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The impact of disruptive innovation – on PCs and on Retail

January 17, 2013 11 comments

Two recent items highlight the impact of disruptive innovations on industries. The first is a presentation from the Business Insider called the The Death of PC. The second is an article looking at Amazon and mentioning its March 2012 purchase of Kiva Systems.

Since 2009, the PC market has hardly grown. In the same period, Smartphone & Tablet sales boomed. Many tasks that used to be done on PCs are now done on these newer devices: email, web-searching, social media, and more. This has had a massive impact on the traditional PC market and its suppliers such as Intel and Microsoft. Whereas Apple’s and Samsung’s share prices have grown substantially, Dell & HP have been static or fallen. The introduction of both Smartphones and Tablets illustrate how disruptive these technologies are to the traditional PC industry – although as the The Death of PC presentation shows, things are actually more complicated. This is typical for a disruptive innovation – especially in the earlier stages.

Disruptive innovations do not always kill the products and industries they replace. What they do is change them radically. Smartphones haven’t killed the camera industry. They have, however transformed it so that DSLR and higher-end / special function cameras are now the main products sold. The cheap mass-market snapshot camera has gone – who needs one, when a Smartphone does everything that they could do, and much more. Disruptive innovations also mean that companies that fail to adapt quickly enough disappear. Kodak’s filing for Chapter 11 bankruptcy is an example of this. Kodak and photography were synonymous – but the company failed to anticipate how digital camera usage would change the way people process photographs.

In the case of the PC market, so far it’s only the home PC that’s dying. The PC in the workplace is doing fine – and that’s because the type of task it is used for is different. It’s hard to work on a spreadsheet, or a complex graphic or even a long report using a Tablet and almost impossible on a Smartphone. These aren’t tasks that the home computer was used for. So Tablets haven’t changed the work PC – only the home PC market. However expectations have changed – and this has led to newer devices and cloud computing which promises to be as disruptive for the traditional hard-disk based PC and so the PC as we knew it last century is gone or going. It’s not yet dead – just changed.

Amazon’s purchase of Kiva Systems in another example of a disruptive innovation. Amazon itself has shown how disruptive e-commerce is to traditional retailing. The high-street and even the out-of-town retail outlets struggle to compete with Amazon on price. However they can still compete on service: if you want something on the same day, then such outlets beat Amazon, even if the price is higher. Further, Amazon’s warehouse distribution system could be copied and many of the larger retailers now offer online options. Currently both use human labour to select and package products for delivery – and this represents a significant proportion of retail costs. The Kiva Systems purchase promises to change all this. Kiva Systems manufactures robots and the software used to control them. The robots are designed for use in warehouses for accessing goods. They remove the need for a human being to go to the relevant shelf and remove a product for sending to a customer – instead a machine does this. Eventually such systems are likely to completely automate the distribution process – meaning that Amazon’s labour costs will fall dramatically.

Any retailer that still depends on human labour in their warehouses or retailing is likely to find it even harder competing with Amazon’s prices. Such retailers should start thinking now on how they could compete. Options include looking at ways of improving service or focusing on narrow niches requiring in-person expertise. Waiting and hoping that some shining knight on a white charger will come and rescue them is not an option. There will be no shining knight because, however much retailers may wish it was, true life is not a fairy story.

[After writing this post, Michel Bernaiche, Program Development Director of AurowaWDC and current Chairman of the SCIP board, pointed out this news story to me – highlighting how robots are impacting not just retailing but many other business areas – from hospitals & surgery to legal research. CBS News Video on Impact of Robotics in Industry]

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Wikileaks and Whistleblowing!

December 5, 2010 3 comments

As soon as Joseph saw his brothers, he recognized them, but he pretended to be a stranger….” (Genesis Ch. 42 v7).

There is a time for everything, and a season for every activity under the heavens….a time to be silent and a time to speak….” (Ecclesiastes Ch 4 v1, v7)

I wasn’t planning to write about the Wikileaks affair – as in essence, I agree with Wikileaks that excessive secrecy is wrong. At the same time, as the preacher (identified with King Solomon) in the book of Ecclesiastes says, there is a time to speak out, and a time to remain silent.

