WAWC Workshop 4.8.2005

How to evaluate the disruptiveness potential of

new wireless technologies –

perspectives of ICT industry players

Liisa-Maija Sainio, Senior Lecturer

Themes of the presentation

1. Background & goal of the study

2. Propositional framework & concepts

3. Methodology

4. Propositional analysis

5. Conclusions

Background

- Doctoral dissertation project; 4 cases:

1) Bluetooth – national operator

2) WLAN – local operator A

3) Grid computing – software company

4) Mobile Peer-to-peer paradigm – comparison between device manufacturer and local operator B

Goal of the study

- How do firms interpret potentially disruptive technologies or operating models in their own strategic context

- Themes of the framework:

PR 1) Product characteristics and added value

PR 2) Technology and market uncertainty

PR 3) Changes in product-market positions

PR 4) Competence destruction

PR 5) Changes in value network positions

Amount of radical changes in business model?

Propositional framework

Disruptivenesspotential of anew technology

Strategicimportanceof a new technology

Changesin business model-Customer benefits-Core strategy-Resources-Value network

Features of

a disruptive

technology

PR 1

PR 2

PR 3

PR 4

PR 5

PR 6

Disruptivenesspotential of anew technology

Strategicimportanceof a new technology

Changesin business model-Customer benefits-Core strategy-Resources-Value network

Features of

a disruptive

technology

PR 1

PR 2

PR 3

PR 4

PR 5

PR 6

Concepts

Disruptive technology: (vs. technical operating model)

- Different value proposition

- Rapid improvements in performance; ultimately meets the needs of mainstream markets

- Destroys the competences of existing industry players

Business model: Unique combination of activities, resources and strategies with which the company delivers value to customers and captures profit from the market.

Methodology

- Combination of technology forecasting and strategic analysis

- Firm-level qualitative analysis and cross-case analysis (how did the framework function?)

- group discussions with ICT industry experts- Why group discussions?

- Efficient way of gathering rich data- Quick feedback (evaluation & control)

EXPERTISE IN TECHNOLOGY AND ECONOMICS

www.lut.fi

Wiredconnection

Wireless, ad hocconnection

GRID COMPUTING: dynamic,virtual resource allocation

(storage, calculations)

BLUETOOTH:Personal Area Networking

~10 m

WLAN:wireless access in public

spaces ~100 m

MOBILE P2P PARADIGM:decentralized operating

model

Computing power:product service

Low-cost networkaccess, 3 G?

Low-cost cable replacement, hot spotservices

Vs. centralized client-server models

INVESTIGATED CASE TECHNOLOGIES:

Technology Proposition

Bluetooth /National operator

WLAN / Local operator A

Grid computing / Software company

Peer-to-peer paradigm /device manufacturer

Peer-to-peer paradigm / Local operator B

1: If the technology enables changes in product characteristics and added value, it is potentially disruptive.

Confirmed. - Convenience - Changes application-specific

Confirmed. - Mobility, flexibility - Added value especially strong in mobile devices - No behavioural changes, except in recognizing security risks

Confirmed. - Same functions with a different operating mode - Intelligence to shared servers - Increases performance criteria - Knowledge needed to gain trust

Confirmed. - Interesting new features (e.g., gaming), but difficult to determine their significance in markets

Partly confirmed. - Low-cost/free services for different types of communities - Competitive advantage not always clear compared with centralized approach

2: If the amount of uncertainty relating to markets and technology is high, the technology is potentially disruptive.

Confirmed. (excl. cable replacement where there is low uncertainty) - Service application market more uncertain

Confirmed. - Unreliability, natural disturbances, problems with security - wireless networks vs. 3G?

Not confirmed. - Technological uncertainty not high (esp. company-internal systems, clear benefits) - Market uncertainty high: Consumer market more uncertain

Not confirmed. - Technological uncertainty low: already established technologies, but lack of standardized approach and problems with security - Market uncertainty high: how to provide expected low-cost services, fragmentation of P2P solutions

3: If the technology enables or drives changes in product-market positions, it is potentially disruptive and of strategic importance to the firm.

Partly confirmed. - Better usability of existing applications - Effect on mission complementary - Customer trust a benefit in service market

Not confirmed. - Strong link to mission, but complementary, “something extra” - Needs the support of cable network

Confirmed. - Fit with current mission - As demand for data security grows, creates more business - Risk: commoditization of security solutions? moving to niche markets

Partly confirmed. - No effect on mission - Certain changes in product concept, scale? - Smartphones with p2p gaming as a market test

Confirmed. - Certain threat to mission; some cannibalization of SMS market, problems with service quality - Hard to create profitable service concepts (local usage, low volumes)

Technology Proposition

Bluetooth /National operator

WLAN / Local operator A

Grid computing / Software company

Peer-to-peer paradigm /device manufacturer

Peer-to-peer paradigm / Local operator B

4: If the technology is competence destroying, it is potentially disruptive and of strategic importance to the firm.

Not confirmed. - Logical continuation of current competences (service management, technological know-how and their integration)

Not confirmed. - Logical continuation of current competences (technical know-how & data security) - Risk: used to highly reliable systems attitude limitation?

Not confirmed. - Enhancement of current competences (distributed systems, CRM, wireless PKI)

Not confirmed. - No signs of competence disruption (competences: user interface, design, branding)

Partly confirmed. - Strong competence in voice & data traffic in different networks - If p2p reflects paradigm change, then disruption might occur

5: If the technology drives or enables changes in the positions of players in the value network, it is of strategic importance to the firm.

Not confirmed. - General development of mutual co-dependence, role of Bluetooth minor - Role of device manufacturers

Partly confirmed. - Electricity companies as potential new players. - WLAN to mobile phones what will happen?

Confirmed. - May increase dependency (more actors & partners) - Fragmentation of activities? - Role of operator controversial

Partly confirmed. - Changes in operators’ positions expected

Confirmed. - Growing role & bargaining power of customers! - Changes in device manufacturer’s role (?)

Different dimensions of disruptiveness:

• Improvements in performance criteria (Bluetooth)• Not taken seriously in its initial stages (”WLAN is

a bit of joke technology”)• May change pricing structures (P2P)• May change the product concept and distribution

model (Grid computing)• New functions to existing applications

Conclusions

- Results not generalizable!- The value in the process itself; providing a holistic

perspective on a new technology- Cross-case analysis result: Proposition 4 possibly not

reliable! - Contradiction between changes in product characteristics

and uncertainty vs. strategic response! Knowledge structures enforce the belief in current

competences Sign of vulnerability in the face of potentially disruptive

technologies