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Chapter 2
The Technology LifecycleINFS 780
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The evolution of technologies
• Early technologies are uncertain and risky
• No standards• Performance is unknown• People accused of “dreaming”
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The Technical Product Lifecycle
• 5 Stages•Introduction•Growth•Maturity•Decline•Withdrawal
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The Lifecycle
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Example: Telephones• Bell invented the
phone in 1876• Built on the telegraph
by Morse• Trying to solve
deafness
• Rapid growth• By 1882, 240,000
phones in AT&T network
• Many competitors
http://www.privateline.com/TelephoneHistory2A/Telehistory2A.htm
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Introduction
• The new technology is emerging• No Best Practices
• Each firm offered competing phone standards
• Companies experiment• Some technologies fail
• Large competitive advantages available for successful firms• AT&T consolidated and enhanced service
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Proprietary vs. Infrastructural Advantage
• Proprietary: One firm can “own” or control the technology• Bell was successful in defending his
patent and driving many competitors out
• Infrastructural: Offer advantages when shared• The phone network quickly became
part of the infrastructure.
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Proprietary Attempts
• The Selden Patent• Patented the “Road
Engine (car) in 1879
http://www.bpmlegal.com/wselden.html
Wright Bros. patented Wing Warping to control flight
Glen Curtis used ailerons and overcame it
http://www.centennialofflight.gov/essay/Wright_Bros/Patent_Battles/WR12.htm
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Introduction Issues• Level of Change determines risk
− High level of change means lots of risk
• Early IT systems were very risky as they involved massive structural change in the firm.
− How much risk did early retailers such as Macys undertake when moving to a position where they owned all inventory?
• Highly innovative technology is very risky – WHY?
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Life Cycle Curves Vs. Risk
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Examples
• Why did Armour Meatpacking flourish?• Was this risky?
Why?• How did this
innovation change business?
http://www.trainweb.org/railpix/misc2.html
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More examples• How did the telegraph impact
business?• Communications became easy!• First firms to use had a huge advantage• Railroads were
revolutionized
http://www.2020site.org/telegraphy/invention.htm
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Early electric generationNiagara Falls – lots of power, no way to distribute it to Buffalo, NY
Thomas Edison believed Direct Current (DC) was best to deliver power – but it could only go a short distance (1 mile)
NOTE: See PBS at http://www.pbs.org/tesla/index.html for a wonderful overview of Telsa and these events. All materials on this subject are from this site.
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Nikola Tesla developed Alternating Current which he believed could be distributed over great distances. He also developed the AC motor
George Westinghouse was convinced Telsa was right and committed $$$ to building and distributing power to Buffalo, NY
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I remember Tom [Edison] telling them that direct current was like a river flowing peacefully to the sea, while alternating current was like a torrent rushing violently over a precipice. Imagine that! Why they even had a professor named Harold Brown who went around talking to audiences... and electrocuting dogs and old horses right on stage, to show how dangerous alternating current was. George Westinghouse
It was a fierce struggle , but eventually, Westinghouse and Telsa won and in 1896 Buffalo was electrified.
This set the standard for electricity distribution to this day
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Telegraph
• Imagine being a sales rep in 1850• Orders taken take months to get to plant
and be delivered• Errors cannot be corrected
• With telegraph, I can instantly enter my order, catch errors• Allowed development of modern retail with
Sears, Penney’s, etc.
• Telegraph rapidly becomes an infrastructure
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Infrastructure
• As a technology reaches infrastructure point:• All firms need it to compete • Simply having it does NOT give an
advantage• The infrastructure forms the base for
any business – but yields no competitive advantage
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Life Cycle: Growth
• Market now recognizes the technology• Risk is reduced as firms can avoid the
known failure points
• Still, little knowledge generally available on the use of technology• Can build small competitive advantage
• Costs stabilize & even decline
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Growth issues
• Market takes off• High adoption rates
• AT&T in the 20’s – 50’s
• Technology can move toward infrastructure vs proprietary
• Knowledge is rapidly disseminated among users
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Life Cycle: Maturity
• Technology moves into the commodity area.• AT&T in the 70’s – 90’s
• Products are well understood & copied
• “Secrets” are unveiled• competitive advantage is unlikely
• Costs begin to drop rapidly
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Example
• Try to open a business today without a phone or electricity• You must have these expenses, but
there is no competitive advantage to your firm as a result
• Obviously, you do not want to invest more to provide these services than you have to!
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Life Cycle: Decline
• Technology is total commodity•AT&T today
• Seek to re-define the system• No new investment• Seek to harvest
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Life Cycle: Withdrawal
• Product is dropped• Think of slide rules!