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October 10, 2008

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Paul

@Sean. We aren't going to quibble about whether the Flip is disruptive. I know a few months back I ignored it when you brought the camera to my attention, but it just looked so cheap and flimsy and frankly, I just wasn't paying attention.

But I've seen some very good quality videos made with the Flip on YouTube -- just as good as with a regular camcorder (maybe even better in some cases -- simplicity definitely is a boon to amateurs), and a heck of lot better than webcams as you note, or cell phone cameras. That certainly makes it good enough as a low-end contender to disrupt the camcorder market.

I do have a 'yeah-but', but just to add a little objectivity to this, I actually ran a Disruption Report Card on the Flip (see Video is the New Audio: Disruption of the Camcorder Market on the Disrupt This blog), and it came out with an A+ grade. That translates into "definitely disruptive". (Good call on your part, and especially since you recognized it early).

If we had only been allowed to buy in to the early investment tranches. Could make up for everything I've lost in the last week.

Here's my challenge though. You seem to be suggesting that the real exciting potential disruption comes from the integration of plug-and-play software into the device, which means your grandmother (if she was going to do any editing) wouldn't have to load up a CD and figure out how to get everything working -- it's just there). The inclusion of software in the camera is part of what makes this device simple, convenient and disruptive, but I disagree that this portends a wider trend, or that it's necessarily a factor in making anything else disruptive. Sometimes, being integrated in this way would actually work against disruption.

Disruption theory as outlined by Christensen in The Innovator's Solution actually speaks to this integrated vs dis-integrated notion. Goes something like this:

  • When performance constraints are tight because you are pushing the technology envelope, disruption favors the company that can do it all. For example, when IBM introduced the 360 computing architecture in the early 60s, it was the first practical business computer that an average Fortune 500 company could afford. Before that, only specialists whose business depended on being able to process massive amounts of information could benefit from a computer because a) the technology required armies of engineers and was extremely complex, and b) it was computationally expensive.  So, the applications it (a mainframe) was suited for were a) military (missile trajectories, satellites into orbit), b) really big insurers (actuarial tables, calculating 10s of millions of policies).
  • But, the 360 was state of the art technology -- disk drives were brand new (and one of those huge suckers only held 4K of data!!!), card readers were still being perfected, the CPU was pushed to its limits to calculate payroll, everything had to be in a cooled, dust-free "glass room" So, IBM had the internal capabilities and engineering talent and size to build all the parts plus the OS and programming help for first time computer buyers, and they completely disrupted the computer market with something that Univac, Sperry and others viewed as "a toy" because it couldn't do the big military-style heavy lifting.  But the key was, disruption favored them because all the pieces had to be tightly integrated to get the performance that it did get for general business use, and things had to be tweaked to make it all work together.
  • As the industry evolved and computers kept getting faster, cheaper and smaller, eventually you could buy a mainframe from any number of vendors that was "plug compatible" with IBM (although they continued to dominate until minicomputers came out), and independent industries sprang up to make disc drives, tape readers, supply programmers, create input devices, etc. IBM controlled the big iron part of the business, but increasingly as the constraint became cost rather than technology, other vendors were able to pick off pieces of the technology with low-end disruptions that were good enough.
  • The last two sentences above illustrate when "dis-integrated" disruptors flourish -- i.e key component parts of the solution become "good enough" and the constraint becomes cost, not performance.
  • A modern day example of an end-to-end integrator benefiting from performance constraints to build a disruptive product is Apple.  They win, because to get the performance they do out of an iPhone requires tight integration between the hardware and software, and making it all seamless and easy to use requires design interdependencies that make cost irrelevant, although Apple is smart enough under the second incarnation of Steve Jobs to realize that to stay ahead, they have to be the ones driving the price down.
  • What you describe about the camera including the software illustrates exactly this point. Ease of use, convenience (putting it in your pocket and going) and accessibility to the "right tools" (say you just shot a video at your friends house and want to upload to YouTube now, but don't have your PC and its software with you) are the key constraints that inhibit the average person, and especially those over 35 years old from putting videos on YouTube to share with friends and family (some things, like convenience, are inhibitors even for youngsters).
  • Flip solves this by bundling everything together, so the only thing you need is a USB port on a PC with an internet connection. In order to do all this and make it cheap, they need to do everything, so disruption and lack of standards between video cameras, software, plug types (fireware vs USB1 or USB2), compression standard, etc favors Flip as an all-in-one integrator.

Therefore, I don't think it portends a trend. As more standards emerge, and more things become "plug compatible", the design constraint will shift to the software capability, because it will be the only place to innovate, and people like Flip won't be able to compete cost-wise if they continue with the all-in-one strategy. These things tend to go back and forth based on what part of the solution isn't "good enough". 

See any parallels between Macintosh and IBM PC and the respective paths those two took in the 1980s (and the reason that the PC was the disruptor, not the Mac)?

So basically, if you can identify products or product categories where the constraint in delivering significant new benefit or utility is interdependency of components and software, then you will find other products where embedding the software in a "good enough" package will create a disruptor. If the constraint moves to cost of the components, which are all "good enough", then software becomes a competitive battleground on its own, and dis-integration of components will create disruptors. (e.g. I don't think I'd want anyone but the manufacturer of the brake system on a car doing the programming for the anti-lock braking -- too risky. But, I don't care who does the software for the GPS -- I just want the best GPS.)

I know you think this intelligent device with integrated software stuff is cool, but that's because you're a geek like me. You and I don't make a disruptive marketplace though.

Sean Howard

There are some strong trends at play in the world:
- Standardization of APIs and data/feature sharing
- Purchase and download software (no CDs)
- Virtualized software (Google Docs and others)
- Shift to device (phones/blackberry/iphone/etc)

What happens when the API for a TV is as open as the APIs for google, the iphone or Amazon?

Now what happens when we factor in that one day we won't be getting software on CD?

Let me ask this a different way.

In a world gone crazy for sharing, how much longer will we allow for software that has to be installed in order to use a device?

I believe that disruption always comes from an unmet and generally misunderstand human desire/behavior. I think you will concur. If so, what unmet desires are waiting to be easily tapped just by changing from an included "CD" to "ready to run software" embedded on the device?

I present a couple ideas on my blog: Printers that come with the drivers on them as 99%+ of printers already have a network drive capability. But what about some of the following unmet needs that are just waiting to full a potential disrupter?
- PVRs that are intelligent (Apple TV being an example) and that share applications, control and content between devices
- A cell phone that enables my computer to be better. Applications that when my phone is within range of my computer allow me to connect to the internet, perhaps? Or access international status (awake, away, etc.) of my friends and family around the world?
- New photo manipulation apps are launching on the iphone. Who expects me, in the future, to buy a copy of Photoshop for my computer, my TV AND my phone. This is insane. But it is how the current industry is trending. Rather, I want to buy a device that takes photos and have access to photo manipulation from ANY computer that happens to be on-hand.

routeur

I've seen some very good quality videos made with the Flip on YouTube -- just as good as with a regular camcorder (maybe even better in some cases -- simplicity definitely is a boon to amateurs), and a heck of lot better than web cams as you note, or cell phone cameras. That certainly makes it good enough as a low-end contender to disrupt the camcorder market.

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