BELEN, Joyce B.

December 02, 2019

BS Accountancy- 2A M-W-F (11:30-12:50 PM)

SEGWAY INC. CASE ANALYSIS

(Analysis of an innovation that failed to commercialize)

In 1999 the inventor Dean Kamen founded the Segway Inc. company in order to fulfill his
vision of developing a zero-emission transportation vehicle that can be used on pedestrian
sidewalks. This project took Dean Kamen over three years of patenting work and technical
development together with the help of the University of Plymouth. On the third of December in
2001, the first Segway Human Transporter was unveiled on the ABC News morning program
‘Good Morning America’. The year 2001 was also accompanied by the peak of the dotcom
bubble that soon was up to burst, which could explain the mindset of investors that were very
high-tech oriented even though not all of them were experts in this field.
It did not take long, and the hype also caught Segway Inc. After having attracted much
attention because of the technologically brilliant invention, investors soon saw a possible
uprising of a radical innovation. One of the first investors was John Doerr who was speculating
“it will be the fastest company to reach $ 1 billion in sales” (Time.com; 2001), even
Amazon.com chief Jeff Bezos and Apple’s Steve Jobs seemed to be convinced and invested in
Segway Inc. Those ‘big names’ of the industry were also a way for Segway to achieve
legitimacy to gain even further investments. There are no official numbers of how big those
investments were, but it is estimated that altogether Segway Inc. has received around $176
million US dollars of initial investments for product development (usatoday.com, 2006).
In December 2001, Dean Kamen of Segway LLC unveiled the Human Transporter HT.
With lofty ideas of replacing the automobile and unrealized sales forecasts, Kamen's Segway HT
has not moved mankind nearly as much as Kamen had expected.
With an annual CEO change since start-up, it is apparent that Segway's lack of a stated
vision and mission is haunting the organization. The lack of "a way ahead", coupled with a less
than well-defined marketing strategy, has caused Segway to fall short of Kamen's expectations.
Kamen, while a definite asset to Segway, could be a detour or even a dead end on the company's
road to success. Historically, Kamen's successes have been based on his abilities to be innovative
in research and design, while at the same time being able to pass the developed product off to a
partnering company that is able to take the product to market.
Through the launch and development of this product, DEKA Research ran into a variety of
problems that hindered the success of this product. Not only did the Segway have intangible
expectations, but it was also proposed to replace a technology, the automobile, that was too
widely utilized and would not be applicable toles population dense and rural areas. The proposed
areas of use, cities and metropolitan areas, lacked the infrastructure necessary to make the switch
to Segway use. These problems, as well as several additional hindrances, contributed to the
failure of the Segway technology.
Case Method
Title of the Case: Segway Inc.

Time Context: December 2001

Perspective: Chief Executive Officer (CEO)

Central Issue: Despite of the excessive expectations of the people from Segway Inc. for its
characteristic as an upright, self-balancing, two-wheeled, people mover, eventually, it became a
market failure in the eyes of most observers because it fell far short of its expected sales. The
other major unforeseen problems were Segway committing fatal mistakes in its distribution and
its target consumer base. A conflict regarding its regulation issues in terms of its actual
operations in roads of some countries is also a minor issue.

Statement of Objectives:

 To analyze the launch of a new product

 To highlight the significance of media/publicity with respect to new launches
 To appreciate the importance of segmentation, targeting and pricing in marketing
unique/high-tech products
 To understand the impact of legal/social issues vis-à-vis new products

Areas of Consideration:

 Expectations were too high. The Segway was described as the future of transport. As an
innovation it was said to be on a par with the PC or the internet. Inevitably it could not
live up to this level of hype. PR exposure is generally useful but this time it was
overdone.
 It was a product not a solution. The product works well but it lacked a support context.
Where can you park it? How do you charge it? Do you use it on roads or sidewalks? Our
cities are designed for pedestrians or speedy vehicles and this was neither, so it had no
proper infrastructure to support it.
 No clear need or target market. Who was the target market? Who really needed this? It
was an appealing novelty but there was no compelling need for anyone to buy it – and it
was very expensive.
 It was an invention rather than an innovation. The Segway was patented and kept
under wraps until its launch. There was no user feedback or iteration in the process. Its
inventors were then surprised when people criticized or ridiculed the design for being
‘dorky’ rather than cool.
  Regulation. The Segway fell afoul of regulation in many countries where it was banned
from sidewalks and roads because it did not fit any existing categories. This is a problem
for a truly revolutionary product – but it was not properly anticipated.

Alternative Course of Action:

 Consideration of a new strategy

 Utilization of a flexible and adjustable business model canvas
 Formation of a business team
 Development of a Customer Insight Strategy

Conclusion: Segway Inc. failed to launch and commercialize its product because they couldn’t
provide a quick resolution for its major problems involving its weak links of distribution and a
mistaken target market that were problematic. Followed by another minor conflict regarding its
regulation/legal issues in road operations in some countries.

Recommendations:

In order to improve the outlook of the Segway technology, several recommended

alternative courses of action could be considered. Ultimately, Segway Inc. should have
considered a different strategy and utilized a business model canvas. Their business model
should have included flexible and adjustable concepts to support the company's potential growth.
In their launch, Segway Inc. failed to consider what their customers wanted in a product,
therefore, customer opinions and needs are recommended to be considered moving forward.
Although the current team of individuals enlisted in developing the launch of the Segway are
well versed in the development of highly inventive and greatly coveted technology, it is highly
recommended that a business team must be developed to ensure that all aspects of the business
model are addressed by those who have experience and understanding of the various concepts
required of a launch of this type.