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TECH TALK: Technology’s Next Markets: Disruptive Technologies

October 15th, 2002 · No Comments

As we seek to conquer Technologys New World, let us first understand what are the needs of these markets. Here is my assessment of what consumers and enterprises in emerging markets would like so that they can also be at the cutting edge in their personal and business lives:

  • Computers for USD 100 (Rs 5,000), so that there can be one in every home and office
  • A better, more intuitive desktop on the computer, making it easier to navigate
  • Ubiquitous, cheap, high-speed wireless communications
  • Software as a service for USD 5-10 (Rs 250-500) per month, so that it is affordable
  • Zero-latency, real-time presentation of information, because this is what their partners, customers and peers in the developed markets are likely to have
  • Seamless integration of information across the extended enterprise
  • A single, unified database, such that information is entered only once and does not reside in silos
  • Leveraging the tacit knowledge that lies within people, because even though one person may not know everything, as a collective, they can know it all

    Fulfilling the list may seem like a tall order. But the interesting thing is that the building blocks to put the solutions together already exist. These building blocks are the equivalent of what Clay Christensen, the author of The Innovators Dilemma, terms as disruptive technologies.

    Let us take a small detour to understand better what disruptive technologies are. Writes Christensen:

    Most new technologies foster improved product performance. I call these sustaining technologies. Some sustaining technologies can be discontinuous or radical in character, while others are of an incremental nature. What all sustaining technologies have in common is that they improve the performance of established products along the dimensions of performance that mainstream markets have historically valued. Most technological advances in a given industry are sustaining in character.

    Occasionally, however, disruptive technologies emerge: innovations that result in worse product performance, at least in the near-term. Disruptive technologies bring to the market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and frequently, more convenient to use.

    Disruptive technologies typically are first commercialized in emerging or insignificant markets. Leading firms most profitable customers generally dont want, and indeed initially cant use, products based on disruptive technologies. By and large, a disruptive technology is initially embraced by the least profitable customers in a market.

    Technologies can progress faster than market demand. This means that disruptive technologies that may underperform today, relative to what users in the market demand, may be fully performance-competitive in that same market tomorrow.

    This discussion is very important because to target technologys next markets, companies have to create disruptive innovations. Consumers and enterprises in the emerging markets are at the fringe for todays technology leaders. Yet, they can become, as will see, the core for the new technologies. As a whole, these consumers and enterprises have a huge technological gap when compared to their counterparts in the developed markets of the world. This is the chasm they seek to cross, the digital divide that they seek to bridge. Separating technology companies from the consumers in the emerging markets is the Gulf of Money.

    Tomorrow: The Gulf of Money

  • Tags: Tech Talk

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