Monday, October 25, 2010

Apple, Handhelds, and Disruption in Markets

Every time I see an advertisement for a touch phone, smart phone, or whatever you call them, I can only think of how Apple created this working technological system and the market. Really they are touch-screen handheld computers, but they come marketed like phones, so we call them phones and think of them like phones--computers had modems built in, at one point, and we could actually make phone calls on them, but no one ever referred to a computer as a phone.

I don't want to say "the market for these devices wouldn't have existed without Apple," since that's not true, the market did exist before Apple made the iPhone, and that's why the iPhone immediately sold so well. However it is true that these smart phone, or touch-screen handhelds (TSH is not a good acronym, though), would not exist today without some company having made the move first and having a positive market response, and in this case, such an overwhelmingly positive response that every other phone player wants in on the game.

And that's why we have to think about disruptive technologies.

I am not, by far, the first to point this out. The radio powers in some decade in the past sat on the newer, better, FM technology since their entire empire was built on AM radio, and their manufacturing process didn't make radios that could tune to FM signals, and none of the radios out there could tune to FM. Eventually they rolled it out. I have read how companies fear new technologies, since it is risky, changing what you are doing is risky, and people fear losing their jobs if the company shifts to something new.

Thus, Apple. Not a player in the phone market. No one at Apple stood to lose much if the iPhone wasn't a hit. But they also had experience with the iPod, the iPod as part of the larger iTunes system, and they could learn from their earlier Newton, from Palm, and from RIM's Blackberry. And given than the iPhone is really a computer, Apple had experience in that market.

None of the established phone makers would have made an iPhone knock-off, like they all do now, it was simply too risky. They didn't have the experience, they were locked into thinking about cell phones and not touch-screen hand helds, and they didn't have an existing infrastructure into which they could connect the device (iTunes). It is possible that individuals or teams at the more innovative cell phone companies tried to push an iPhone-like idea, but it wasn't until Apple blew the cell market open did anyone else make one. And of course it isn't actually the cell market, it's something new that people took a while to figure out, just like the iPad.