February 22, 2009

Disruptive Technologies

When companies get cozy, the marketplace gets innovative and from out of nowhere...a disruptive technology upends things.

We've seen this happen countless of times in big ways.

In the auto industry, 50 years ago neither GM nor Ford would have ever dreamed that they would lose their virtual monopoly on the U.S. auto industry to foreign car companies that would dislodge them with compact vehicles and hybrid engine technologies.

More recently in the music industry, Apple seized the day by combining functionality, stylishness and price on their iPod player with an accessible online iTunes music store.

More generally, the whole world of e-Commerce has stolen much of the show from the brick and mortar retail outlets with internet marketing, online transaction processing, supply chain management and electronic funds transfer.

Now, another disruption is occurring in the computer market. For years, the computer industry has made every effort to provide more raw computing power, memory, and functionality with every release of their computers. And Moore’s law encapsulated this focus with predictions of doubling every two years.

Now, on the scene comes the Netbook—a simpler, less powerful, less capable computing device that is taking off. Yes, this isn’t the first time that we’ve had a drive toward smaller, sleeker devices (phones, computers, and so on), but usually the functionality is still growing or at the very least staying the same. But with Netbooks smaller truly does mean less capable.

Wired magazine, March 2009, states “ The Netbook Effect: Dinky keyboard. Slow chip. Tiny hard drive. And users are going crazy for them.”

How did we get here?

“For years now, without anyone really noticing, the PC industry has functioned like a car company selling SUVs: It pushed absurdly powerful machines because the profit margins were high, which customers lapped up the fantasy that they could go off-roading, even though they never did.”

So what happened?

What netbook makers have done is turn back the clock: Their machine perform the way laptops did four years ago. And it turns out that four years ago (more or less) is plenty.”

“It turns out that about 95%...can be accomplished through a browser…Our most common tasks—email, Web surfing, watching streaming videos—require very little processing power.”

The netbook manufactures have disrupted the computer market by recognizing two important things:

  1. Computer users have adequate computing power for their favorite tasks and what they really want now is more convenience and at a price that says buy me.
  2. Cloud computing is no longer an idea full of hot air, but it is a technology that is here now and can do the job for consumers. We can get our applications over the web and do not have to run them on our client machines. We can afford to have computers that do less, because the cloud can do more!

The result?

Foreign companies are running away with the Netbook market. “By the end of 2008, Asustek had sold 5 million netooks, and other brands together had sold 10 million…In a single year, netbooks had become 7 percent of the world’s entire laptop market. Next year it will be 12%.”

“And when Asustek released the Eee notbook, big firms like Dell, HP, and Apple did nothing for months.” They were taken off guard by miscalculation and complacency.

The future?

Of course, the big boys of computing are hoping that the netbook will be a “secondary buy—the little mobile thing you get after you already own a normal size laptop. But it’s also possible, that the next time your replacing an aging laptop, you’ll walk away into the store and wonder, ‘why exactly am I paying so much for a machine that I use for nothing but email and the Web?’ And Microsoft and Intel and Dell and HO and Lenovo will die a little bit inside that day.”

Implications for CIOs?

  • End complacency and always be on the lookout for disruptive technologies and ways of doing business. There is always a better way!
  • Hardware becomes a commodity over time and supplying the infrastructure for the organization is moving the way that electricity generation did at the turn of the 20th century—to outside vendors that can do it more effectively and efficiently.
  • Cloud computing means that commonly used software applications are available over the internet and can be provide the foundation business functionality for the organization.

The important future value add from the Office of CIO is in IT strategy, planning, governance, and mission-focused solutions. We need CIOs that are true leaders, innovative, and focused on the business and not just on the technology.


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2 comments:

softwarevisualization said...

Yes the little netbook computer is disruptive, but to whom? To the handhelds. The handhelds, the HP Jordanas and Handsprings of the world are taking it from two sides, the phones and now the netbook. The netbook exists because it's the right size to carry in your backpack and lets you catch a wave on free coffeeshop / library WIFI.

No one who needs to use a computer for any work, including word processing for school is going to get by with a netbook. A laptop, maybe, a netbook, no way. At any rate, anyone who uses a computer on a job they get paid money for works on either a laptop or a desktop. For high end applications, video, programming, graphic artists, CAD/CAM people, architects, etc. etc, it's most likely a desktop because of the keyboard, the monitor size and the speed of the hard disk.

It's a clever thought- the CPUs and disks are so big and fast that they exceed most people's needs and that surfeit of power lets the disruptor start to eat at the computer maker's margins.

In fact, it's not true. Those CPUs are WAY too slow to, say, index changes in new documents on your hard drive. In fact, there's an entire class of problems that are very interesting and perform noticeably and meaningfully better the faster the chip is, the bigger the memory is the bigger the hard drive is the wider the bus is. That class of problems will never be satisfied with ANY computing power. It's a by-product of something called he curse of dimensionality. Those problems combined with the fact that, despite some industry leaders wishing it wasn't so, people are NOT going to let their sensitive information be stored on the cloud- think novels their writing, business information, songs their composing, anything aspirational or proprietary or just plain sensitive (think intimate). We've all seen how safe our credit card information and social security information is. Do you believe that your super valuable information is really truly secure? Neither does anyone else. It's just shared, unconscious knowledge now.

Developers are going to continue to find new ways to put new horsepower to work on the desktop so that the difference in speed / privacy / reliability between the netbooks and the net and the desktop matters to consumers.

Netbooks are what people are spending 299 bucks on instead of the big boomboxes of the 80s. There's a reason to want something that just surfs, plays music and holds text; it has its place. It's why I bought an iTouch. I get it, but it's not replacing my computer.

smplcv said...

I feel you didn't mention about, IPOD AND IPAD, EREADERS? I see some schools already having Ereader for students, rather then books..


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