There once was a company named "Play" that developed what was, for the time, a revolutionary video processing system called Trinity. It could capture and switch video like professional video switchers that cost ten times as much. For three years, Play took Trinity to the NAB Show, each time promising to ship it before the end of that year, but never managing to do so. So, year after year, Play went to NAB, always showing a few more bells and whistles, but not a shipping product. By the time Play finally completed development and shipped Trinity, most people in the television industry has stopped paying attention. Play eventually went out of business, although some of its concepts live on in products from Newtek and Adobe.
Back in 1995-96, Netscape told the world that it would make Microsoft Windows obsolete by moving applications from the operating system to the browser, which would make the applications operating system-neutral. This was tantamount to waving a red flag in front of a bull; in this case, the bull was Microsoft. We all remember what Microsoft did in response--everything possible, both legal and illegal, to crush Netscape. For all its publicity and hype, Netscape wasn't big enough to withstand Microsoft's onslaught. The company was sold to AOL at a good price considering the situation, but it's fairly clear that Netscape would have eventually failed had AOL not acquired it.
RED, the digital cinema camera company, has fallen into the same trap as Play with its Scarlet camera. In 2007, RED started talking about Scarlet, a camcorder that would provide true HD output at a cost around $3,000, which at the time was where prosumer SD camcorders were priced. Then, in early 2008, Jim Jannard, RED's founder, announced that Scarlet was going to become a video-capable DSLR. In November 2008, RED showed off non-working prototypes of Scarlet and its big brother, Epic, but they didn't ship anything.
As soon as RED started talking about making Scarlet a DSLR, companies that already made DSLRs like Canon and Nikon, as well as companies that were planning to get into the DSLR business like Panasonic, started to pay very close attention. In November 2009, RED made the rounds again, this time with yet another non-working prototype of the Scarlet, but Canon, Nikon and Panasonic all had DSLRs in the market that could do HD video, all for less than the (now increased) price of the Scarlet. This March, you'll be able to buy a Canon Rebel T2i with excellent video capabilities for $799 without lens. Sony, which had been holding back, now plans to release two DSLRs with AVCHD video by the end of the year.
By making premature announcements, RED educated its competitors. RED may have assumed that its competitors were too incompetent or too hidebound to respond, but they were wrong. At best, the Scarlet is going to end up as a niche product rather than the revolutionary change in camera design that Jim Jannard envisioned.
Now, Microsoft itself may be falling into the same trap with Windows Phone 7 Series. At the Mobile World Congress a couple of weeks ago, Microsoft previewed its new operating system for smartphones, a radical departure from previous Microsoft offerings. The problem is that smartphones that run Microsoft's new operating system won't ship until the end of 2010, thus giving Apple, Google, RIM and other competitors nine months to respond. Microsoft used to be able to get away with it--their preannouncements would cause FUD (fear, uncertainty and doubt) in the minds of potential buyers of other products. However, that was when software development took years; now it takes months. By the end of the year, it's likely that the advancements that Microsoft demonstrated will be integrated into its competitors' platforms, and any real competitive advantage that it might have had will be lost.
The lesson? Don't telegraph your moves. Announcing products and strategies too early will only educate your competitors and frustrate customers, not create FUD.