Flipping Simplicity into Disruption

Paul asked me to write about the Flip Camera.  And as his last article stated, I have been a big fan of the Flip Camera for a very long time now.  Here I present my case for why I believe the Flip Camera (and the type of product it represents) is more than a blip on the radar.

  Q: How is the Flip camera "good enough" to cause unexpected market disruption?

  The first thing I look at is what you CAN'T do with a device.  If the list is long or "critical" enough, the odds are that the rest of the industry won't see it as a competitor and will be blind to the disruption that it represents.

• You can't plug in a professional external microphone
• You can't change the aperture or adjust the levels in any way (video or audio)
• The zoom is too feeble to enable any filming from any real distance.  You basically have to be in their face
• You can't add in new lenses or later expand the camera
• You can't take "professional" quality footage with it

  Looking at the list above, I realize why so many dismissed the camera.  But then I think of YouTube.  Watched anything on there lately?  Most of the videos on there are shot with a WebCam that has WORSE quality, no controls and mediocre audio at best.  Hmmm. 

  Let's look at what this device CAN do.

• The pricepoint has driven the entire market lower ($135).
• Size is critical.  It fits in a pocket or a purse and doesn't add much weight.  You can ALWAYS have it on hand (not quite as easy as if it was on your cellphone)
• Ease of use is critical.  Turn it on and you are ready to record in less than 2 seconds.  Just press one button and the same button to stop.
• Quality is NOT critical, but must be "good enough" and I believe the Flip is just that.  Good enough.  Limited zoom and full frame rate, 640 by 480 video with decent audio.
• The software that comes with the camera is anything but the greatest editor.  But the fact that you can edit clips together and upload right to YouTube is quite neat for many users.

Q:  Where is the Flip driving new innovation and creating new value/opportunities?

  More and more cameras record to a chip nowadays.  And just about every manufacturer is working to make getting the photos or footage into your computer easier.  Cables are generally included with the camera.  Some cameras offer accessories for you to remove the chip, plug it into a device and then plug the device into your USB port.

  Flick a switch on the Flip and the USB connector emerges.  You plug the camera directly into your computer.  Done.

  But this is not the innovation I want to speak of.  This is a cool feature, but the real innovation is that the Flip Camera comes with the software to edit your videos embedded on the camera itself.  There's no CD to install.  You connect the camera and everything you need is on it.  You launch the application off the camera.

  What the Flip does represent is a rather significant potential to revolutionize how we think about products in the electronics category - (I took a stab at this on my blog).  To date, electronic products have been either a piece of software or a piece of hardware.  Many pieces of hardware came with software or drivers to enable us to interact with them, but the feeling was that we were purchasing the hardware and the software was often not a required component.

  The Flip offers a glimpse of a future where software is seen to be an integral part of a device because it is fully contained within the product.  I can easily see a future where we start interacting with products and not the other way around.  The day when our PC's capabilities are actually ENHANCED by owning a piece of electronics.  My new Bravia Entertainment Platinum TV now allows me to access live streams of new shows a day early off any computer in my house.  Or the fact that I bought a new scanner means I have access to enhanced faxing and photo editing from any machine on my network, without having to install any software.  The software just appears because the purchased device is on my network.  Electronic devices become a gateway into enhanced functionality that is related to the device but operable on other platforms and tasks.

-- Sean

...over to you, Paul...

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Comments

[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.