Electronic Product Development: How to Navigate the 90% Failure Rate

The process of developing a new electronic product is not easy, with around 90% of products failing to reach the market. While this statistic might be daunting, it reflects how complex modern development can be. To be successful, you’ll need more than just technical innovation – you’ll need to know your market, plan the finances carefully and execute precisely.

Over the years at ByteSnap Design , we’ve found most failures happen because of planning oversights, rather than due to technical issues. Understanding these challenges is key to improving your product’s chance of success.

Understanding the Failure Rate

The most obvious reason products fail is simply not knowing what is required for a successful product development. This lack of knowledge leads to a build-up of mistakes. While even experts can fail to reach the market, their experience means that they will fail sooner, which has a far lower financial impact.

Product development has three main limits and operates within a triangle of constraints: unit cost, development cost, and technical specification. These three factors constantly compete with each other. For example, lowering unit costs often requires more development time and may impact technical capabilities.

Another reason that products fail isn’t necessarily technical – it comes down to market fit. Many start-ups fail simply because they don't have enough customers. This often happens when inventors become too emotionally invested in their ideas, without conducting an impartial assessment of the market.

The Critical Role of Market Research

?Market research should begin by asking yourself this question: What problem does my product solve? If you can't clearly explain the problem, you're already at risk of failure. Even for products that don't directly solve problems, understanding the market is really important.

So, how do you go about market research? It can start quite simply by joining industry events and chatting with potential customers. Companies launching their products into sectors they are familiar with, often do better than those who are entering into new markets. It’s also worth hiring an impartial market research firm in order to avoid confirmation bias – they will provide crucial, objective feedback – which you’re going to need to hear, even if you don’t want to.

Timing: A Critical Success Factor

Market timing can make or break a product. A good example of this is that we once had a customer who launched a wireless energy monitoring device that was created before IoT became popular. Even though it ended up winning an award in a Shell competition, the product struggled because the consumer market didn’t yet understand why they needed to track energy for individual appliances. Eight years later, the market better understood this need and an explanation was no longer necessary.

Conversely, entering the market late can be equally problematic. Just take a look at the EV home charger market – newcomers here are faced with tough competition and will need increasingly compelling and unique reasons for customers to pick them over the more established brands. There are still opportunities in the broader EV infrastructure sector, but certain parts of that market have already become crowded.

Only big companies like Apple or Microsoft have the financial backing to create entirely new markets. Small and medium-sized businesses (SMEs) should focus on entering the existing markets and find ways to make them stand out from their competitors.

Funding and Financial Planning

One of the biggest challenges you’ll face is budget constraints. To launch an electronic product, you’ll typically need at least a six-figure investment (British Pounds). If I could give one bit of advice for product development, it would be: plan for twice the amount of money that you think you’ll need. Even with a thorough risk analysis, surprises will happen. And on the subject of unexpected challenges, remember that the cost of failure increases dramatically as a development goes on. It’s better to fail early.

Grant funding can be particularly helpful, not just for the financial support but for the validation process. It will help to confirm your ideas. The grant application process forces companies to carry out in-depth market research and justify their business case. Of course, getting a grant doesn’t guarantee success, but the effort it takes to secure one, can help to validate your idea.

The Prototype to Production Journey

Many entrepreneurs underestimate the gap between prototype and mass production. A product that appears 80% complete at the prototype stage, may really just be 10-20% ready for final production.

Testing requirements vary significantly depending on the industry. For instance, industrial explosion-proof devices and medical equipment can require many years of testing. Understanding these requirements can help when planning costs and timelines.

Intellectual Property Strategy

While patents can be valuable, they're only as strong as your ability to defend them. Small companies often struggle to protect patents against larger competitors. This is mostly due to high legal costs.

This goes both ways: conducting patent searches is still important. You’ll need to check you're not violating existing intellectual property.

Measuring Success

You will need to set strict goals to measure success at each of the formal development stages. Have clear targets and continuously check your progress with potential customers. It’s better to regularly test the market throughout the development process than to develop alone and risk facing rejection when you eventually launch.

The 90% failure rate in electronic product development highlights the many challenges developers face trying to introduce products to market. But, don’t let this stop the ideas; instead, it should motivate you to work smarter and more strategically. To succeed, you’ll need more than technical excellence. You need to know the market well, plan realistically, time the market just right, and continuously seek customer feedback.

Above all, test your ideas early; be willing to pivot when needed; and learn quickly from your failures. By embracing these principles, you can help your product to be within the successful 10%.

Is there anything I’ve missed? I’d love to hear your thoughts!