UPDATED 12/7/2009: scroll down to bottom . . .
New technology has always had two advantages vs. the status quo. One is efficiency. The other is creating new possibilities that add enough value that it grows the market because people use more of it and/or they will pay a premium for it.
When new technologies are introduced to an economic cycle powered by growing consumption, the application of these technologies is on creating premium value. Then the path goes something like this: 1) competitors invest a lot to merit a premium and charge a premium. 2) once supply starts to meet demand, r&d is focused on improving
efficiencies. 3) as competitors expand, pricing becomes a strategy.
When new technologies are introduced in an economic cycle powered by cost-cutting and re-financing (what we’ve been in since the late 1980’s), the application of these technologies is, not surprisingly, on cutting costs. It’s pretty obvious, now, that there is nowhere to go but start over. Even Google is asking for ideas here.
In my opinion, the internet/mobile market needs to accept that it needs to change direction. Today, it is a field of wild flowers. Many individual, diverse flowers. Some consumers have the imagination,time and desire to choose, gather, and design them into a bouquet and take them into their homes, suffering the unanticipated bugs, or durability. No wonder many active internet users expect them to be free.
When someone designs those flowers into bouquets, de-bugs them,and provide instructions on how to optimize durability, now you have something people will pay for. More people will find value. Consumption will grow.
As we the current financial crisis is being resolved, the market is communicating that it gets that we have milked demand all we can. There’s no more room to create the allusion of increased consumption by cutting the costs of products and money to buy them.
Today, to stimulate the economy, we need to grow consumption by adding new value to people’s lives.
UPDATE 12/7/2009: PBS Media Shift @rolandlegrand writes about young journalists being risk averse. I comment that maybe that's because if you've only been observing the business world since the late 1980's you are only used to seeing people use innovation/new technology to cut costs.
