1. Chapter 2 The Technology Lifecycle INFS 780

2. The evolution of technologies Early technologies are uncertain and risky No standards Performance is unknown People accused of “dreaming”

3. The Technical Product Lifecycle 5 Stages Introduction Growth Maturity Decline Withdrawal

4. The Lifecycle

5. 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

6. 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

7. 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.

8. 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

9. 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?

10. Life Cycle Curves Vs. Risk

11. Examples Why did Armour Meatpacking flourish? Was this risky? Why? How did this innovation change business? http://www.trainweb.org/railpix/misc2.html

12. 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

13. Early electric generation Niagara 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 overviewhttp://www.pbs.org/tesla/index.html of Telsa and these events. All materials on this subject are from this site.

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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!

22. Life Cycle: Decline Technology is total commodity AT&T today Seek to re-define the system No new investment Seek to harvest

23. Life Cycle: Withdrawal Product is dropped Think of slide rules!