Tag Archives: Disruption

The iPad’s Disruption Of The Windows PC Market

Windows PC vs iPad
Chart via Horace Dediu

Now we can actually confirm that the day the iPad was introduced, Personal Computing changed forever.

Two years earlier, 2008 was the year of the netbook. Analysts would doubt whether Steve Jobs was right to dismiss netbooks when he insisted Apple would never launch one.

And once a gain his genius was spot on. In 2010 the iPad created a new category that made netbooks completely irrelevant. The rise of the netbook signaled a need for light computers with long battery duration and just powerful enough for everyday use. Now we know the answer was not going to be just a smaller PC.

The inevitable growth of broadband pipes and services in the cloud are a perfect fit for tablets, phablets and smartphones to become a more and more frequent replacement of laptops in our daily life. In emerging markets the leapfrog to wireless broadband and mobile computing is a reality. It will only accelerate the trend the chart shows.

Microsoft has a big problem with mobile and tablets. Windows 8 is a compromise to address tablets and desktops, but it is not working neither of them. Microsoft faces disruption in the personal computing space they used to dominate. Compromises have never worked well in face of disruption.

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2 Key Ideas on Marketing Disruption

These are the key points that Brian Solis makes about Marketing Disruption in this video:

1) How to equip marketers to deal with disruption?
The answer from marketers should also be disruptive. That means you should stop looking at the same companies you looked in the past and everybody looked.

By the very nature of the process, if you keep working with the same agencies and companies you won’t be very disruptive.

My comment: I can only agree. Incumbent players tend to protect the status quo and will have a conflict of interest to disrupt themselves. AT&T did not invent Skype, and Time Warner would have never invented YouTube. The disruptive guys are the ones that shake the established model.

A traditional media agency has no incentive to shift your offline dollars to digital.

2) What are the recent Disruptions in marketing?
One of the greatest disruptions is that of consumer behavior. The way I make a decision, how I use technology, where I go and what I share today Vs what I shared yesterday is different and it is changing over time.
“What I do, where I go and how I do it, this is what marketers should pay attention to. This is what should inspire them to get in front of consumers.”

My comment: Having a mobile and being connected everywhere has changed the way people buy, research or share what they like and dislike. This is an opportunity for marketers to better understand their customers. And this is why Big Data Analytics has become the key for marketers to understand the on-going changes in consumer behavior and the opportunities they bring.

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7 Weapons of Digital Disruption

What makes digital so disrupting? These are the 7 traits of digital that may disrupt your industry. Watch out!

Disruption

Disruption (Photo credit: Tsahi Levent-Levi)

1) Zero marginal cost. Digital assets, software apps and online services have virtually zero marginal cost. That is, the cost of any additional sold unit is close to zero.

Case in point: A physical CD, newspaper, book, brochure, paper form, all of them have a cost per item. Copying an MP3, publishing a blog, distributing an ebook, filling an online form have zero marginal cost. Total costs are roughly the same for 1 download than for a million.

Impact: This is the biggest disruptor. This is the enabler of a paradigm-shift business model: freemium. Your revenue comes from a small percentage of paying customers while you give your product for free to millions of users. Why freemium?

  • Free Advertising. The bigger the customer base the bigger impact of word of mouth.
  • You occupy the market to avoid other players in the field. You create your blue ocean as you disincentive other players to enter a market you already serve for free.
  • You get feedback from more customers. That means better insight into customer needs.

The result is a winner-takes-all approach. The goal with freemium is to dominate your space. You rule your own blue ocean.

2) Infinite flexibility. Software is malleable. Unlike product updates in the physical world, in software/digital products, updates have no major impacts. There is no need to change manufacturing lines. Many digital products provide for nearly invisible updates.

Case in point: Chrome release cycle of a major version every 6 weeks is an example of how easy is to keep the product in constant evolution. Users hardly notice.

Impact: That enables the Lean Startup. That is the philosophy behind Agile software development. Years ago building software had waterfall processes that resembled manufacturing. You get requirements, you build it, you test it and you release it. Nowadays it is about shipping the product as early as possible and learn from the feedback. Ship a Minimum Viable Product (MVP) good enough to test the concept with real customers. The insights from your customer are fed into the complete product. That can’t be easily replicated in the physical world. Customers today buy digital products that keep improving well after they purchased them. e.g. mobile apps.

3) Infinite connectivity. Everyone is connected now and everything will soon be too.

Case in point: 79% of North Americans are connected to the Internet. The Internet of Things is just beginning to emerge.

Impact: That means, companies have now more data sources to learn from. That means consumers have access to infinite amounts of information. Social networks have become the way to discover, filter and share information. Today, what is remarkable, spreads like a virus. Marketing has not only gone digital, it has gone social. Never was there the potential to reach so many for so little cost. In the old days, the size of your advertisement budget was a barrier of entry to your market. Those barriers are still working, but are more and more permeable.

4) Moore’s law only accelerates the zero marginal cost of heavier and heavier digital assets, such as video. Moore’s law and cloud computing are also decreasing barriers of entry to play digital, by reducing or eliminating the upfront investment in technology infrastructure.

