Established Players in Tech Industry Are Displaced By New Technologies and Companies Often When They Are Operating At Their Peak (learningbyshipping.com)

In a column, Steven Sinofsky, former President of the Windows Division at Microsoft, cites various examples from the past to suggest that it is often when incumbents in technology space have established market dominance that new startups rise and displace them: While the tech incumbents are clearly generating massive revenue and profits, nearly all of this comes from products developed long ago. In fact, as we now know in hindsight, it is exactly when conventional wisdom conflates today's economic success with forward-looking product innovation that seeds are being planted for the next massive wave of innovation. Google was formed at time when the incumbents of AOL and even Yahoo were stronger than ever. Facebook came just after the dot com bubble burst. Even the reincarnation of Apple took place after the bubble burst with products being developed as the bubble peaked. And for what it is worth, the PC ecosystem, particularly Windows, was relatively "flat" mired in Windows Vista while Firefox dominated and Google Chrome was appeared (Windows 7 wouldn't come out for a year after Chrome). In the infrastructure space, the seeds were planted for both AWS and VMWare in the shadow of the dot com bubble. In an historical context it is highly likely that the next wave of innovation in new technologies and new companies will happen right under the noses of big companies operating at what the public markets think of as peak (earnings) potential.

Comments

Not displaced, the users change

[petes_PoV]

This isn't cause and effect thing. It is not because tech companies are at the top of their game when a newcomer comes along. It is because there is a cycle to these things. One that means that users wants, needs and even just fashions change regularly - and that this often coincides with when the previous "generation" of tech solutions have reached maturity.

Google didn't displace AOL, they produced a search engine that was better than anything around. That gradually blew past the competition over a period of years. Facebook is only cited as an example because (coincidentally) it was successful. There were thousands of failures during the same time period. Any of them could have been used as an "example" here, but they failed, so they didn't make it into the article.

If there is something in this, it is not one of cause and effect. It is down to timing and cherry-picking examples that support the author's thesis.

The rich and powerful learn

[rsilvergun]

unlike the working class. Once in a while things move faster than they can keep up, e.g. the dawn of the Internet. But for the most part they keep a lid on this kind of 'disruptive' tech. Right now the solution is to keep all the money for themselves (re:Apple and their $650 billion in cash) and then use it here and there to buy any and all potential start ups. The upcoming corporate tax cut in America is going to exacerbate this as companies have a ton of cash but not a lot worth spending it on. R&D, let us remember, is mostly done by the government.

We shouldn't be surprised. This is the essence of what it means to be "conservative". It means to push back against change. It's just nobody ever seems to question the actual motive of that particular ideology. It's always simple time this and when things were better that. Never a word about how it just so happens the ideology favors the establishment over new players.

Duh - no one notices if they aren't

[gurps_npc]

Lets say your company is doing well, but has a slight pullback, losing 10% of your market share and you are now the #2 player, then a startup comes out of nowhere to take over the entire industry.

People don't talk about how the startup beat the guy that USED to be #1 and is now #2. Instead they talk about the startup beating the guy that just made it to #1 spot after 10 years of hard work.

In fact it's almost physically impossible for someone to create a disruptive technology without taking out the #1 player - it's just not disruptive if your tech only makes you #2. And if you are #1, then OF COURSE you are at your peak. Unless the economy is in a downward spiral, the #1 guy has to be at his peak.

That's like saying the wow, the best scorer in the league is having a good year. He would not be the best scorer if he wasn't having a good year.

Innovator's Dilemma

[MonkeyTrial]

Sinofsky restates well-known book by Clayton Christensen written in 1997. News at 11:00?

You can define it however you want

[rsilvergun]

That's the beauty of words. But it doesn't change the fact that a lot of very powerful people are using the sentiment behind your words to maintain and expand their wealth and power, more often than not at your expense and the expense of the entire working class.