So how and why did we get ourselves into this techno dilemma, or should we even be worried? Why concern ourselves with a personal analysis of consumer technology purchases? Consumer transactions drive over 60 percent of GDP and subsequently heavily influence the development and adoption of new technologies even by the business community. A study underway by Computer Sciences Corp. (CSC) titled "Consumer Technology Will Drive Corporate IT Agenda" (csc.com/features/2005/index) makes this point (e.g., text messaging). Maybe we can learn something from my not so unique consumer technology experience, whether we are consumers or provider/sellers. Regardless, these dynamics apply equally to either set of players. Here are some technology facts that I've personally deduced.
Technology gets cheaper and cheaper per unit of performance. By any measure, in whatever technology, performance per dollar increases exponentially as the technology matures, markets grow, and production costs decrease. I bought my first 20 mghz PC in 1991 for $1500. Thanks to the successful fruition of Moore's Law, I can now buy a 2.8ghz PC with 140X the processing power and many more accompanying features for $500.
High tech companies are "pushers". I worked for high tech companies for many years, so do not think me ungrateful in my assessment here. These companies prosper by developing and pushing technology into the marketplace, thus attempting to find or create markets for their products. Sometimes, innovative technologies begin without an obvious market or use and serendipitously become vital (xerography). Almost always, the performance curve of the technology advances faster than the performance needs of the market, which creates a market dilemma for these companies—how to get the market to buy more.
Again, the PC industry demonstrates this dilemma aptly. In the 90s, not only did many people buy their first PC, but major technological events such as the introduction of Windows or the advent of Internet usage stimulated necessary hardware upgrades by the marketplace—much like Stephen Jay Gould's concept of "punctuated equilibrium" in describing significant geological events that stimulated accelerated spurts of evolution, these technological events motivated technological leaps in development which the marketplace proved willing to absorb. However, as the frequency and impact of these previously significant PC technological events have decreased, reasons for buying a new machine have lessened. The latest consumer drivers, such as the connectivity between digital entertainment and PCs (photography, audio/video, etc) have helped, but have done more to stimulate purchases of these other digital devices than PCs. Thus, the industry growth rate has declined by 50 percent since the year 2000. Indeed, PC acceptance plateaued at about 60 percent market penetration among consumers compared to products like phones at over 90 percent and DVD players at 70 percent (after only seven years when most consumer technologies have only reached about half that rate).
Rejoice or beware disruptive technologies! Read Clayton Christensen's book, The innovator's Dilemma, to understand how new or initially lesser performing technologies overtake the needs of the marketplace for higher technologies and steal their customers. If you are on the customer end of this phenomenon, then rejoice. If you are a technology provider, then remember Andrew Grove's well spoken adage that "only the paranoid survive".
You get more than you bargained for. Because of the sometimes growing disparity between performance offered and performance required, product features are bundled to entice you to buy other capabilities not on your core list of needs, and thus you get the cell phone that photographs, e/mails, and web surfs when all you really wanted to do was make a phone call. Most technology sellers gain additional commissions, margin and profits when they "up-sell" or bundle other product features beyond the standard offering.
No comments:
Post a Comment