Antiquated Thinking About The Tech Industry

on February 23, 2015

A few weeks ago, Ben Thompson hit the nail on the head with this tweet:

Screen Shot 2015-02-22 at 8.55.58 PM

When we look at commentary by so many in the industry, what Ben’s tweet highlights, and perhaps the best way to understand the issue, is many are hindered by antiquated thinking about the technology industry. What they learned, observed, studied, and lived in the industry of the past is largely outdated.

As many of the modern critiques of things like Disruption Theory and Adoption Theory have shown, the industry has changed and changed fast. Many business theories, once the fundamental foundation for thinking about the technology industry, were created in an era very different from the one we live in today. It is also this outdated thinking that is the root of most bad analysis of Apple. While some of the fundamentals of theories of old remain helpful, the takeaways and modern applications of them are not as black and white as most believe.

Uncharted Waters

Last year I articulate in this article how the tech industry history is being made, not repeated. This fundamental understanding is the root of why we have to take theories and observations from the 30 year tech industry past with a grain of salt when looking to implement them universally today. Sometimes they apply and sometimes, they don’t. But too many believe these are universal applications to the market today and it is simply not true. In that post I stated:

Billions and billions of people have leapfrogged the PC and jumped straight to a computer in their pocket. They have no concept of what it was like to grow up with a PC or even in a PC saturated region. They didn’t have PCs in their school to learn computer literacy, they haven’t had to deal with the Microsoft Windows monopoly, they never dealt with corporate IT bureaucracies. In the very near future, the number of people in the market who had nearly zero contribution to tech industry history will dwarf the number that did. So how can we, with any degree of intellectual honesty, claim so boldly we know how this will play out?

In a similar line of thinking, Ben Thompson takes the time to elaborate more on this tweet in a recent episode of his podcast Exponent.Fm. In this discussion, he outlines how some of the lessons we learned with Microsoft’s dominance may not represent a universal trend or truth. There is a great deal of modular vs. integrated business model philosophy to unpack but understanding these dynamics is central. Understanding what has changed is key to our framework moving forward.

In the podcast, Ben makes the excellent point that was has changed was a premium in the market placed on user experience. When IBM/Microsoft “won” in the last era, it was largely due to IT buyers being the customers for PCs. This customer places a premium on cost, not experience. So, once the customer base shifted from corporate IT buyers, who favored cost, to true consumers, who favored experience, the basis of competition changed. Once the basis of competition changes, so do the dynamics in the market. This is what we are observing today many miss. While we can explain this in terms of user experience, the deeper observation of what has changed is the emergence of a pure consumer market.

This is the root of my point that tech industry history is being made. We have 30 years of history focused on a business customer and only 10 years or so of tech industry history selling to pure consumers. And even fewer years of history when we think about how long the tech industry has been able to sell a PC in the shape of a smartphone to almost every person on the planet. As we add as many brand new internet users over the next five years as we did in the past 30, we may very well realize none of the lessons learned in the past 30 years apply any longer.