You would think that application developers, or at least their bosses, would
be gonzo over prototyping.  Every survey of IT indicates that getting
application requirement right and delivering the correct functionality to end
users is the most traumatic, dysfunctional, and catastrophically error prone
aspect in authoring apps.  CIOs could save a great deal of verbal and
physical abuse if they just got their teams to get the requirements right the
first time.

(Yes I realize IT professionals lay blame on end users not actually knowing
what time zone they are in, much less what they want in application
functionality.  But end users have the same perception of programmers. 
This was nicely summarized in "Gavin’s Law of Bidirectional Software
Imbecility.":  "If you’re a developer then the users look like idiots. If
you’re a user then the developers look like idiots." )

In a recent client engagement, we evaluated multiple markets including the
application prototyping market.  I was frankly surprised at the state of
the market, which even Forrester believes is a new but growing niche, at least
for "high fidelity" prototyping tools.  There are few players in the space,
and fewer still that can create application prototypes that are sufficiently
robust, can provide simulations from real data, can perform remote
demonstrations, and can do it in anything but HTML.

In short, this market appears to have to be under served at present. 
There are few competitors, most are targeting the visionary and early adopters,
and charging relatively obscene prices because of their targets.  This
means that the market is still pre-chasm, and otherwise might be approaching a
mass market shift.

But the shift will not occur soon given the state of IT’s alleged mindset and
the current price points of competing products.  The rigors of requirement
gathering range from sloppy to anal retentive, and the relative value of
prototyping has little clear ROI.  Indeed, most analyst that have looked at
prototyping conclude that the ROI for prototyping comes from eliminating
mistakes and subsequent reworking of applications, which is a tough sell as it
first requires getting IT professionals to admit that their current system of
requirements gathering is incomplete or broken.  One of the prototyping
vendors recognized this point, stating publicly "we are so confident about the
ROI of XXX that we will license the product based on savings you realize …"

Educating the market is the strategic challenge that faces most pre-chasm
companies.  In the case of the prototyping market, the situation is a bit
worse because:

• People will not buy unless there exists in their mind a perceived need. 
• People will not have a perceived need if they believe they are doing
  their jobs well. 
• Telling people that they are not doing their jobs properly ticks them
  off.

Selling the benefits is an obvious alternative, but tricky in this market. 
The benefits (faster time to application delivery, less IT expense through less
rework, etc.) are damn near impossible to quantify in the abstract, and are
highly variable from customer to customer.  So the benefits may need to be
expressed in more abstract terms to create the perception of need, and as with
many pre-chasm markets, fear is the operative tool.  In particular
pre-chasm education campaigns are often based in the fear of becoming less
competitive or generating the wrath of the CEO ( given the high turn-over rate
for CIOs, this last one is effective when selling to the corner IT office ).

Expect a few things to happen in this market in relatively short order:

• One or more of the competitors will initiate a media-based education
  campaign to drive the competitive value of prototyping.  This will
  happen when early adopter sales begin to slacken.
• Expect the one low-cost competitor in the market to piggyback on the
  educational campaign, and drive mass adoption.
• Pricing for the high-end competitors will start to drop when the market
  begins adopting prototyping on a larger scale, given that the low-cost entry
  will be seriously evaluated (their feature matrix is competitive).
• Expect one dark horse (our client) to co-opt this campaign with a niche
  play and an unexpected feature/benefit that bridges prototyping with
  application deployment.

Even if you are not in this market, do watch.  It will be entertaining.