One of the most powerful theories that explains who wins and who loses in each turn of the technology industry is the theory of disruption, which observes that so many of the new technologies that triumph appear inferior to existing products when they’re introduced.
The theory of disruption is one reason Apple’s success with iPhone has been so surprising to so many commentators. Surely, those competitor phones that are inferior but cheap will one day soon undermine Apple’s obscenely profitable business. Right?
Benedict Evans isn’t so sure. His post yesterday proposes that the opposite may in fact be true:
You can see this basic story over and over again in the history of the technology industry. The future always comes looking like a toy. But right now the tech industry is being reset by the mobile, and in mobile, disruption tends to work the other way around. The new thing tends to arrive looking like an expensive luxury for rich people, doing far more than any normal person would need. But over time it gets cheaper, and the new, unnecessary characteristics turn out to be very necessary, and the the old, cheaper, less capable model gets squashed.
That is, in tech the cheap weak product generally gets better quicker than the good expensive product gets cheaper. But in mobile, the good expensive product has generally got cheaper faster than the cheap, weak product got good. Moore’s Law is operating in both cases, but the effects are different.
If you’re as fascinated by business and strategy as I am, the entire post is well worth your time.