It is also possible that the production cost may exceed the target costs set by MTT. This is possible due to foreign currency exchange fluctuations (as manufacturing is done in Hong Kong) and any delays caused in the work by unforeseen circumstances in Hong Kong (e.g. political instability, delays in shipments from Hong Kong etc.)
Identification and development of a more compelling product may also make it quite risky to go for this project. Apple and Google being the world’s leading tech giants may introduce similar products at a lower price or at an equal price but with far more features than Midas Touch Technologies was planning to offer and may not be able to compete in the market.
Uncertain customer adoption
The customer reaction to these new products in the high tech industry is still unknown in many countries and it may be hard to predict the appropriate demand worldwide. It is also possible that the customers may not adopt the smart watch as expected. This can be said for countries have a greater proportion of old people who may find it hard to learn high tech gadgets like smart watches and derive utility from them like younger generations.
Risky competitive position:
A strong competition exists in the tech market and the Patent protection alone may not provide enough barriers to entry, as other tech giants have their own highly competitive products which could readily dominate the market. Patent protection may only stop small competitors from entering the market, but it may not have much effect on the global tech giants.
Competitive and tight labour market in Hong Kong may make it easy for other competitors to produce the same product and sell them in countries where it may be too costly defending patents, competing with larger established competitors for employees.
Uncertainty may exist about market share and pricing as at the initial stages, the product may be bought by the wealthiest customers as a sign of prestige and status. A higher price may be charged in the start, while just a few years in the product’s life cycle, (and due to copies of the product and cheaper prices made by competitors) the price may have to be considerably dropped.
As with many tech products, the smart watches can also be copied and sold by smaller competitors who can sell it in markets at lower prices thus cutting out a market share for themselves.