Chapter 6 -Assessing Future Markets for New Technologies

In Chapter 6 of Wharton on Emerging Technologies, George Day discusses the challenges faced by the organizations in assessing the future markets for new technologies. With uncertainties and ambiguity associated to the emerging technologies, it is difficult to assess the future of new technologies. Few challenges firms encounter when assessing the future markets for new technologies include:

· Lack of sales history or precedents for the new technology.
· Not certain as whom the potential customers are.
· Interaction between technological development and rate of market acceptance.
· Difficult to understand whether the market is big enough for a development project.
· As the technology progresses, many questions crop up that requires precise answers.

In this chapter, Day provides certain frameworks, methods and best practices that help solve these issues. This chapter provides three approaches which can be used to assess future markets for emerging technologies. They are:


Diffusion and adoption:

Each new technology follows a different time patterns to diffuse and adopt in the market. Some technologies will take long time to penetrate into the market, while some take very less time. This difference in adoption rate can be due to:
· Perceived advantage of the new product over the best available alternative.
· Risk associated with the new technology.
· Barriers to adoption
· New product details should be readily available.

Videoconferencing example provided in the book shows the importance of perceived advantage of new product. When videoconferencing was introduced, the developers thought it would be a substitute for travel. But the high set-up costs were perceived as disadvantage over the benefits. Moreover, the potential users thought that electronic meetings are not as effective as face-to-face meetings.

Models such as Moore’s law, helps assess the rate of performance of improvement of new technology, but it is difficult to assess the stimulative effects of diffusion such as price cutting and investments by competitors. Firms should look for stimulants such as innovation, price and collective investments in education and access.

Rate of adoption is also influenced by the innovators (technology enthusiasts), early adopters (visionaries), early majority (pragmatists), late majority (conservatives), and laggards (tradition bound).

Exploration and learning:

Continuous learning and exploring the market brings competitive advantage to the firms. Learning about the markets for emerging technologies include framing the inquiry, collecting market information through probing and experimenting, disseminating the information to the management team, interpreting the data, using the market information to make decisions and evaluating the outcomes.

Triangulation for insights

Methods and best practices adopted for established markets are not suitable when applied to emerging markets. Though, assessing future market for a new technology is mostly done by probing and learning experiments, the four specific methods- learning from lead users, learning about latent needs and anticipating inflections -help understand these results.

Lead user analysis can help under the need of new technology. Lead users develop new technologies in order to find solutions to their needs. Studying lead users is far more valuable than collecting random information of potential customers.

Sometimes new technologies address the latent needs of customers which customers themselves are not aware. Methods such as problem identification, story-telling and observation, helps firms identify the latent needs of the customers and emerging technology that satisfies those latent needs.

In the uncertain emerging technology markets, anticipating inflections brings competitive advantage over rivals. Inflection points can be identified by combination of methodical guesswork, tracking of leading indicators, diffusion modeling and Information acceleration.

With methodical guesswork and tracking of indicators firms can anticipate market demand for the new products or technologies. Diffusion modeling predicts the period of growth for emerging technologies.Information acceleration simulates future environment in an interactive multimedia workstation where consumers can experience new products and services.

The chapter concludes by saying that it not possible to predict all the uncertainties of emerging technologies. The best approach when assessing the future market of emerging technologies would be to know whether the future market is big enough to warrant a development project. To have competitive advantage, firms should continuously monitor the markets with probing techniques and learn from lead users. The author says that actual learning comes when firms interpret the information in the right sense and resolve some uncertainties.

Research:
Moore' law was introduced by Intel's co-founder Gordon Moore in 1965. Moore's law states that the number of transistors on a chip will double about every two years. According to the Intel website, Intel has kept the pace of doubling chips every two years for almost 40 years. Intel is continuously moving ahead by delivering products such as 32 nm silicon technologym 2-billion trasistor microprocessors and revolutionary technologies in the field of nanotechnology.

Reference: http://www.intel.com/technology/mooreslaw/