 Midsize IT budgets continue strong growth E-mail and content retention strategies How to spend less and get more out of security Curbing complexity in your IT infrastructure Solution Showcase gives vendors opportunity to talk shop with midmarket  Current Issue September 27, 2007 Midmarket IT continues strong growth September 18, 2007 SAP previews new midmarket solution September 17, 2007 HP outlines midmarket commitment June 05, 2007 CIOs as agents of change May 15, 2007 IT as a line of business May 14, 2007 Rebels Versus Empires September 20, 2006 The power of IT in the midmarket September 19, 2006 It's great to be midmarket September 17, 2006 Addressing mid-market IT needs April 11, 2006 Peer-to-peer networking |
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The world of technology is no stranger to the business cycle of change, to what economist Joseph Schumpeter termed, in 1942, the cycle of "creative destruction" - which is "the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." In the information technology sector, over the past three or four decades, there have been any number of iterations of pattern in which a new product category or sector emerges, one that represents a technological discontinuity with previous mainstream category. This sector goes through a cycle of rapid growth, an upward trajectory that is fueled by revenue flowing out of the previous generations. The old sector stagnates and is disrupted, while the new sector sees a proliferation of companies, startup ventures that cannot be sustained in an overpopulated sector. Inevitably, the new sector matures, and the crop of startups is harvested through acquisitions and consolidation, or plowed under through business dissolution. Some examples of this emergence, growth and consolidation can be seen in the following categories: application servers in the late 1990s, ESBs in the early 2000s, and portals from 1997 to the present. This cycle occurs in both large and small categories: minicomputers challenging mainframe dominance, themselves challenged by desktop PCs, and PCs now challenged by server-based Web applications. More recently, there seem to be some trends that suggest that there is something different going on, a different kind of dynamic, one which is part of a set of patterns that Gartner calls "Rebels versus Empires." There is a well-known pattern of evolution in business, one in which a new sector or market evolves in stages. In the emergent stage, there is a new idea or technology that catches fire, leading to the entrance of dozens or even hundreds of would-be players into this arena. These entrants are small companies who are not invested in the established order. Often there is the first mover, the first company to see and take advantage of a discontinuity or innovation in technology or business model. The first mover gains uncontested market territory, called by one business writer as the "blue ocean." This is in contrast to the "red ocean," a metaphor that describes the fiercely contested market space of an established category, in which competitors turn the water red fighting over incremental slivers of market share. Competitors in the older, established category are focused on one type of engagement and often do not see the new opportunity. The established order consists of the previous generation of technology, which is now the territory of large established companies, players who are less agile and respond slowly to changes in market or technology. In the new sector, the field of entrants is diverse, because the opportunity in the early stages is hazy and not well understood. Each competitor will use different techniques and technologies to address this, and there will be no consensus among users about product feature set. As the market evolves, the feature set becomes more precisely delineated, and the diversity of technology approaches is filtered by market mechanisms, two approaches that are mirror images of each other (for example, the .NET vs. Java stacks). Discontinuous change occurs when a competitor, usually a new entrant, takes advantage of new technology or business approach (distribution channel, for example). Sustainable competitive advantage usually arises not just from one attribute or innovation, but from a combination of linked attributes, each one of which is substantially different than the mix favored by established players.
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