New categories and markets
Should we create a new category or enter a new market?
Launching a product that defines a new category, or entering a market new to the decision-maker.
21
62%
14%
24%
What the cases suggest
New categories succeeded more often when created by young companies or by public bodies with patience, and failed more often when large companies launched them as broad visions before users had asked. Google Wave, Iridium, the Newton and IBM’s Watson for cancer care all promised a new category in full; M-Pesa, Workday and Amazon’s fulfilment service started with one concrete job for one group of users.
What separated the decisions that worked
- Successful launches started narrow, with a use people already had, and widened as users showed what they valued.
- Failed launches were often announced at the scale of the vision rather than the scale of the evidence, and priced or positioned for a market that did not yet exist.
- Speed alone did not decide outcomes: ChatGPT’s quick release paid off, while Google’s rushed Bard announcement, with an error in its own demonstration, is judged mixed.
Where this evidence is weak
Several successes here are decades old and their process grades were assigned long after the outcome was known.
By who decided
| Decision-maker | Cases | Paid off | Mixed | Backfired | Too early |
|---|---|---|---|---|---|
| Market leader | 9 | 4 | 2 | 3 | 0 |
| Challenger | 5 | 3 | 0 | 2 | 0 |
| Young company | 5 | 4 | 1 | 0 | 0 |
| Public body | 2 | 2 | 0 | 0 | 0 |
The cases
Each links to the essay, memo or road not taken where the decision is described and judged, with its sources.
- Build standard business software that many companies could use with configuration, processing data in real time, rather than writing custom programs for each client Packaging what many customers need in common can be worth more than tailoring what each one wants.
- Build a phone for a person rather than a car Ask who the product is really for: the place, the device or the person.
- Build a national videotex network and give households terminals free of charge, initially to replace the paper telephone directory. Removing the cost of joining can launch a network that charging for entry would kill.
- Found a semiconductor company that would only manufacture chips designed by other companies, with Philips as the main foreign partner When you cannot win the existing game, look for the part of it that others would gladly hand to someone they trust.
- Build human resources and finance software for large enterprises from scratch as a shared online service Credibility with conservative customers can be the scarcest resource in a platform shift.
- Store, pack and ship goods for independent sellers, and make those goods eligible for Prime delivery The infrastructure that makes strangers trustworthy can also make them dependent.
- Offer a free spreadsheet in the browser, built for sharing and simultaneous editing Against a dominant product, compete on the dimension it was not built for.
- Move the document into the browser with simultaneous editing Sometimes the product is not a better tool but a different place where the work happens.
- Rent computing capacity by the hour If your internal capability is far better than what customers can build, consider selling it.
- Start with an expensive, low-volume sports car and use the money to fund progressively cheaper, higher-volume cars. When a technology is too expensive for the mass market, start where customers will pay a premium and use the margins to move down.
- Add streaming free to its DVD-by-mail subscriptions instead of selling it as a separate service The safest way to replace your own business is to let your customers try the replacement for free.
- Launch mobile money for people without bank accounts, using a network of shopkeepers as agents to convert cash into electronic value Infrastructure for the excluded can be built from what they already use.
- Release a free chat interface to an existing model as a “research preview” The interface that lets ordinary people try a capability can matter more than the next improvement in the capability.
- Commercialise the MIT Lisp machine as dedicated hardware rather than as software for general-purpose computers. A hardware advantage built on today's gap is a bet that the gap will last.
- Launch a separate experimental email app, then close it and move its best ideas into Gmail If something is an experiment, say so, and plan the exit before people depend on it.
- Announce a public chatbot quickly in response to ChatGPT, with a promotional demonstration When the known flaw of a technology is that it is confidently wrong, the launch itself must be checked against that flaw.
- Develop a global satellite telephone network for business travellers and others outside terrestrial coverage, and spin it into a separate company with outside investors. A long build into a fast-moving market needs a thesis that survives the market's likely evolution, not only today's gaps.
- Launch the Newton MessagePad as a new category of pen-based personal digital assistant with natural handwriting recognition. When the core interaction does not work reliably, ambition elsewhere cannot rescue the product.
- Launch Wave as a broad new category meant to unify email, chat and documents, with an invitation-only preview. A tool whose value depends on others must launch in a way that brings the others along.
- Turn a quiz-show demonstration into a business unit aimed at cancer care and other high-stakes fields A general capability does not become a solution until it fits the data, workflow and accountability of a specific job.
- Build a social network on top of everyone’s Google account Do not confuse distribution with demand: count what people do, not how many accounts exist.
Other kinds of decision
- Opening or closing
- Business model and pricing
- Make, buy or partner
- Acquisitions and sales
- Technology bets
- Product design
- Distribution and positioning
- Focus, exit and investment
- Trust, safety and privacy
- Executing large change
- Organisation and governance
- Public rules
Shrikant Kumar. “New categories and markets.” The Telos Decision Record, Telos, version of 2026-11-03. https://shrikantk.com/record/new-category/