There are two primary reasons why the Segway is a niche product and the second actually follows logically from the first. The primary problem is one of utility. What value does this device have to a prospective customer? Of course that question is going to have a different answer for each person. Realistically we can't take into account everyone's opinion so we aggregate people into groups that we feel are representative of the larger population. I'll use myself as an example.
I'm male, live about a mile from work and own a car that gets thirty three miles to a gallon. Everything I need is within a five mile radius of home so I seldom need to travel further than that. In some ways I sound like the perfect customer for a Segway. The Segway would be great for commuting back and forth to work and running errands. The issues for me are that if the weather is bad I'm going to want to drive and if it is good I'd be thinking "Why the heck am I not walking? I could use the exercise." particularly in the case of my work commute. Carrying capacity is somewhat limited but it wouldn't be bad for most errands. Sidewalks are not universal however and riding on the street is unappealing to me. I was once hit by a pickup truck while in a cross walk and while my injuries were relatively mild the experience was enough to make me very cautious in regards to situations where automobiles and my body could have a negative interaction. Finally, my wife and I often like to go places together. That would require two Segways.
Which leaves me with the question, what the heck would I use one of these for? I suspect this is the question most people ask themselves once the initial wow factor wears off.
The base Segway costs just under $6k. For that kind of money most people are going to need to get a lot of utility to feel properly compensated (assuming they have that kind of money to spare which many do not). I couldn't justify buying a Segway at half or even a third of that cost. I don't think I'm alone in that assessment. Oddly this provides the people who make the Segway with a powerful incentive not to lower the price even if they can; assuming of course that they can find enough customers at the current price to justify their share holders investment in the company.
So who is buying these things? As near as I can tell they are popular primarily with the following groups.
- Wealthy consumers with a lot of money who like high tech gadgets (See Steve Wozniak)
- Tour Companies (They are a nice differentiator and equalizer as in theory every one on the tour should be able to go the same speed)
- Police departments (A nice compromise between in car and on foot patrols)
- On campus transport for companies and universities (Disney uses them at Epcot extensively)
- People with certain forms of physical disability
I'd be very surprised if Segway doesn't have very healthy margins on their products. The computational power needed is modest by todays standards and the rest of the components aren't all that exotic. The rechargeable battery is likely the single most expensive item. When companies have high margins and low volumes they basically have two choices. Lower the price in the hopes of increasing sales more rapidly than profits drop off as a result of the lower prices or keep prices high and stay/become a premium and/or niche product offering. Segway has apparently chosen to take the second path. Either choice is equally valid depending on the circumstances. Given the apparent limited utility of the Segway,it's easy to see the wisdom of the premium/niche play. Which is why the second reason the Segway is a niche product is price. I realize that this is essentially circular reasoning but it does show the interrelationship between the various factors that determine product strategy.
The picture near the top of this entry shows the "key" of a Segway. The icon on the right is a "smiley" face that shows the Segway is functioning properly. The buttons control various features including placing the Segway into "Turtle" mode. If the key falls off or is removed more than a short distance the Segway will go into shutdown mode.
Segway has faced a number of challenges since its inception including most recently the death of its than current owner while riding the all terrain model. For certain uses I really like the Segway but I'm not convinced that it has long term viability. That question will be answered by how many units they can sell to the various relatively small niche markets that gain positive value. If I won the lottery I'd think seriously about purchasing one just for the fun of it. Otherwise I'll be more than happy to reminisce about my recent experience if the urge to buy one ever strikes me.
Top Image via Wikipedia
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