technology tales & tails stories of techno-evolution steve kiely chairman, cray, inc. september...
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Technology Tales & Tails
Stories of Techno-evolution
Steve KielyChairman, Cray, Inc.September 21, 2010
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Does the best answer always win?
VS.
VS.
VS.
…If not, how do we pick the right horse to ride?
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Technology Tails
T1 T2 T3 T4 T5 T6 T70
5
10
15
20
25
30
Product 1Product 2
Early life cycle
Late life cycle
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Life cycle: early phases
T1 T2 T3 T4 T5 T60
1
2
3
4
5
6
Unit Sales (M)
“Innovator’s Dilemma”
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“Innovator’s dilemma”: Clayton Christensen
• Technology evolution Disruptions!
• Disruptions occur at low-end price points▫High-priced product’s managers won’t react…
They’d lose margin!They don’t feel threatened!
▫Buyers moved by price for NEW USESIf milk cost a penny per gallon, we’d water our lawns
with it….
• Disrupt yourself before somebody else disrupts you!
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Paradigm shift: low-cost replacement
1980’s:Mainframe Model
1990’s:Distributed
Model
DISRUPTION!
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Tale: IBM vs. Intel & Microsoft
1982 2000
IBM IT PRODUCT
MARKET SHARE
INTEL & MICROSOFT IT PRODUCT MKT
SHARE
• IBM exited PC business in 2005• PC business dominated by Intel & Microsoft
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Tale of 1982: The Birth of The Industry Titans…
•IBM Funds Intel’s R&D for microprocessors▫Intel faced financial ruin from Japanese RAM
dumping
•IBM chooses Microsoft to supply the OS for IBM PC▫Microsoft had no meaningful business at that
time
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TALE: iPad vs. PC: Disruptive Technology?
iPad Paradigm PC Paradigm
• Simpler (touch vs. type)• Killer graphics• Task-focused
▫ Reading▫ Playing
• Lower cost
• Getting better▫ Smaller▫ Faster ▫ Cheaper▫ More portable
• KB/Mouse• Large Storage (HD)
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iPad and the Laptop, WSJ
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Tale: Low Cost Replacements, Round 2
Apple vs. Microsoft, Round 2 • Apple’s market value (stock) now exceeds Microsoft’s (!)
▫ Apple has attacked the low-price segment iPod, iPhone, iPad enjoy significant user simplicity advantage Microsoft has four failed entries in consumer segment
Zune, Windows phones don’t compete XBox: only hardware differentiation; uses software from game
industry
Intel vs. the world, Round 2• Intel has no answer for low cost hardware engines
▫ ARM, Snapdragon dominate smartphones, specialized devices like iPod and iPad
▫ DSP’s (Digital Signal Processors) dominate mobile devices – no Intel answer
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Life cycle: MID phases
T1 T2 T3 T4 T5 T60
1
2
3
4
5
6
Unit Sales (M)
“Crossing the Chasm”
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Crossing the Chasm: Geoffrey Moore
• Build the whole product▫Your product, plus…▫ The “Value Chain”
Hardware, software, network, distribution, service, etc. …
• Target early adopters▫Users who have NO CHOICE▫Users that DRIVE THE BUS
• As volumes peak, change your approach to the market▫ shift investment to the next big thing▫ change marketing (e.g., coupons vs. advertising)
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TALE: Apple vs. Android• Apple iPhone approach:
▫Premium priced within its category▫Proprietary product design, even for applications
Steve Jobs’ philosophy: design beauty via total control Side-effect: limited value chain (e.g., Flash Applications)
▫Exclusive network (AT&T only) - #2 behind Verizon• Google Android approach:
▫Supply the key element = the mobile OS▫Let the industry provide hardware platforms &
networks Result: lots of price points, hardware innovation &
competition, broad network adoption• 2010 Year-to-date: Android sales > iPhone sales• Market prediction: Android dominates by 2014
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SOME IMPLICATIONS for USERS…
• Pioneers have arrows in their chests….▫Be an early adopter when you have no other choice▫ If you’re an early adopter, realize if it’s for the thrills…
• Laggards walk a tightrope…▫There’s a lot to be said for the stability of maturity▫Laggards put themselves at a competitive disadvantage
• Mainstream Majorities seldom stick out in a crowd….▫“Nobody get’s fired for buying IBM”…▫…But does your business require a technology
advantage?
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Life cycle: Late Phases
T1 T2 T3 T4 T5 T60
1
2
3
4
5
6
Unit Sales (M)
“Technology in decline?”
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Cost Wars: Hard Drives vs. DRAMs
VS
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Tale: Hard Drives vs. DRAMs
•LESSON: Competition technology improvements!▫Consumer hard drives priced below $0.01 per
GB▫Consumer Flash RAM priced over $2.00 per GB
•LESSON: Competition technology differentiation!▫Hard drives – best capacity▫Flash RAM – best access times
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Beware the “Next Big Thing”…
OFFICE O
F THE F
UTURE BLADE SERVERS
CLIENT-SERVERCLOUD COMPUTING
VIRTUALIZATION
…Consultants don’t always get it right…
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Closing Thoughts…
•Don’t be the first to buy unless you see no choice (or you are a thrill-seeker)
•Don’t sell an old technology short while it’s still delivering
•Don’t make your organization a dinosaur by riding one
•Don’t forget to look for the WHOLE product
•Don’t forget to look for the shiny new toy at price points below the mainstream product’s
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Technology Tales & Tails
Stories of Techno-evolution
Steve KielyChairman, Cray, Inc.September 21, 2010