I believe that many of the items leaked deserved to be leaked. It is wrong to keep details of torture, rape, summary executions, and various other war-crimes secret, irrespective of whether such crimes were committed by the USA, the Iraqis or whoever. War-crimes should always be exposed, and prevented. If a government tries to keep such crimes hidden, then it is the duty of responsible people to expose them. Keeping such information secret just allows for a culture that views the enemy as non-human and dispensable – and ultimately, this makes all who allow this to happen complicit in the crime.

At the same time, there is good reason to keep diplomatic negotiations hidden, however duplicitous they may appear to be – so long as there is a procedure to ensure that such records are not kept secret permanently, but are released when they are no longer politically and diplomatically sensitive. Similarly, information that could put lives at risk – through the identification of people who oppose an oppressive government or who collaborate with others to end oppression – is totally wrong.

Essentially, a leak to prevent wrong-doing is, in my view, correct, whereas a leak for some warped belief that everything should always be out in the open and public is wrong.  Whistle-blowing to prevent corruption and criminal activity is right – whether it impacts commercial or government business. There is a time to speak out, and a time to keep silent, as in the biblical story of Joseph. Had Joseph identified himself when his brothers first visited him, he would have been unable to test their sincerity and repentance. It was important that he kept his status secret – in the same way that it is important that diplomatic cables shouldn’t be revealed as a general rule.

Sarah Palin & Mike Huckabee enter – stage right.

Sarah Palin

Sarah Palin

One reason I’d avoided discussion of Wikileaks was that Sarah Palin had just commented on the site. Having just written a blog post on her, I didn’t want to reprise some of my comments. Her view that Julian Assange, the founder of Wikileaks, should be hunted down “with the same urgency we pursue al-Qaeda and Taliban leaders” is yet another emotive, and ill-reasoned Palinesque comment showing a lack of understanding of what al-Qaeda stand for and what the Taliban represent. Assange may have caused damage to USA interests but in no way can he be seen as an overt enemy who would like to destroy everything that the USA stands for, and to impose a totalitarian belief system on the world.

However along comes Mike Huckabee who, apparently, does not wish to be outmanoeuvered by the outspoken Mrs Palin in his dreams of entering the White House. Huckabee has called for the execution of the person accused of leaking the material to Wikileaks. 

Bradley Manning

Bradley Manning

I agree that the man accused of leaking the material, Private Bradley Manning should be tried and if found guilty, punished (assuming that the trial is fair, which now with so much negative press is doubtful). I do not agree that he deserves the death penalty. He did not release the files to an enemy government and nor did he do it for cash rewards. According to reports he did it after seeing attempts to cover up possible war-crimes committed by the US – for instance an air-strike that killed a dozen people in Baghdad and where the air crew laughed at the dead, and another in Afghanistan, that killed dozens of children. This makes him a whistle-blower and not a spy or traitor, and as such, this needs to be taken into account in any penalty. An overly severe or unwarranted sentence will just serve to further deter whistle-blowing and allow corrupt officials, politicians or business managers to continue in their actions.

I also question whether it is Manning alone who should be blamed. The US government must share some blame in not protecting material they viewed as confidential. Apparently the material leaked was available to many thousands of people. Following the September 2001 terrorist outrages an attempt to stop the silo mentality that had prevented different bits of information being linked together, correctly allowed for improved sharing of intelligence. Evidently such sharing did not consider the security implications of making so much information available to so many – with minimal protection. If Manning had not leaked the material, I’m sure that somebody else with a moral conscience, seeing the Iraq video, would have.

Additionally, it was not Manning (if the leak came from him) who posted the material but Wikileaks. Wikileaks would like to be seen as a channel whereby whistle-blowers can alert the world of crimes (commercial or governmental) that are being kept hidden, and I believe there is a need for such a service. Had they fulfilled this role, they would have edited out any material that did not serve a public service in being released.

The free-rights-for-all crowd enter – stage left.

