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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (11263)	9/26/2000 4:11:56 PM
From: Apollo	Read Replies (1) \| Respond to of 17183

Book Summary: The Innovator’s Dilemma By Clayton M. Christensen I read this book, and thought I would follow up with some comments after Bill Fischofer's post. It focuses more on developing new disruptive technologies. I think it has the greatest relevance to companies that are trying to “cross the chasm” with a new product or service. Christensen separates new technologies into 2 groups:  Sustaining: technologies that improve the performance of established products, which will most satisfy the mainstream customers of the company.  Disruptive: technologies that when first brought to market are in search of a customer. These technologies at first will often underperform established products in the mainstream market, bringing worse performance. Over time, these products will be upgraded and will, because of their disruptive nature, be cheaper, simpler, smaller, and frequently easier to use. As these products upgrade, they will be adopted by customers who were often not even first envisioned or targeted. Eventually, they will eat into the market share of the mainstream products of major corporations. To escape this, the mainstream companies will move up into the higher, more complicated end of the market as the disruptive technology eats their lunch from below. Examples of disruptive technologies include: transistors over vacuum tubes, very small engined off road motorcycles introduced by Honda were disruptive to on-road large engined bikes built by Harley and BMW. Handheld internet applicances may become disruptive to desktop PCs. Management at large mainstream corporations often don’t react well to disruptive technologies pioneered by their own engineers or when attacked by smaller companies. Management will listen to its customers, who will demand more of the sustaining technology already produced, at the expense of lesser known, underperforming disruptive technology. The latter is the future, but isn’t recognized as such, and is often discarded since it often won’t bring quick and large earnings. By listening to their customer, and working hard, the sustaining technology and its management eventually lose the future in favor of sustaining the present. Therefore, keeping close to one’s customers is the appropriate approach for sustaining innovations, but can provide misleading data for disruptive ones. The management of a smaller start-up is under no prior customer constraints, is not hamstrung like the larger corporation, and is more flexible, and more persevering. If they can cross the chasm, their product can become the future. The best way for large corporations to develop disruptive innovations without being encumbered by the usual bureacracy is to start anew with an independent project; ie, IBM and the PC, GM and the Saturn, HP and the inkjet printer, etc. “Perhaps the most powerful protection that small entrant firms enjoy as they build the emerging markets for disruptive technologies is that they are doing something that it simply does not make sense for the established leaders to do. Despite their endowments in technology, brand names, manufacturing prowess, management experience, distribution muscle, and just plain cash, successful companies populated by good managers have a genuinely hard time doing what does not fit their model for how to make money. Because disruptive technologies rarely make sense during the years when investing in them is most important, conventional managerial wisdom at established firms constitutes an entry and mobility barrier that entrepreneurs and investors can bank on . It is powerful and pervasive.”

To: Apollo who wrote (11263)	9/27/2000 4:50:11 AM
From: JDN	Respond to of 17183

Dear Appollo: I am aware of the book you mention, however, I happen to think a lot of it is just book selling HYPE. In the REAL WORLD one does what one must. I am an outsider so I have no idea what EMC will do but I do know that one way or another (you list the 3 ways) EMC will do what is necessary to and most effecient to be a success in whichever market they care to address. Remember my first post on this subject, money talks, B.S. walks. EMC has the financial power, the loyal customer following to do any of the above. JDN