Don Dodge talks about the massive platform shifts and the next big one - the mobile platform and why the leaders fail to make these shifts.
Platform shifts happen every decade or so in computing. The leaders of the previous generation are rarely successful in dominating the next generation platform. IBM dominated the mainframe business. They didn’t lose their dominance because another company built a better mainframe. They lost it because the market shifted to a new platform…Mini computers. Digital Equipment, Data General, and a few others dominated that market. Another platform shift is happening today, from PCs to Mobile devices, and another industry leader will be left behind. John Herlihy of Google Europe says “In three years time desktops will be irrelevant”
The future of computing is that your cell phone will become your primary computer, communicator, camera, and entertainment device, all in one. The exciting new applications are running in the browser, with application code and data in the cloud, and the cell phone as a major platform. I think in the near future there will be docking stations everywhere with a screen and a keyboard. You simply pull out your phone, plug it into the docking station, and instantly all your applications and data are available to you. You can connect to the Internet via your cell phone service, WiFi hotspot, or wired connection. Your phone will have enough storage so you can decide which applications and data are stored on your phone, and which will be in the cloud. Replication will work seamlessly in the background so that you always have a backup copy of your data in the cloud. Where does that leave the PC industry leaders? Scrambling towards mobile.
Why do leaders fail to adapt? The Innovators Dilemma, made famous by Clayton Christensen, clearly explains why market leaders fail to make the leap. Innovation usually happens at the low end of the market where the products are simple, prices are low, margins thin, and the market totally undefined. The industry leaders have great margins, high prices, and customers who want more features and are willing to pay for them. The industry leaders always move up market and leave the new emerging market to smaller innovators. The process usually follows these 6 steps;
- The disruptive technology is discovered, often by the market leading company.
- Marketing people seek reactions from customers and industry analysts.
- Established companies decide it is a better strategy to speed up the pace of sustaining technical advancement in their own product rather than go down market with the disruptive technology.
- Start-ups learn about the disruptive technology and see opportunity. They keep their cost structure low, build the technology, and find new markets through trial and error.
- The start-ups get some initial success and then move up market and eat away customers from the market leading company.
- The market leading company finally jumps on the bandwagon reluctantly with a half hearted attempt and fails. It is too late.
I actually think apple and google are well positioned for this mobile wave (with iphone and android platforms). But there are large open opportunites for startups to make their mark.