Niche Markets for Obsolete Technologies

21 September 2009 at 12:57 pm 5 comments

| Peter Klein |

recordOne of the most interesting papers I saw presented at this year’s ACAC meeting was Ron Adner and Daniel Snow’s “‘Old’ Technology Responses to ‘New’ Technology Threats: Demand Heterogeneity and Graceful Technology Retreats.” They show how incumbents sometimes react to disruptive innovation by repositioning the old technology as a niche product, aimed at specialized users or enthusiasts. Their examples are fascinating. One-way pagers, for example, are still popular in hospitals because their low-powered signals work better around, and interfere less with, complex medical equipment. Many audiophiles prefer vinyl records, with their rich, analog sound, to digital media. (Needles for high-end turntables sell for thousands of dollars.) Calligraphers prefer fountain pens to ball-point pens. And so on. Adner and Snow present a taxonomy of “reactive” strategies by incumbents facing innovative entrants and characterize the benefits and costs of each strategy. Here’s the abstract:

We explore the implications of a real and common alternative to attempting the transformation required to embrace a new, dominant, technology — the choice to maintain focus on the old technology. In considering this choice we distinguish between ‘racing’ strategies, which attempt to fight off the rise of the new technology by extending the performance of the old technology, and ‘retreat’ strategies, which attempt to accommodate the rise of the new technology by repositioning the old technology in the demand environment. Underlying our arguments is the observation that the emergence of a new technology does more than just create a substitute threat — it can also reveal significant underlying heterogeneity in the old technology’s broader demand environment. This heterogeneity is a source of opportunities that can support a new position for the old technology, in either the current market or a new one. Using this lens we explore the decision to stay with the old technology as a rational, proactive choice rather than as a mark of managerial and organizational failure. We then consider the distinctive challenges and organizational dynamics that arise in technology retreats, and their implications for the ways in which managers and scholars should approach questions regarding the management of capabilities, lifecycles, and ecosystems.

I came across another example this summer, in a NY Times piece on a Dutch firm resurrecting the Polaroid camera. And there was the 2006 Darren Aronofsky film The Fountain, which used a low-tech combination of soap bubbles, oils, and other liquids rather than digital technology to create its unusual visual effects.

Entry filed under: - Klein -, Innovation, Strategic Management. Tags: .

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5 Comments Add your own

  • 1. gabrielrossman  |  22 September 2009 at 12:01 pm

    Russ Neuman talks about this dynamic on pages 117-119 of Future of the Mass Audience. He’s citing Merrill and Lowenstein’s Media, Messages, and Men, but I haven’t read that.

  • 2. Bo  |  24 September 2009 at 10:06 am

    I was raised never to throw away anything – as my mother said: “wait long enough and it will be unique and valuable again”. I wonder if similar dynamics exist for obsolete ideas? reading the recent management (and some economics) literature, it seems that many “obsolete” ideas resurface, albeit in somewhat new packaging. Perhaps it is time for “journal of obsolete knowledge” or “journal of resurrecting ideas”…

  • 3. Cntrl_K  |  29 September 2009 at 9:44 pm

    not exactly related, but the ‘Portable Rotary Phone’ at sparkfun is an original rotary phone that has been modified to be a cell phone.

  • [...] Niche Markets for Obsolete Technologies – Organizations and Markets [...]

  • 5. Richard M. Henderson  |  9 November 2013 at 12:01 pm

    I hope someone in the investment world has the foresight of Ron Adner and Danel Snow to save polaroid and make the instant camera a 2x bigger picture or more for Hollywood like autograph size and this niche market will be a dream come true and If you get a chance send Sony a letter for some old equipment that can be retro to today’s market needs for music using the same basic Idea upgrading old idea to today’s needs. Richard m. Henderson

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