Are Net Appliances "Disruptive Technology"
allNetDevices
03/29/2001
In his "The Innovator's Dilemma," Clayton Christiansen describes "disruptive technology" as an innovation that does not threaten a particular market initially but that eventually revolutionizes that market. Are Internet Appliances (IAs) disruptive to the PC market?
In his analysis of the history of the disk storage industry, Christiansen argues that disruptive technologies start as cheap, low-margin, convenience-focused products that initially appeal to an emerging market but that eventually move upstream to become viable broad-reaching products across an existing market. He contends that the innovation of a disruptive technology lies in its novel application to a specific market, not in the complexity of the technology itself.
The nascent IA industry potentially is disruptive to the personal computing market. Christiansen suggests that, at the time of their introduction, disruptive products are cheaper, simpler, and more reliable and convenient than existing products. They're also attractive to emerging markets for the very same reasons they are unattractive to established markets - the disruptive products are usually considered under-performers in the established markets.
Avoiding Comparisons
IAs are different than PCs because they provide instant-on, simple-to-use access (convenience and simplicity) with no-crashing, no-Windows-needed quality (reliability). However, while most IAs are cheaper than PCs, they aren't cheap enough. That's why comparing the IA to the PC experience is inherently a problem.
To be successful, IAs shouldn't attempt to be good at personal computing; they should attempt to be good at specific tasks that leverage personal computing technology such as e-mail (Cidco Mailstation) or personal TV management (TiVo). The Web surfing IAs such as i-opener are not good first entrants into the market because their nature leaves them wide open for PC comparison and thus performance criticism.
Eventually, the IA will be a better (and cheaper) solution than the PC at common personal computing tasks (like word processing and desktop publishing), but this will come as pro-IA technology like Linux and high-speed access evolve.
Missing the Boat?
Gateway has said it is "pulling back from the nascent market for Internet appliances" and 3Com recently announced the end to its Internet appliance initiatives - Audrey and Kerbango. As IAs enter the market, they are being labeled as low-end performers when compared to the PC experience. Again, that's the problem: IAs are being compared to PCs by the PC market.
Christiansen warns that companies must recognize an emerging market and shouldn't focus on the current mainstream market. Will Gateway and 3Com find themselves in the company of industrial giants of the past that, as Christiansen notes, predicted the failure of disruptive technologies such as the 3.5-inch disk drive, hydraulic earthmoving equipment and simplified accounting software?
Don't Overperform
Average PC processor speed and storage capacity will, in the near future, overshoot the needs of the average consumer - some argue that already is the case. Christiansen labels this quality as "performance oversupply," which occurs when an established technology's functionality out-performs the needs of the market.
This notion supports the argument that the IA potentially is a disruptive technology. Here's why.
As high-speed Internet access becomes a reality, less and less computing power will be needed in the average consumer's hands. The "performance oversupply" of the PC will provide an opportunity for Internet appliances to become a viable solution for a large market of mainstream consumers. The path for an IA vendor should be to make some traction with a niche market now and prepare for the larger market that will evolve as high-speed infrastructure builds up around us.
The stars are close to alignment for the IA to become a disruptive technology. IAs are cheaper, more convenient and reliable and have lower performance than PCs. Established giants are wavering over potential success. In other words, we're almost there.
The IA promise meets Christiansen's definition of a disruptive technology, the execution is just not perfect (yet). Not surprisingly, Christiansen predicts and welcomes these problems. He recommends to get the product out before it's perfect and learn about your markets needs and values.
Daniel Stoller is the former vice president for product development for Internet Appliance Network (IAN). Before IAN, Dan started Root.net, an online concierge service, and built the online media group at SiteSpecific, (acquired by CKS Group in 1997).
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