One of my opening questions when I meet a new tech start-up or a business I’ve not come across before is ‘why do you think you will succeed in the market?’ Over time my experience is that there has been a growing distinction between businesses that see themselves as tech and those that see themselves as digital media, even when the businesses look almost identical to an outsider.
My observation this year is that ‘tech’ companies are becoming more confident and there is a growing ‘geek is chic’ theme in the UK. Nearly all the companies I’ve asked that to in the last year have put ‘better/best/unique technology’ in the answer to my question. In contrast ‘media’ companies tend to stress user experience or business model.
In the days of mainframes, all the other suppliers would bemoan IBM’s dominance and claim technical superiority for their own operating systems. Honeywell’s GCOS was known affectionately as God’s Chosen Operating System. I remember friends at Digital who asked why people wanted to play with a toy operating system like Unix when they could have VAX-VMS.
In software, advocates for Ingres over Oracle were passionate about their choice.
Friends and family in the Apple camp, especially in my time at Microsoft, would complain over Microsoft’s dominance when the MAC was ‘clearly superior’.
I can remember the first time I saw OS/2. It felt to me so clearly better than MS-DOS. Surely, it was bound to win in the end?
What these examples illustrate for me is that technological superiority, while helpful, is not a guarantee of market success. In particular, once a market has become dominated by one or a few suppliers, it is hard to overtake an incumbent by a ‘better tech’ route.
The availability of skills, number of apps, brand recognition are just some of the factors that have to be overcome. Importantly, the business model of the dominant player has a powerful pull.
There are very few examples where a dominant player has been overthrown by someone adopting the dominant business model in combination with ‘superior technology’.
In 2005 I spoke at a conference where I was told that around about now in 2013 Desktop Linux would overtake Windows because of the combination of better technology and a more flexible business model.
I still talk to companies whose business cases are based on freemium models with 30-50 per cent conversion rates, when the market seems to have settled in single figures.
So neither superior technology nor the business model can be evidenced as proof of likely success, for me.
My interest here is that with the rise of mobile technologies and the tablet form, where is the next shift coming from?
As an iPAD user, there are frustrations I find with it. I confess that the Microsoft Surface 2 has some advantages, but at the moment it feels like an OS/2 play.
My suspicion is that the next really disruptive shift will come with the undermining of the iTunes/Appstore model. The sharing of revenues and terms of service have become the dominant way of doing business. Separating content apps from service apps, that is to say media and tech offerings, looks a real possibility. The rise of native HTML5 apps interests me as a trend.
But there is one dominant model that seems ripe for change. I’m getting increasingly frustrated by the browser model. Life’s too short to deal with the plugins and incompatibilities and overheads.
So here’s the challenge. Is the browser model the equivalent of the QWERTY keyboard? There are superior options but it still dominates, with the virtual keyboards on tablets mimicking QWERTY.
Or is there a young entrepreneur out there who can see a way of rethinking usability in this space? It was the combination of the WWW and the first browsers that led to the take-off of the public internet.
Looking at the examples earlier in this piece, once the dominant model is set in place the significant innovations come from the fringe or unexpected places. I used to comment that if we wanted a really useful email system we should get Fisher-Price to design it.
I’m increasingly of the opinion that the next five years will be more disruptive than the dominant players of today will admit to or like. It’s going to be interesting to spot where the game changers will come from.
