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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (27628)	7/11/2000 12:27:05 PM
From: Tom Ardnij	Read Replies (3) \| Respond to of 54805

Stan, The Disruptive Innovation Conference was held in Austin, TX mid-May. You are right about my being remiss in not posting to the thread this update. Many on the thread are familiar with Clayton Christensen's "Innovator's Dilemma." For those that are not, these two posts will be helpful. The second post is the update from last November's Disruptive Innovation Conference. Message 12150640 Message 12151079 Clayton Christensen opened the conference with a discussion about when vertically integrated companies are likely to dominate vs where disrupters are likely to succeed with their modular approach to technology development. Integral technologies are likely to dominate when product functionality does not satisfy market needs. Modular companies, the disrupters, become prevalent after functionality overshoots what customers can absorb. This characteristic of overshoot is what sets a vertically integrated company up to be disrupted at the low end. The disrupters open up a market at the low end that didn't exist before. The architectural elements of the disruptive technology are: 1) Technologically simple idea 2) Starts at low price point 3)Not predicated on overcoming infrastructure and regulatory barriers 4)Not predicated on consumers having to change their behavior 5) Opens up a market of less wealthy customers. Lot's of examples, mostly listed in the two posts that I have copied to this one. George Gilder described the era of bandwidth abundance as overshoot. Where is the undershoot? Circuit switching of paths of light, Optical cross connects, he said we need all optical circuit switches(forget bit rate) In the optical era, it's back to circuit switching paths of light. That was the introduction to the CTO's from JDSU and SDL. They reported on their moves toward increased modularity and increased output. I could tell that they were stressed by pressures to meet the over 100% year over year output requirements. George Gilder said that when the bandwidth outside the computer exceeds that inside, the computer infrastructure disaggregates. (See integrated disruption from above) He said that beginning with 10 Gigabit switches there was a 5X penalty to keep it inside. He said, that therefore all lose to network attached storage. This was the introduction to Andy Watson, Director Architecture & Deployment for Network Appliance. Gilder clearly favors NAS as a storage approach, but it's important to note that he considers storage to be an underserved market and therefore not subject to disruption. Therefore EMC is also in a very strong position. There is no overshoot, so disruption is not likely in an underserved market. A good argument for investing in both storage opportunities. We heard from Kent Savage of Netpliance. Arthur Tyde of Linucare. Tensilica and ARM chip designers. We heard Carl Everett, Dell Computer's VP for the Personal Systems Group talk about the innovative process at Dell. We toured the Dell Dimension assembly plant and saw firsthand the Continuous Flow Manufacturing process that makes Dell Direct possible. As a former manufacturing manager, this made my day. Many here will remember Reed Hundt, the FCC Chairman during the years of dramatic change in the communications industry. His comments were of note especially when he was forcasting change in the industry over the next ten years. He said, 1) 2-3 years, Long Distance disappears as a separate product, strictly bundled services(one bill) 2) 7-8 years---Narrowband access to the internet disappears 3) After broadband internet is pervasive--network TV disappears in it's present form 4)Selling voice over the present circuit switched network disappears in it's present form within 4-6 years. Reed Hundt is a former attorney in the antitrust division. He commented on Microsoft. He clearly sided with the justice department, but forcasted that the case would disappear in the appeals process. It's interesting to note that George Gilder who clearly thinks that Microsoft has overshot most of it's franchise and is a primary target of disruptive innovation, said that he thought the justice department was misguided in trying to limit Microsoft from innovating it's operating system. Sorry for the length of the post. The prior two posts do a better job of talking about what is the disruptive innovation process. I am leaving for a trip out west today and won't be able to answer questions promptly. However, if there are questions about the conference, I will be happy to address them when I return toward the end of the month. Best Regards, Tom