Disruptive technologies are technological innovations which, as their name suggests, disrupt the status quo. They may displace existing technology, or introduce an entirely novel concept to society. The digital camera and the telephone are two examples of disruptive technologies. Developing and marketing such technologies requires skill and some financial backings, as consumers may initially be wary of such technologies before adopting them and generating income for the companies and people who developed them. It is not uncommon for companies to experience a brief fall in fortunes after the initial introduction of a disruptive technology. The concept of disruptive technology was coined by Clayton M. Christensen in the 1995 book The Innovator's Dilemma. Such technologies surprise the market by generating a substantial improvement over existing technology, and this can be accomplished in a variety of ways. A disruptive technology may be cheaper than an existing technology, for example, or more basic in nature, attracting more potential users. When disruptive technologies expand the market by providing low cost, they are known as low-market disruptive technologies, while new-market technologies are entirely new innovations which replace existing ones. They may displace existing technology, or introduce an entirely novel concept to society. The digital camera and the telephone are two examples of disruptive technologies. Developing and marketing such technologies requires skill and some financial backings, as consumers may initially be wary of such technologies before adopting them and generating income for the companies and people who developed them. Sustaining vs. Disruptive Innovation
The central theory of Christensen’s work is the dichotomy of sustaining and disruptive innovation. A sustaining innovation hardly results in the downfall of established companies because it improves the performance of existing products along the dimensions that mainstream customers value. Disruptive innovation, on the other hand, will often have characteristics that traditional customer segments may not want, at least initially. Such innovations will appear as cheaper, simpler and even with inferior quality if compared to existing products, but some marginal or new segment will value it. The disk drive industry
The first disk drive was developed in IBM’s San Jose research laboratories, around 1954. It was as large as a refrigerator and it could store 5 megabytes of data. By 1976 $1 billion worth of disk drives was being produced annually, divided between integrated producers (IBM, Control Data, Univac, and others) and OEM producers (Nixdorf, Wang, Prime, and others). By 1996 the disk drive market was worth $18 billions, but out of the many companies that were operating in 1976 only IBM was still in the market. About 129 firms entered the market during that period, and 109 of them ceased to exist. Most of the technological discontinuities that emerged in the industry were sustaining innovations. For example in the 1970’s the oxide disks started to reach a physical limit (in terms of bytes of information contained), forcing the leading companies to develop an alternative. IBM, Control Data and other incumbents invested more than $50 million developing thin-film coatings, and virtually all of the established firms managed to keep their position in the face of such sustaining innovation. In contrast, there have been very few disruptive innovations over the same period, but those were responsible for the downfall of established firms. As Christensen highlights the most important disruptive technologies were the architectural innovations that shrunk the size of the drives, from 14-inch diameter disks to 8’, 5.25’ and 3.5’, and then from 2.5’ to 1.8’. The passage from 14-inch to 8-inch disks
The 14-inch disk drives were produced to supply mainframes, and the two parameters mainframe producers...