The 80:20 rule applies across many busnesses. That is, the market leader in any sector has 80% of the sales. Indeed the hi-tech area seems to amplify this effect. So it was with action cam makers Go-Pro and Contour. In 2011 Go-Pro had $250 million revenues compared to Contour's $ 27.2 million.
Signs that there might be trouble ahead came in February when Co-Founder Marc Barros stepped down from running the business saying “Contour needs fresh legs”.
Barros touched on the problem for the number 2. action camera maker in a blog post back in April. “With each incremental dollar in revenue they gained, the gap widened as they plowed that money back into marketing, forever separating the recognition in consumers’ minds.”
Like the best ideas Contour grew out of the need of friends and founders Jason Green and Marc Barros to find a way to shoot high-quality video while skiing. The company was founded a decade ago in Barros' parents' house with a $50K loan backed by his uncle.
In an article fro Business Week Kyle Stock identifies what he sees as three major issues. He sees the target market for action cameras as much smaller than it appears squeezed by the fact that many digital cameras and mobile phones can take video footage. Barros complained that the Go-Pro was a “tele-tubby box of a camera” but Kyle sees this as an advantage as it is much closer to traditional camera looks. While looks and ease of use were not Go-Pro's strengths everyone praises its image quality and for a camera, that's important.
Although Contour can claim a decade of history with roots firmly in the outdoor market so can Go-Pro whose founder, Nick Woodman, was already trialling his design in the San Francisco surf in 2004. Indeed the chosen home towns for both companies: Seattle and San-Francisco may have played a role in accessing venture capital with Woodman securing a $200 million pound investment for 9% of the company last year. Contour founder Green notes that Contour was “a hardware company in a software town, it was difficult to get the area's software-focused investors excited about the company’s hardware plans.”
Stock also points out that Success draws in competitors from the likes of the mighty Sony with its reputation and established distribution and marketing channels to hundreds of knock-off low cost Chinese brands selling on eBay and Amazon.
Contour has shuttered its HQ and laid-off its 60 workers but there is talk of new investment and management. Whether it has the legs to compete with Go-Pro which controls 14% of the digital camcorder market remains to be seen.