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:
- 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.
- 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!
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.
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.