product is difficult. But the entrepreneurs that are willing to tackle this challenge and iterate, pivot and optimize their model will become the leaders that determine the future of the AR/VR market.

While behemoths like Apple will continue to play a tremendous role in driving the market forward, there’s plenty of room for a company with a foothold today to become the next Facebook, Uber or Snapchat.

Selling a treasure chest of IP-related to AR now is analogous to being back in the 1990s -- and selling keys to the Internet.

Next story loading loading..