Case in point: This is one of the forces behind Youtube turning into profits. Serving a 1080i video costs today a fraction of what serving a 240p did cost in 2006.

Impact: Startups don’t need a big investment to launch mass market consumer digital products. Dropbox is a case in point, too. Moore’s law is also partially responsible of the rise of Big Data. Now we can Manage infinite data and get fast insights from it. CIOs, CMOs and an emerging Data Science are all about it.

5) Personalization. This is derived from infinite flexibility. Digital products can be personalized to every single customer. This is mass personalization at virtually zero cost, compared to the physical world.

Case in point: Amazon’s amazing recommendation engine, that always gets to your frontpage those items you like.

Impact: Behaviors, friends behaviors, customer profiling, all is recorded and that makes recommendation and ad engines more and more intelligent. AI combined with big data promise personalized products adapted to each customer and context. From market segmentation, to micro segmentation, to a segment of one.

6) Social Media and Crowdsourcing. The self-service model of supermarkets and restaurants, is even simpler in the digital world. Users will fill in their own data, will review products, and will share to their friends. The crowds create and share content with tribes as never before. Social Media is word-of-mouth on steroids.

Case in point: Paper Encyclopedias released Appendixes units to keep up with updates. Wikipedia is updated in real-time. Second screen: Twitter trending topics are often correlated to TV shows.

Impact: Millions of Facebook users not only personalize their experience, but create content and personalize the experience of their friends. Tripadvisor and Amazon are examples of the fundamental role of customer reviews in the decision to buy. Twitter has become the social soundtrack of TV. That means you need to monitor Social Media proactively. You need to get some clarity from the noise. What they say about your brand will not be so easy to influence with a prime-time expensive ad campaign.

7) Mobility and Ubiquity. Mobile takes the Internet and all your digital assets wherever you are. Smartphones capabilities (cameras, sensors, location, customer info) provide an array of possibilities illustrated by the nearly one million apps available in the App Store and Google Play.

Case in point: Maps applications are replacing standalone GPS devices that were only surviving because of the offline maps. With connectivity everywhere, maps in the cloud become more reliable and up-to-date than stored maps.

Impact: Consumers are more informed than ever. People can check online on the store before to help in the buying decision. They can even ask their friend’s opinions in real-time using their phone cameras. Witnesses to major news end events have become first-line reporters.

Media has already been disrupted by digital. It will not be the only industry. Healthcare, education are next. How many weapons of digital disruption are already affecting your business? Do you have a strategy to defend yourself?

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How does Disruption look like in Print Media

Not because you already anticipated it, it’s less of a dramatic picture. The chart from Statista shows the result of how technology reinvents industries.

In 2004, Google’s $3Bn business seemed nothing compared to a $70Bn industry. Only eight years later, Google is bigger than the entire Print Media business in US.

A single company — let’s call it the disruptor— is worth more than the entire industry it disrupts, in less than a decade!

Though it is the company that gets more attacks from the newspaper and magazine industry, Google was not the only one driving the change.

  • Some years ago when you wanted to sell a car or a house, there was one obvious place to advertise: Newspapers. Nowadays you would only think of eBay, Craigslist or Carlist.
  • Bloggers were the first to grab readers from traditional media, though Google Adsense dollars helped here.
  • Then came the big social media boom with Facebook and Twitter attracting eyeballs from other media.
  • And finally, also contributing to the decline in offline revenue, Print Media has gone online, though they have not been too enthusiastic about exchanging “paper ads dollars by online cents.”

Print and online magazine advertising spending in the U.S. from 2010 to 2016
You will find more statistics at Statista

After disruption, is the resulting market smaller or bigger?
U.S. Print Media went from a $72bn peak in 2006 to $42bn in 2011. Where has all that money gone? Online, right?

According to GroupM, online ad revenue in US in 2011 was $34.5Bn (*). You make the numbers and that means that the size of Print Media + Online combined add to $76Bn. Around same market size as in 2006.

Roughly, you could conclude the combined market of “disrupted + disrupting” has not de-materialized the industry.

Jobs: A collateral damage of disruption?
The most visible effect in jobs is the change in skills and preparation. New jobs online require more preparation than those in the old industry. And for sure they need different skills.

Disruption due to new technologies often creates inflation in preparation. The lowest rank worker in the new industry will require far more preparation than in the previous one. E.g. Less skilled jobs like printing operation or distribution are replaced by technology. If you are a junior journalist you are now in the lower ranks, in the sense that the jobs less skilled than yours are all replaced by technology. You need much more preparation to be a journalist than to be a guy in the distribution chain.

On the other hand, a system like Adsense enables a bigger crowd to benefit from advertising. Now if you are a junior journalist you can join the Long Tail of  bloggers and be self-employed. Online ads, combined with indie publishing, are the foundation of the Digital Renaissance we live in.

How does print media respond to that?
Sadly enough, we have the example of France, where print media lobbies politicians to tax the innovator, in order to protect the status quo and delay the inevitable. As RIAA already demonstrated in the music industry, trying to stop change with lawsuits is not the best way to deal with disruption.

