However, this does not represent true innovation, and is unlikely to have a profound impact on the firm's competitors. Dippin Dots, in order to succeed, must develop ways of utilizing its core product (the dots) or the core technology of liquid nitrogen freezing, to drive innovation. One major attempt at doing this is the Dots & Cream, a product that mixes the dots with conventional ice cream. This product solves a key issue with respect to distribution in that it allows Dippin Dots to begin distribution in grocery stores. This product utilizes the core product, but that product remains visible and within a fairly normal context for the industry. However, this innovation also detracts from the uniqueness of the dots and reduces the degree of differentiation that Dippin Dots has. In addition, such a product could conceivably be matched by competitors, as a result of poor patent protections. There is also limited evidence that the market is ready to significantly embrace such a product.

Patent protection is crucial to Dippin Dots' ongoing success. The company's product uniqueness is the one competitive advantage is has. At its heart, the technology used to produce the dots is fairly simple and easily replicable. Mistakes at the outset of the company's existence led to a situation where it was unable to defend its products in court against imitators. As the result of this, any ice cream maker new or established could compete directly with Dippin Dots. This represents a major threat to the company, and highlights the need for further innovation in order to maintain market position.

The evidence therefore points to Dippin' Dots as being largely unsuccessful at developing innovative new products beyond its core dots; and the company is largely unsuccessful at fending...

These two elements would indicate that Dippin' Dots is at this point a relatively unsuccessful company. It has succeeded in growing at a fair strong rate to this point, a sign of success, but may face difficulty sustaining that growth in the future. Without the patent, any larger competitor can undercut Dippin' Dots on product or price, putting tremendous pressure on Dots to cut prices or develop innovations. The company's long-term success depends on being able to defend the uniqueness of its product against imitators, or on staying small enough to avoid attracting larger competition to the use of frozen ice cream dots.
The company has also failed to leverage key opportunities and address other key challenges. It was unable to get into McDonald's, despite a high profile partnership and a mutual target market. The company faced issues with respect to transportation -- the same issue that has kept it out of grocery stores. In addition, it was unable to reach a price point that customers would accept in an everyday context. The company has also failed to transfer its popularity with kids to adults, meaning that it must continually win new customers. This implies a difficult future for Dippin' Dots, should it fail to address these critical issues and develop new innovative products. The company's decline in the number of franchise outlets in 2006 is potentially a sign of these troubles, especially in light of slowing growth over the past several years. Growth was 8.4% in 2001, for example, but slid to 3.3% in 2004, followed by 2.7% in 2005 before declining sharply by 29.4% in 2006. These figures signal that the company needs to address its multiple issues in order to restore growth and success going forward.