Saturday, March 5, 2011

Advantages of Cloud Computing– Part VI – Disruptive Technologies

At this point, we would like to deviate from the subject of ‘Reduced Cost’ to introduce ‘Disruptive Technologies’, because it falls within the framework of demonstrating how Cloud Computing is already affecting ‘costs’, creating both strategic opportunities and competitive threats.

As expected, we are seeing more interests coming from smaller operators than from companies with hundreds of retail locations. This is entirely normal in the technology adoption life cycle of all disruptive technologies. However, we are always amused as to the lengths market leaders will go to deny their existences. Example: K-Marts 10 Deadly Sins by Marcia Layton Turner. But that is not to say they are oblivious to them. We often hear, “We’re not ready to make the change, we just don’t want our competitors to have it.”

Anything that changes our behavior is described as ‘Disruptive’ and a thing that does not is classified as ‘Non-Disruptive’. The interesting thing about disruptive technologies is they create an opportunity for the little guy to rip off a large portion of his competitor’s market, and is far more destructive than those that do not require a change in behavior.

When HP comes out with a faster computer, with more memory and a larger hard drive, you are able to adapt to that new technology without changing your behavior. In contrast, when in 1986, IBM introduced the PS/2, which was arguably a far superior alternative to desktop computers of the day, their new computer was a disruptive technology in that it was not compatible with most of the software programs that were already on the market. IBM tried in vain to convince software suppliers to rewrite their programs to make them compatible with the PS/2, but they failed and the primary reason they failed is they did a poor job of convincing the market it was significantly better. With the failure of the PS/2, its powerful operating system (OS/2), which IBM commissioned Microsoft to write, became Windows/NT and the first desktop computer operating system that allowed more than one program to run on the same desktop at the same time –multitasking.

Disruptive technologies are infinitely more difficult to market because of the necessity to throw the baby out with the bathwater so-to-speak, but when they succeed, it’s the devil to pay for those that procrastinated.

Downloadable streaming video is a good example of a disruptive technology that has laid waste to Blockbusters, as Amazon Kindle and print-on-demand books are destroying book publishers and retail book dealers this very minute. We keep waiting to see retail book stores install kiosk where patrons can do research and download books to their Kindles, but odds are they will disappear from the American landscape entirely. A successful disruptive technology can lay waste to market leaders, because smaller companies embrace  ‘change’ as their opportunity to grow rather than fearing it in the way their larger competitors do, and market leaders like Sears, IBM, Western Union, AT&T and thousands of others pay the supreme price.

Disruptive technologies, when they survive, are generally giant killers... David and Goliath, Microsoft and IBM, Alexander Graham Bell and Western Union come to mind. In TCSICGM we call this period a ‘Tear in the Environment”, a specific window of time when castles fall, kings topple from their thrones, and insignificant visionaries are mysteriously catapulted to the top of the heap.


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