IT Conversations - Capturing the Upside

April 20, 2005 23:00 by keithkaragan
programs range from general technology topics, to software, to math, science, and marketing. Most of the programs are recorded from technology conferences, although some (Larry's Place and Moira Gunn's Tech Nation interviews) are studio or phone interview formats ranging from 30 minutes to 1-2 hours. Their stuff is also available as a podcast.
One of the programs that I listened to today was especially good - 'Capturing the Upside' by Clay Christensen. Clay talks at length (for nearly 2 hrs.) about technology business models, innovation, commoditization, modularization, and markets focusing on the important observations and trends he's seen over his career. What stuck out for me was the gluing together of core business beliefs that I have always innately had in regard to being in the emerging technology marketplace, and how this positioning is valuable in keeping my upside up (as well as keeping life interesting).
It's always amazed me when I worked with or talked in depth with people that looked at commoditization as a good thing (I had a business associate that staunchly insisted that this was a good thing - although I don't see any evidence of this in his business). Even in examining the language - commoditization has the connotation of lower value, it's generally not a complimentary thing. Mr. Christensen returns to the theme of technology advances out pacing the need of the user, and this marking the beginning of the commodity relationship - and it makes sense, these technologies had higher value to the users before that point as they represented a leap in technology that they needed for one reason or another which resulted in higher margins for the product - even if the product was imperfect in it's form (the users will still want it because there is nothing else to take it's place).
He expands this notion into the free and open source software (OSS) domain. And although this technology doesn't seem to offer any particular technological leap over their proprietary counterparts, he contends that the strength of this class of products lay with their ability to be the modular structures that are freely adaptable to the products built upon them. Again this makes good sense, and can be witnessed in the heavy use of Linux in the embedded computing markets - it's not the price of the software that is most attractive, it's the flexibility it offers the innovator building on top of it. This seems really obvious, and I've noticed the trend of embedded systems using OSS but had attributed this mostly to licensing costs - but I really missed the boat by not seeing the forest for the trees - “it's the platform stupid!”.
This is making me reconsider my thinking about Apple. I've been pretty convinced that Apple will see Huge gains in mindshare as cell processors become cheap and available in the marketplace, and that they would (or should) open their licensing and distribution to other vendors in order to capitalize on the market that will emerge for these technologies. I still think they should do that, and think that it's quite possible ... However, if they do this in a closed and proprietary manner this could be a huge mistake, as the innovators will 'need' to have a malleable platform that they can tweak to fit their solutions. Darwin is an OS that Apple has available as OSS, but without the slick Aqua/Cocoa/Carbon layer on top that gives a mac it's mac-ness will it have the same appeal - or will a Linux variant fill the void, leaving Apple to only to gain market share in the desktop and server space, missing the embedded market that will undoubtedly emerge in the cell processor world?
I like it when I find out I was wrong, and learn something in the process.
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