We didn't always call it time to market. In simpler times, it was just called getting the project done, out to door, shipped, and so on. A more formal definition for time to market is "the length of time taken in the product development process from conception of an idea to a finished product."
Admittedly, when a project actually starts and finishes is somewhat fuzzy and varies from company to company, as well as industry to industry. In addition, everyone agrees to a schedule, but all hardily approve when someone has to slip the schedule. What I do know is that this time has gotten shorter. Thirty-five years ago, when I started a project, I would go look at the data books, brainstorm with co-workers, and call a couple of key reps to get information. They would make recommendations and send more datasheets or part samples. Time was measured in weeks, with a resolution of days.
Now, when I am given a project, I scour the Internet for technical information, visit some forums, occasionally talk with a key rep, and order samples with next-day shipping. I can even usually download any software tools I'll need, giving me immediate access, and Internet tutorials make learning a snap. Time is now measured in days, with a resolution of hours. I dare not think what design will be like in 35 more years.
Of course, I always gave lip service to the schedule and didn't take it seriously until I worked for a university doing underwater acoustics. Here, the end of the project was defined as when the ship set sail. (I don't know why they still say "set sail" when none of the research ships I have been on ever had a sail.) Other markets have more drastic deadlines. New model cellphones are introduced at the Mobile World Congress every February. If your part is not designed in at that time, you get zero business that year.
One thing I don't like about the formal definition is that it is static. Unless you are a contractor and work for a job house, your product is part of a continuous series of improvements and cost reductions. You work with a group of people who have the highest passion and knowledge of a particular market. (I once met a customer who could tell me the brand and model of every automatic faucet at all the major airports. Want to guess what that customer made?) Your project may not even be complete before the follow-on product design is started. In this light, a market is more like a series of books.
I will give two examples of time to market using experience with my present firm.
Capacitive touch sensors
Cypress got into the capacitive touch sensing business when our president came over, threw an iPod click wheel on the table, and said, "Can we do this?" Our answer was, "Maybe." I define capacitive touch sensing as the ability to measure capacitance and the smarts to do something with the data.
Because Cypress makes a reconfigurable system on a chip, it took us about six weeks to measure capacitance reliably. It then took us two years to figure out what to do with the data. The knowledge to process the data came one mistake at a time, and we made many, many mistakes.
We learned that rejection of water droplets was important when a treadmill company had a user drop a bead of sweat on the speed increase button. We learned temperature can change quickly when buttons are exposed to the sun and cause a correspondingly rapid shift in the capacitance baseline. We learned that radio frequency interference (RFI) affects performance, as does isolated charger noise. We even learned that static electricity is a burst of white-like noise (that was a problem that took a while to solve).