* Google makes 95% of revenues from Ads and U.S. represents 46% of their worldwide business. As Google reportedly has 44% market share in U.S. online ads, numbers are consistent.
Global online advertisement spending in 2011
You will find more statistics at Statista

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Disruption: Technology or Business Model? Definitively, not Laws

Kindle books have now overtaken paperback books as the most popular format on Amazon.com, according to the quarterly results just released.

  • For every 100 paperback sold, Amazon sold 115 Kindle books
  • For every 100 hardcover sold, Amazon sold 300 Kindle books
  • The Kindle store has over 810,000 ebooks
  • 670,000 ebooks are priced at $9.99 or less

In just 3 years, Amazon has taken the eBook from nothing to mainstream. Amazon has managed to take the book transition to digital without suffering the pain the music labels went through with mp3. How did they do it? First, with a great device, the iPod of the ebooks. Second, no fear to cannibalize their own business. Third, force publishers to accept the $9.99 price policy. Same recipe as the iTunes “take it or leave it” $0.99 a song.

Amazon and Apple set the example of companies taking advantage of technology to drive new business models that are changing industries. The Netflix $7.99 a month all-you-can-stream is another bold proposition for consumers, that is shaking the Pay-TV industry.

The right offer for digital content at the right price is not only changing industries in US. It is also driving piracy down. Meantime countries like France, UK and Spain struggle with nonsense laws that not only are useless against piracy, but that are also stopping the development of a legal digital content market.

Legislators in Europe should stop making laws to preserve the status quo. Else US companies will have total domination of digital media by the time old Europe reacts.

 

 

[Views] Spotting Disruption Before It Happens

Postaldecline

We can call it the “delayed” disruption. It has 3 phases, that can be illustrated in the chart above showing the decline of postal mail volume.

1. Hyped Prediction. End of 90s with the Internet boom, people predict that the end of mail will soon happen.
2. False Reality. A few years later in 2005, people say mail will never die, all the opposite Internet is increasing the use of postal services, as the growth in mail volume shows.
3. Disruptive change. The hyped predictions become a reality, and mail drops in free fall.

The same can be said of CD sales, newspaper and magazines, and soon will be said of  ebooks.

And the same is happening on TV and Internet TV, as the recent debate on the Future of TV shows, when voices say that TV is weathering the Online Video storm better than Music or Newspapers. The good news for TV is that hey have some precedent cases they can learn from and adapt. But the disruption will come… only maybe a bit later.

Read the port: The Key to Spotting Disruption Before It Happens

Innovate for Tomorrow or Die

Any ambitious innovation must target to fix the problems of tomorrow considering the technology environment of tomorrow. Fail to consider the future environment and you might be pouring R&D dollars into the bin.

Innovations that did bet on tomorrow:

Remember when Gmail launched in 2004? It offered 1GB of storage when Hotmail or Yahoo only gave a few MBs. Google was anticipating the increasing volumes of email people would have to deal with in the future, while betting on the exponential reduction of storage costs. Gmail now give more than 7 GB of storage.

YouTube growth also rides on decreasing storage costs, increasing bandwidth and better video compression techniques to make Internet Video go mainstream. Not to mention the habit of a new generation of kids to search with YouTube rather than Google.

GPS navigators vendors should also be careful with Google Maps on new handsets such as Android or iPhone. With Unlimited Data Plans, why have a GPS Navigator when the GPS mobile phone can provide online up-to-date maps with extra real-time information? There are some advantages to run maps from the cloud rather than from a device memory, and Google will leverage on them.

Many anticipated that people would not carry a mobile phone and an mp3 player, when only a single device would do it. For Apple the iPhone was a matter of survival with iPod having the biggest market share by far, and Nokia adding Mp3 players to their phones. Not only did it created a great convergent phone-mp3 player, but also added the multi-touch and the mobile web revolutions.

Innovations that were shortsighted and are soon to die:

ATM (Asynchronous Transfer Mode) aimed to manage the bandwidth of data connections so that  different QoS could be handled over the same network. With increasing amounts of bandwidth, driven among others by Gigabit Ethernet, the Internet can perfectly cope today with Voice (and even Video) communications, as  Skype demonstrates, without any complex bandwidth management in the network. Why managing the bandwidth when there is plenty, and more is to come?

WAP was designed as a scaled down version of HTML to render web pages in a small screen. With faster microprocessors and  larger memory powering-up mobile phones, WAP window is over before it ever delivered on its promise. MMS is a similar case. Why MMS, when you can send an email with a photo from new phones with web/email capabilities, using unlimited data plans. Mobile Internet is become more and more Mobile Internet the Internet way.

Fon and other Wifi Hotspots networks might suffer from the limitations of Wifi (100m-300m of range) as a technology to provide wide area coverage. With WiMAX, HSDPA, EVDO (and LTE coming), wireless broadband is crossing the chasm. Once Wireless broadband is available and affordable, how can a Wifi Hotspots Network spotty coverage compete?

Technology trends can easily be predictable, at least regarding capacity growth, be it Moore’s Law on computing elements or its equivalent on bandwidth growth. Before embarking on an adventure, make sure it is consistent with future trends and its corresponding problems.