3. The fight for the living room!
In the previous post of this series I said that abundance (that has created the paradigm shift from technology push to market pull) comes in two flavour and I started to explain the first one, the existence of alternative technologies that can serve very similar purposes, ie. that can be used to create an innovation on the market, like in the case of television displays the plasma, LCD, and labs technologies like OLED, SED, NED, QD….
I have also shown that it requires a much better technology to displace the one already in the market. In the case of television screens we have seen LCD taking the upper hand with the fading away of the plasma and the defeat of SED. OLED are now appearing on the market hitting a niche, the one of people willing to spend much more to get something fancy that is marketed as a really better experience although it is difficult, for most people, to really tell the difference. Strange as it might seem (but it happens in many market segments) it is the higher price that makes a product successful in this niche, because it is perceived as “exclusive”!
A niche, like this, may remain forever a niche, like the proposition of an exclusive secluded island where few rich people can vacation, or it can grow to the point of becoming a mass market proposition. In general you make more money by selling to the mass market, because the volume increase produces more gains than the margine decrease, but in some cases, like the one of a secluded island the shift to the mass market is not an option. An island can accomodate only as many people!
In the case of technology it is different: as production effectiveness increases, a company can keep a good margine even if the price decreases. By decreasing the price, of course, you can address a broader audience but at that point you also need to re-tune your marketing proposition.
This is what is being done, will be done for OLED. First the marked addressed was the luxury, exclusive market, where a higher price was not a deterrent factor, and quite the contrary price was reinforcing the exclusivity appeal. Then, as production cost lowers that niche is being used as a comet, to drag along new customers still enticing them with an exclusivity that is now becoming “affordable”. In a longer term (which in case of electronics means 2-3 years) the production cost will decrease so much and the adoption will increase so rapidly that it will no longer be a niche proposition but a mass market proposition.
At the same time marketeers will go after the original niche with a new exclusive (costly) proposition that I guess will start exploiting NED for the 8K video standard (where not only the increase in colour fidelity will be missed by most, as it is now the case with the shift from LCD/LED to OLED, but also the increase in resolution from 4k to 8k will be undetectable in most situations unless you are prepared to have a 120” screen in your living room).
There are clearly plenty of other examples in competing, alternative, technologies and observing the marketing strategies and their failure success is a good lesson on how innovation is pursued. In the end we see that today, and likely for this decade, market is leading both in the success and failure and, more important, in the steering of evolution and industrial research.
Changing Paradigm – III
3. The fight for the living room!