4 stages in technology lifecycle – and how to profit from it

February 1st, 2009 byScott Farrell

It will help you if you can better predict innovation.

You will be able to take advantage of trends before and as they occur.

Just listening to Wired Magazine editor – Chris Anderson, he notes 4 stages:
– critical price
– critical mass
– displacement of other technology
– price approaches zero

At each stage, there is opportunities for smart entrepreneurs. These opportunities are both with that product, and with adjacent products and services.

You should identify where you and your products are. If they are about to go through some of these inflection points.

I really believe there are opportunity if you are first to commoditize a product. You dont want to be a competitor in a commoditized market. But if you take someone else’s market, and commoditize it on them …. now that has some profit potential.

Some of this parallels what I have observed from open source software, and how it competes with commercial software.  Open source software cant compete with all of the features, or all of the support of commercial software. So when the price is high, and the market smallish, open source doesn’t have a chance. It when the market expands, and features are less important, and support is less important, then open source can more easily compete. Clearly the commercial software guys can’t compete once price approaches zero, but open source, and SaaS can compete at those levels.

I see lots of opportunity for SaaS and commoditing products/markets. So long at there is already wide adoption, its a product that is well understood, you can help push the price towards zero and make some money on the way.

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