Is Flash memory a disruptive technology?

The main case study in the Innovators Dilemma was the computer hard drive market and how each successive wave of smaller hard drives was disruptive and ultimately destructive for the incumbent manufacturers.

Is it going to happen again with compact flash memory?

Compact flash memory is used by digital cameras, mobile phones and in USB memory sticks (they look like a stick of chewing gum) where hard drives are either too large or in most cases too fragile to be used.

Over time the amount of storage available on this flash memory has increased to the point where you can get 2G USB memory sticks and memory cards. The lifetime of the flash memory is also improving all the time.

I believe there at least two main selling points for flash memory

1. Robustness, compared to hard drives you can drop these cards and they will still work.
2. Ease of replacement for backup or additional storage.

Why is flash memory disruptive?

1. It has captured a market separate to hard drives i.e. digital cameras, portable memory sticks and now newer mobile phones.
2. People are starting to think about replacing laptop hard drives with flash memory. For two reasons: robustness and power usage.
3. There is potential for much higher IO (Input/Output) bandwidth with flash.

In the future I believe that flash memory will replace and then surpass hard drive use in modern computers. The cost per megabyte/gigabyte is still high however this will come down over time (as it always has)

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Article on Organisation feedback

This article talks about how immediate feedback loops provide signals to allow fast training and immediate response to decisions. Lather, Rinse, Repeat...
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How does this equate to disruption and innovation theory?

1. Incumbents are going to be receiving feedback for their most profitable and likely most demanding customers via dedicated sales managers. Big clients have their own client (sales) managers. Other signals will be ignored due to the lack of profit potential both for the company and the salesman.
   
2. Startups will be receiving feedback from whoever tries their product or service and sees potential for solving a problem they have.
3. Flatter, leaning companies will receive feedback (outlined in the article) faster and more importantly learn faster than large companies with inflexible process and systems.

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Paul

Update:

It has been a while between drinks. I will continue the case study of databases with some charts when I have time.

It is interesting watching the incumbents response to the open source/freeware databases MySQL and PostgreSQL, both are still pursuing the most demanding customers or trying to compete against the new competitors but from a cost structure setup up for the most demanding customers.

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Case Study: Databases - Signals of Change

In the last blog, I outlined a short history of the database industry for the three companies we're are going to use in this case study. Oracle (as the lead company), Microsoft SQLserver (as the second tier company) and MySQL as the disruptive company.

So where are the signals of changes in the database marketplace. Innovation theory and the impact of disruption theory suggest that when the leading companies overshoot on the performance demanded by customers that customers will start to value other things in the product. The primary phases being functionality, reliability, convenience and price.

Where are we at in the database lifecycle? I believe we are in the price phase.

Oracle has remained the leading database company through functionality, reliability phases.

In 1995 it was attacked by Microsoft SQLserver from below with the release of SQLserver 6.5 ,when customers started to value convenience.
SQLserver 6.5 was easily supported by DataBase Administrators (DBA) via a Graphical User Interface (GUI). This allowed companies to employ less skilled staff to look after databases compared to Oracle and its command line interface. The GUI tool allowed SQLserver DBAs to administrator more easily a larger number of databases.
I remember having to support both Oracle and SQLserver as a junior DBA and SQLserver was easier to support. Oracle provided more in-depth tools to support, however everything had to be done via a command line and you had to remember syntax and complex relationships to retrieve the correct information.

Oracle released in own version of Enterprise Manager (the GUI admin tool) in response to SQLserver, however Microsoft also attacked Oracle from a convenience value point by using its famous bundling strategy. Companies could choose Microsoft when they started and grow into the higher end products as they grew. So the company could start with Microsoft Access database, which was functionally limited and migrate to SQLserver when they required more functionality, better reliability and ease of use.

At the same time SQLserver was attacking Oracle from a convenience value point, some customers had already moved on to value price. The open source/freeware movement started to gather steam in the lead up to 2000. After the tech bubble burst in early 2000, plenty of struggling IT companies looked at slashing costs via the use of open source software. They would employ IT staff at a discount (due to the market slump) and rather than pay license fees and support fees get their own staff to support the product. The staff relying on search engines and online support forums to support the product, rather than dedicated support consultants (Oracle).
MySQL is a free database, which started with basic functionality and as subsequently added new features in its pursuit of the database leaders. It also has been able to pursue a bundling strategy as a partner product in the open source/freeware LAMP (Linux, Apache, MySQL, Php/Python/Perl) web application suite.

I believe we are in the price phase as the database leader, Oracle, has responded to the threat of MySQL taking the market share by releasing a free version of its database software Oracle Express in 2005. Whilst also buying one company Innodb which provided a more robust database file structure to MySQL.

Side Note: MySQL has actually broadened the total database marketplace. As customers who would have not used a database in the past have now been exposed to the benefits of using a database.

The threat to Microsoft from MySQL comes from the LAMP, as it attacked Oracle offering convenience at a lower price, so MySQL as part of the LAMP bundle as attacked Microsoft offering a lower price.

I will post some charts in the next blog. Please feel free to comment.

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