My last year's prediction about a steep drop in electronic book prices is coming true. According to the Wall Street Journal:

Amazon.com Inc.'s top 50 digital best-seller list featured 15 books priced at $5 or less on Wednesday afternoon. Louisville businessman John Locke, for example, a part-time thriller writer whose signature series features a former CIA assassin, claimed seven of those titles, all priced at 99 cents.

All-you-can-eat book subscriptions, today we call them libraries, is probably one of the logical scenarios. Amazon or Netflix could become such new digital libraries, providing easy access for various e-readers.

tags: source, payload, service, cloud, distribution, s-curve, maturity, storage

The ugly truth about technology

Henry Chesbrough, the author of Open Innovation, writes:

Technology by itself has no single objective value. The economic value of a technology remains latent until it is commercialized in some way via a business model. The same technology commercialized in two different ways will yield two different returns. 

doi:10.1016/j.lrp.2009.07.010

One of the key differences between corporate and entrepreneurial innovation is availability of a running business model, i.e. an implemented way to convert a technological innovation into money. Within an established corporation, a number of business models are readily available, therefore inventors/innovators can and will focus on technology development. In short, within a corporation technologists and business managers think in their respective dimensions.
On the other hand, in a startup, a business model often is being built along with the technology. Therefore, an entrepreneur, either an engineer or a business[wo]man, has to think in at least two dimensions: technology and business.

Today's education in engineering schools follows the corporate innovation model, which was dominant 50 years ago. Only in few places, like Stanford and UC Berkeley, entrepreneurship is taught to engineers directly, or, more often, absorbed by students from "the air" in the Silicon Valley.

quote, system, business, model, innovation, education, 4q diagram,

Inventions and tech transfer in universities

...start-ups are used to commercialize new technologies that are radical, tacit, early stage, general-purpose, provide significant value to customers, involve major technical advances and have strong intellectual property protection. Licensing to established firms is used to commercialize new technologies that are incremental, codified, late stage, specific-purpose, provide moderate customer value, involve minor technical advance and have weaker intellectual property protection.

Fred Pries, Paul Guild, Commercializing inventions resulting from university research: Analyzing the impact of technology characteristics on subsequent business models, Technovation, Volume 31, Issue 4, Managing Technology, April 2011, Pages 151-160, ISSN 0166-4972, DOI: 10.1016/j.technovation.2010.05.002.
(http://www.sciencedirect.com/science/article/B6V8B-50F45TB-1/2/25ef253dd866cbdc56c355446cf1a7fc)

Risk tolerance seems to be the deciding factor in technology transfer: high risk (mitigated by better IP protection) for startups, low risk (defined by better distribution capabilities) for large companies.

tags: innovation, patent, strategy, technology, business, model, distribution, source, tool, education

Contrary to common beliefs about the picket-fence approach, a good patent portfolio doesn't really protect a technology. In business terms (see below), the technology doesn't matter. Instead, patents enable the portfolio holder to screw up create intolerable risks for the competition's business model.

What disrupts incumbent firms in Christensen's story is not their inability to conceive of the disruptive technology: like Amit and Zott, he identifies the root of the tension in disruptive innovation as the conflict between the business model already established for the existing technology, and that which may be required to exploit the emerging, disruptive technology. Typically, the gross margins for the emerging one are initially far below those of the established technology. The end customers may differ, as may the necessary distribution channels. As the firm allocates its capital to the most profitable uses, the established technology will be disproportionately favored and the disruptive technology starved of resources. Christensen quotes Andy Grove, former CEO of Intel, ‘Disruptive technologies is a misnomer. What it is, is trivial technology that screws up your business model’. The root of tension [is] the conflict between the business model established for the existing technology, and that required to exploit the emerging, disruptive technology.

Henry Chesbrough, Business Model Innovation: Opportunities and Barriers, Long Range Planning, Volume 43, Issues 2-3, Business Models, April-June 2010, Pages 354-363, ISSN 0024-6301, DOI: 10.1016/j.lrp.2009.07.010.
(http://www.sciencedirect.com/science/article/B6V6K-4X0MPJN-2/2/06b7077564ed4d7c6266cafac731df5d)

tags: technology, competition, system, business, model, control point, risk, quote, innovation,

What is wind?

Warren Buffet on business management success:

It is comforting to be in a business where some mistakes can be made and yet a quite satisfactory overall performance can be achieved. In a sense, this is the opposite case from our textile business where even very good management probably can average only modest results. One of the lessons your management has learned - and, unfortunately, sometimes re-learned - is the importance of being in businesses where tailwinds prevail rather than headwinds.

Berkshire Hathaway, Inc. Chairman's Letter. March 14,1978

quote, business, evolution, system, management,

Kindle circa 1977

US Patent 4159417, filed in 1977 by David Rubincam of West Hyattsville, MD, and granted by USPTO in 1979, describes an electronic book with holographic memory. Surprisingly, the book's design looks very similar to today's Kindle.

tags: book, technology, evolution, invention, innovation, information