Facebook Group Logo for Boycotting Amazon over Wikileaks

Wikileaks, trying to remain online, used Amazon’s hosting service for the site. Of course, Amazon was then criticised for ostensibly supporting the service, and came under pressure to boot the service. Had they not done so, I’m sure that they would have faced a large and damaging right-wing campaign against them – especially as the peak holiday buying season approaches.  Their action however has, instead, led to a call for a boycott from those who believe in total freedom of speech regardless of the content, including a dedicated FaceBook fan page.

Had Amazon not hosted Wikileaks in the first place, neither side would have complained. Instead, Amazon has been criticised from both sides for doing what it felt was the right thing – both commercially and morally. They hosted the site – I’m sure because they believe in the moral principle of Freedom of Speech. It was not just a commercial decision – as I don’t believe that you will find any Nazi or Ku Klux Klan sites on Amazon servers. They host sites that they believe are not objectionable to their ethos. When, in the case of Wikileaks, this then threatened to be commercially damaging, they pulled the site – and get blasted by the “Freedom-of-Speech-at-all-costs” crowd who I’m sure would quickly campaign against the company if Amazon took this literally and started hosting racist, Nazi or kiddie-porn sites.

Julian Assange and Wikileaks

Wikileaks is not the first whistle-blowing web-site. My favourite – www.fuckedcompany.com – has unfortunately shut down, along with its sister site www.internalmemos.com. These two sites were important in warning investors of commercial shenanigans and companies that were having problems. Unfortunately I know of no other good sites offering such services. Wikileaks could, and should, have taken on this role. However with Assange as their editor-in-chief, they seem to be looking for headlines and controversy rather than fulfilling a role in preventing corruption and crimes being committed by both government and commerce.

Julian Assange

Julian Assange. (Is it just me who thinks that Assange has a strong resemblance to Lucius Malfoy in the Harry Potter films? He just needs to grow his hair a bit longer and they could be twins!)

Assange, according to Wikipedia, has led a peripatetic life. He claims to be constantly on the move – starting from his childhood, where his mother, in conflict with his father, hid Assange and his half-brother for five years. Obviously very bright, Assange became a leading computer hacker at the age of 16, and claims to have studied at university level, physics, mathematics, philosophy and neuroscience.

In 2006 he founded Wikileaks with an overtly political aim of encouraging leaks to change organisations that he felt were unjust or secretive:

…the more secretive or unjust an organisation is, the more leaks induce fear and paranoia in its leadership and planning coterie…

Prior to the current 2010 leaks, WikiLeaks has published material relating to extra-judicial killings in Kenya, information on toxic waste dumping off Africa, Church of Scientology manuals, a report on share price manipulation (that led to criminal charges and a jail sentence for the culprits) by the Icelandic Kaupthing Bank and many more reports and items.

What next?

The latest leaks have caused severe embarrassment for the USA and many of its allies. Worringly, the response by some of the opponents to Wikileaks show how freedom in the USA is at risk. Rather than accept that their security was lax and that the leaks show signs that illegal practices are being covered up, blame is being pinned on the message and the messengers (Manning and Assange). That is not to say that either are totally innocent. Manning, if he was responsible for leaking all the documents was naive to say the least. Assange strikes me as a petulant, spoilt and amoral man who loves the publicity he is getting, and doesn’t really care who gets hurt in the process.

Scene from the film "The Girl who Kicked the Hornet's Nest" - the third book of Stieg Larsson's Millennium Trilogy.

Meanwhile, I wonder whether the accusations of rape that have been made against Assange in Sweden are just an attempt by his enemies to put him behind bars. It would not be the first time that the Swedish authorities were accused of falsifying evidence to imprison an undesirable element linked to computer hacking, violence against women, espionage and the security services.  Stieg Larsson‘s Millenium Trilogy are works of fiction, detailing how corrupt elements within the Swedish secret services conspire to frame the heroine Lisbeth Salander, and keep her locked up, so as to save their own skins. Salander, like Assange, is a computer hacker who takes on and challenges authority. It would be ironic if the Swedish accusations against Assange also turned out to be false – and were an attempt by his enemies to put him away. However such things only happen in fiction…. don’t they?

Scene from the film "The Girl who Kicked the Hornet's Nest" - the third book of Stieg Larsson's Millennium Trilogy.

 

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