How can we predict disruptions in technology to use innovative ideas for our

benefit?

Blockbuster

Top of the food chain:

- Had over 4000 stores nationwide at its peak

- Largest video rental chain in the nation

- Over 40 million U.S. members

Disrupted by small, innovative companies:

- Declared bankruptcy in 2010

- Now has less than 900 stores

Netflix

What was so different?

- Order movies by mail online

- Watch movies by streaming them online

- No trips to the store, no late fees, no hassle

Result:

- Over 23 million subscribers

- $1.5 billion in revenue last year

- Over 20% of internet data usage from 8-10 pm

What Can Blockbuster Teach Us?

- Blockbuster did not keep up with new trends

- They joined the online game far too late

If you don't innovate, you must be willing to follow.

Entertainment Industry

Entertainment Industry

Results:• Flat $5 cost that

went straight to Louis

• Grossed over 1.1 million

• No cut to label or channel

• Sold rights to HBO and FX for further profit

Music Industry

• Pay what you want system - “digital tip jar”

• Physical copies available to order

• No label costs

• Several times more successful than their previous album, millions of sales

• Sold-out concerts

State of the Music Industry

• Disrupted by the easy access to music o Improved distribution channelso Files are harder to charge for than physical copies

• Artists are starting to assist the process

• Labels are becoming obsolete

theOatmeal.com

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POTS

- POTS- Basic, low speed, analog telephone

service- No mobile capabilities- Reliable- Expensive

VoIP

- Voice over Internet Protocol- Digital calls over the internet

- No need for infrastructure- Additional functionality

- Caller ID, Voicemail, Three-way calling

- Portable- Lower costs- Bundled services

http://www.businessweek.com/stories/2008-11-03/who-killed-the-voip-revolution-businessweek-business-news-stock-market-and-financial-advice

Redefining

Skype

http://www.forbes.com/2010/05/21/internet-enterprise-communications-technology-skype.html

- Created in 2003

- Uses a VoIP network called Skype Protocol

- Peer-to-peer network model

- 37% of calls are business related

- Frequently free

Microsoft vs. GoogleApps

• Microsoft Modelo Software Saleso Complex, Feature-

Rich Applications

• Googleo Software as a Service

(SaaS)o Cheaper, more

Convenient, Simple Solution

o Meets the needs of the low end of the market. http://articles.businessinsider.com/2008-04-08/tech/30079357_1_microsoft-disruptive-technol

ogies-amazon-web-services#ixzz27P02qdk3

Microsoft

• http://www.youtube.com/watch?v=FvOrQDavzt4

Advantages of GoogleApps

• Price

• Anywhere/anytime access

• Real-time collaboration

• 99.9% uptime guarantee

• Minimal storage limits

• Platform independence

• SPAM and email security http://articles.businessinsider.com/2007-12-16/tech/30030761_1_

microsoft-customers-disruptive-technologies-google-threat#ixzz27OuO7RSJ

The Innovator’s Dilemma

The Innovator’s Dilemma by Clayton Christensen perfectly describes the phenomenon.

• New-market disruptive technology focuses on meeting demand for a breakthrough product.

• Low-end disruptive technology targets customers for whom cost is a primary concern.  

https://sites.google.com/site/b188sjsu/Home/ebusiness/disruptive-technologyhttp://en.wikipedia.org/wiki/Disruptive_innovation

Lessons Learned

• Change Happenso Never-Ending Process

• Fundamental Disruptions Happen o Forever Alters Successful Business Models

• Certain Products are “Irreplaceable” and are Resistant to Changeo Ex. Live Shows.

• Reconsider Preconceptionso (Piracy is proportional to sales)

Questions?

Conclusion: Innovation Happens, Don’t Get Left Behind