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Technology S-Curve

Technology S-Curve. Outlines. Abstract The usefulness of technology S-curve at the industry level The limitation of S-curve at the individual firms level Summary More discussions. What is “S-Curve”?. The uses of S-curve at the industry level :

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Technology S-Curve

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  1. Technology S-Curve

  2. Outlines • Abstract • The usefulness of technology S-curve at the industry level • The limitation of S-curve at the individual firms level • Summary • More discussions

  3. What is “S-Curve”? • The uses of S-curve at the industry level : • The description of the magnitude of improvement • The prescriptive S-Curve theory • Product performance results from: • Component technology • Architectural design S-curve can provide convincing explanations of why alternative technologies have made substantial inroads against currently dominant technology?

  4. The Position on S-curve Corresponding to BCG Market Share HIGH LOW Product performance Growth ? ? Time or engineering effort LOW

  5. The Limitation of S-Curve • From the point of view of a manger within a single firm, could the S-curve be the prescriptive tool for new component technology development? (at the individual firm level) • The observed maturation of a technology maybe the result, rather than the cause, of the launch of an alternative development program. • Nobody knows what the natural, physical performance limit is in complex engineered products. • The flattening of S-curve is a firm-specific, rather than uniform industry, phenomenon. • Extending the conventional technology S-curve, rather than switching S-curves? • By improving the architectural system • By applying effort to less mature element of the system

  6. Magnetic Rigid Disk Drives • Hard Disk industry : • During 1970~1989, the improvement was steady, averaging 34% per year • With time as the horizontal metric, no S curve pattern of progress is yet apparent. • Measure total industry revenue as a proxy for engineering effort

  7. Using S-Curve to Prescribe Development of New Component Technologies • The risk to switching to a new S-curve. • Cost more and take much longer time • When to manage the switch from one component technology to another? • Engineers sensed they were approaching the physical limit of ferrite cores before 1970. • With a process used in integrated circuit manufacturing, thin-film photolithography, they can create much smaller, more precise electromagnets on the head.

  8. Two S-curves for Ferrite-Oxide Technologies at Fujitsu and CDC • The areal density was pushed to about triple the level at which seems initially to have planned to abandon technology. • Is 30 mbpsi Fujitsu reached in 1987 the “real” natural limit of ferrite heads and oxide disk? The observed maturation of a technology maybe the result, rather than the cause, of the launch of an alternative development program.

  9. Points at which Thin-Film Technology was Adopted by Leading Manufacturers, Relative to the Capabilities of Ferrite-Oxide Technology at the Time of the Switch

  10. Points at which Thin-Film Technology was Adopted by Leading Manufacturers, Relative to the Capabilities of Ferrite-Oxide Technology at the Time of the Switch • Only 5 of the 15 firms shown actually leapt above the convention technology. • Conventional technology progressed far further than anyone expected. • Different competitors switched S-curves at different points. • Little evidence show that companies switched S-curve early enjoyed attacker’s advantages.

  11. Relationship between Order of Adoption Thin-Film Technology and Areal Density of Highest Performance 1989 Model There is no correlation between order of adoption and rank order of density Entrants enjoy no attackers advantage.

  12. IBM & HP

  13. Relationship between Order of Adoption Thin-Film Technology and Areal Density of Highest Performance 1989 Model • Entrants enjoy no attackers advantage. • No systematic differences exist in how firms respond to potential maturity in component technology. (EXHIBT 8) • IBM, switching to advanced component technology • HP, relying upon • Incremental improvement in established component technologies • Refinements in system design Switching to new S-curve is not the only option.

  14. S-curve of Architectural Innovation • Different from S-curve of component innovation • Architectural technologies indeed follow S-curve patterns! • Timely S-curve switching seems critical when confronting architectural technology change. • Not only technological dimensions but also market innovation.

  15. Comparing Prescriptive S-curve and S-curve of Architectural Innovation

  16. Comparing Prescriptive S-curve and S-curve of Architectural Innovation (con’t)

  17. Conclusions • The application of S-curve at a managerial level seems to be very ambiguous. • There is more than one way to skin the cat. • There was no clear evidence of any first mover benefits or “attackers’ advantage.” • Comparing with architectural technologies. 1. Switching to new component technology S-curve early results in no competitive advantage 2. Switching to architectural S-curve enjoys powerful first-mover advantage

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