by Sean Keyes
Posted 16th December 2016
You know Intel. It’s is the giant microchip maker that ruled the technology industry for most of the last 50 years. It came up with Moore’s Law, and it’s the reason Silicon Valley is located where it is.
But you might have noticed, you don’t hear as much from Intel as before. The Intel jingle was all over TV about ten years ago. And Intel Inside stickers were plastered all over our computers and gadgets.
The reason you don’t hear as much from Intel is that the world moved on without it. In combination with Microsoft, Intel dominated the desktop PC business. But then smartphones came along.
Intel missed out on smartphones.
Life comes at you fast
Apple went with a tiny startup based in Cambridge called ARM. ARM was completely unheard of in 2007, but since the Apple deal its become one of the hottest companies in technology. It was bought by the Japanese company Softbank for £24bn earlier this year.
ARM didn’t have a big workforce or even a factory. But it did have an idea. It came up with an efficient new computer chip design, and licensed that design to other companies. The likes of Apple and Qualcomm then manufacture the chips based on ARM’s design.
When Intel missed out on the iPhone it was focused on the desktop PC market. That meant it prioritised speed over power consumption in its microprocessors.
It’s a different story on a smartphones though. On a smartphone the processor has to be small and efficient, as well as fast. Intel was focused on its current customers.
The famous business theorist Clay Christensen says this can be a fatal mistake:
“The reason [for why great companies failed] is that good management itself was the root cause. Managers played the game the way it’s supposed to be played. The very decision-making and resource allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening to customers; tracking competitors actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit.
These are the reasons why great firms stumbled or failed when confronted with disruptive technology change.
Successful companies want their resources to be focused on activities that address customers’ needs, that promise higher profits, that are technologically feasible, and that help them play in substantial markets.
Yet, to expect the processes that accomplish those things also to do something like nurturing disruptive technologies – to focus resources on proposals that customers reject, that offer lower profit, that underperform existing technologies and can only be sold in insignificant markets– is akin to flapping one’s arms with wings strapped to them in an attempt to fly. Such expectations involve fighting some fundamental tendencies about the way successful organizations work and about how their performance is evaluated.”
What he’s saying is that different companies have different personalities. Market leaders are good their own thing. But they’re not good tearing up the script and trying something totally different.
According to Christensen, that means incumbent companies are vulnerable to “disruption” from small, innovative companies. Specifically, he says that small companies tend to disrupt industries by targeting customers at the bottom of the market.
The pattern repeats all the time. Big companies get complacent, and small companies eat their lunch. It happens a lot in the technology industry, where things move quickly. And plenty of the disruptors are based here in the UK.
I’ve put together a plan to help you profit from the next wave of UK disruptors.
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