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.

Re:Not displaced, the users change

[mikael]

Between 1996 and 2000, PC's began to displace UNIX workstations as 3D graphics boards became affordable as Windows NT/95 came out. Many workstation vendors buckled and just gave in to Windows NT. The height of the dot com boom in 2000 was when sales of sub $600 desktop PC's at Walmart and other department stores were also at their peak. As laptop, notebooks, netbooks and web-books became cheaper, the market adjusted Then around 2005, the mobile market took off when it was possible to use GPRS/GSM modems.

PDA's, gorilla glass, wireless internet, touch screens, digital cameras, video compression, GPS and other MEMS sensors converged to make smartphones. PDA's like the Palm pilot were around then but synchronizing documents between a PC, laptop and PDA, then uploading them to the web was awkward. Social networking media took off as it solved this problem and it became possible to instantly broadcast a video or picture from any device to Youtube, Twitter, Facebook, Linkedin or Google.

The convergence of two segments creates new problems to be solved, and the solution to those problems creates a focus point for startups to grow from.

Re:Not displaced, the users change

[houstonbofh]

Large companies at the top of their game are very risk averse. They have a lot to lose now, so play very conservatively. New startups have nothing to lose and take chances because of that. Most of them fail. But we only hear about the successes that took a wild chance with nothing to lose. And occasionally, one of those shots in the dark hits a bulls eye that redefines everything.

Re: Not displaced, the users change

[zaphirplane]

Like google moon shot budget is multiples of many startups that is public, Apple and amazon have multiple hope and a prayer projects or just in case. I am donâ(TM)t follow what you mean by scared of risk. Thats an insurance / bank thing

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?

Re:Innovator's Dilemma

[jbmartin6]

The news is even earlier than that. TFA describes a well known phenomenon across any industry. It's been part of the idea of creative destruction for a century or so at least.

I should probably also add

[rsilvergun]

that if you call yourself conservative but then support progressive policies, well, you're not conservative, are you? Similarly if you call yourself conservative but favor rolling back to the 1600s then, well, you're changes are so radical you're not really conservative anymore. One of the most conservative politicians in our time is, oddly, Hillary Clinton. She'd have left everything as it; at most tweaking things just a hair and only really doing that to maintain status quo elsewhere. It was one of the reasons folks hated her with a passion. There are very, very few 'real' conservatives. e.g. folks who don't want change. What I see mostly are people who want to make a better world (the Bernie Sanders crowd) and people who want to profit as much as they can from that world (the Donald Trump crowd). In the middle you've got Hillary Clinton and Mitt Rhomney.

Is anyone surprised?

[PCM2]

Court-declared monopolist declares that monopolies, in effect, do not exist, or are at least irrelevant. Stay tuned in the next half hour to hear prognostications about the color of the sky.