Politicians tell voters what they want to hear. Technology companies do the same. That’s why all the major players in computers and mobile devices claim to be innovators.
If all these companies are innovators, then why are some growing and prospering and others flailing and failing?
Clayton Christensen’s book The Innovator’s Dilemma talks about “disruptive technologies“.
A list of modern day examples of disruptive technologies would be the Mac, the iPod, the iPhone, and the iPad. While the Mac didn’t win the desktop operating system wars, it has prospered more than any other platform.
The iPod ravaged the portable media player industry within a few years after launch, and coupled with Apple’s iTunes Store, created an ecosystem that attached itself to users like a barnacle to a ship.
Of more interest is the iPhone’s impact on the smart phone industry. In five years the iPhone has ravaged (disrupted) the status quo as represented by Microsoft’s Windows Phone, RIM’s BlackBerry, and anything Nokia.
When the iPhone debuted in 2007, all three were leaders in the industry. Apple’s disruption has caused a deadly shift in revenue and profits with seismic implications. With a minority share of the smart phone market, Apple owns a disproportionate share of revenue and profits.
Microsoft, RIM, and Nokia (along with a handful of others) are starving for lack of sales and profits. Even worse, Apple expanded the iTunes Store ecosystem to embrace applications which further cements the relationship between vendor and customer, making it even more difficult for competitors to revive.
Apple’s hold on sales and profits in the smart phone segment strangles the competition. Low sales numbers means no profits and no profits means a slow death as customers flee to a more robust and dynamic platform.
The same thing seems apparent in tablets. Apple’s iPad may be nothing more than a large screened iPod touch, but sales have been phenomenal, clearly disrupting the netbook and notebook markets, and combined with the built-in app ecosystem Apple created a huge barrier to entry for competitors who must resort to low prices, low or no margins, and lower quality to compete.
Disruption in a market also brings drastic action by competitors who have been squeezed by innovative technology and systems. Witness Google’s all out offensive with Android OS. Witness Google willing to risk the loss of hardware partners by building their own mobile devices. Witness Microsoft willing to do the same, all in an attempt to thwart Apple’s growth rate and customer lock in with mobile devices.
Look at the litter on the technology landscape. HP wants out of the PC business. Who can blame them. Microsoft wants to compete against their former hardware partners. Partners? That’s being kind. Other than the Mac, Microsoft has been the only profitable part of the PC industry since the turn of the century.
Remember Dell? Remember Palm? Both were once leaders of their respective industries. Dell is a shell of the company’s former self. Palm is a footnote in the history of mobile devices.
All this disruption in computers and mobile devices occurred because of one company’s relentless desire to build a better product and not rest on the laurels of the past (coupled with competition which appeared more interested in status quo than building disruptive products).