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What Clayton Christensen got wrong

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Re: What Clayton Christensen got wrong

#11

Post by Touche »

asveikau wrote: post #6
Touche wrote: post #5

Low-end disruption hasn't set in because of the carrier model. It doesn't matter than the iPhone costs twice as much as a Nexus 4 because most people will only pay $200 anyways. This works in Apple's favor. It's also why the iPhone 5C is going to be so big for them; they can sell last year's phone as though it were new and barely drop the price. The margins on that phone are going to be gigantic. It's a direct respon…

The carrier model doesn't exist equally in all places.

But the effect of it existing in the U.S. keeps smartphone prices artificially high every where. It benefits Samsung just as much as it benefits Apple.

Re: What Clayton Christensen got wrong

#12

Post by hollerith »

Touche wrote: post #11
asveikau wrote: post #6

Earlier quoted context omitted.

The carrier model doesn't exist equally in all places.

But the effect of it existing in the U.S. keeps smartphone prices artificially high every where. It benefits Samsung just as much as it benefits Apple.

Can you explain how it keeps smartphone prices artificially high everywhere?

Re: What Clayton Christensen got wrong

#13

Post by Touche »

hollerith wrote: post #12
Touche wrote: post #11

Earlier quoted context omitted.

But the effect of it existing in the U.S. keeps smartphone prices artificially high every where. It benefits Samsung just as much as it benefits Apple.

Can you explain how it keeps smartphone prices artificially high everywhere?

It keeps the high-end phone prices artificially high. Manufacturers cannot sell the same phone to consumers for less than they sell to carriers. This is why high-end phones are less popular in areas where paying full price for a phone is the norm.

Re: What Clayton Christensen got wrong

#14

Post by PaulHoule »

I think the verdict is still out on the iPad and iPhone.

I bought my first tablet, a Barnes and Nobles "Nook", precisely because of the price. Not that I'm cheap so much, but that I wanted to take it places where it might get broken, and I wouldn't feel so bad about breaking a $150 tablet vs. breaking a $600 tablet.

It lacks a GPS, a camera, and some other features and the touch screen isn't as good as an iPad, but I could buy four of these for what an iPad costs. (Like buy one for all the members of my immediate family including my mother-in-law)

Consumers may be seduced by pretty things, but consumers are cheap too. I've seen people underbuy PCs for years; perhaps Apple helped the tablet market get established by preventing underbuying, but Android tablets are getting better fast. (Had Android come into the market first, people would have concluded tablets were junk and there never would have been excitement over them)

For that matter, Apple faces stiff competition from the high end. Microsoft's Surface Pro points to a kind of device that is much more powerful (and expensive and heavy) than the iPad. Windows 8 has its problems, but there will be a Windows 8.1 and Windows 8.2... Even though the Metro ecosystem is weak, I think there's definitely a market for something that is a hybrid between a PC and tablet, even if it the enterprise market.

Add that up and 10 years from now, Apple could be a niche player.

Re: What Clayton Christensen got wrong

#15

Post by Touche »

Paddywack wrote: post #10

It is interesting to separate consumer from business when looking at this theory. Prof Baba Shiv is a Neuroeconomist from Stanford, and has been looking at the neurological effects of "emotional attraction" to a product. His current thinking (as of Nov last year at least) was that a positive emotional response to a product has a multiplier effect on the premium that we will place on that product. Thus, if a product c…

I wonder how long this effect lasts. I suspect that over time people feel less that the product makes them feel cool and move on to a different type of product to get the emotional positive feeling from.

Re: What Clayton Christensen got wrong

#16

Post by hollerith »

Touche wrote: post #13
hollerith wrote: post #12

Earlier quoted context omitted.

Can you explain how it keeps smartphone prices artificially high everywhere?

It keeps the high-end phone prices artificially high. Manufacturers cannot sell the same phone to consumers for less than they sell to carriers. This is why high-end phones are less popular in areas where paying full price for a phone is the norm.

So, Apple keeps the price of the iPhone high in countries where people pay for access to the cellular network separately from the phone hardware to keep US carriers happy. Is that your assertion?

I still do not get it. It seems to me that US carriers subsidize the phone hardware because US consumers have an irrational unwillingness to pay the full price of the hardware -- or an irrational willingness to pay monthly contractually obligated payments to carriers.

If that is true, then there I see no reason for US carriers to fear the availability of high-end phones at full price -- even if that price is not "artificially" high -- since US consumers have an irrational aversion to paying full price. So why would US carriers pressure manufactures to keep high-end phone prices high (in the US or in other countries)?

ADDED. I agree with you that Apple is able to keep the price of the iPhone a lot higher than their cost to make iPhones. Where I disagree is where you assert that any policy of the US carriers has anything to do with the price of iPhones in non-US countries.

Re: What Clayton Christensen got wrong

#17

Post by asveikau »

Touche wrote: post #13
hollerith wrote: post #12

Earlier quoted context omitted.

Can you explain how it keeps smartphone prices artificially high everywhere?

It keeps the high-end phone prices artificially high. Manufacturers cannot sell the same phone to consumers for less than they sell to carriers. This is why high-end phones are less popular in areas where paying full price for a phone is the norm.

This confuses me because it seems to contradict your original comment, and make exactly the point I was trying to nudge toward. I agree with you that the unsubsidized price does not matter in the United States for example, but one must acknowledge that this is a US-centric view and cannot explain what goes on worldwide. I read somewhere that most iPhone sales aren't in the US, so I suspect it doesn't even explain just Apple taken in isolation.

Re: What Clayton Christensen got wrong

#18

Post by Paddywack »

Touche wrote: post #15
Paddywack wrote: post #10

It is interesting to separate consumer from business when looking at this theory. Prof Baba Shiv is a Neuroeconomist from Stanford, and has been looking at the neurological effects of "emotional attraction" to a product. His current thinking (as of Nov last year at least) was that a positive emotional response to a product has a multiplier effect on the premium that we will place on that product. Thus, if a product c…

I wonder how long this effect lasts. I suspect that over time people feel less that the product makes them feel cool and move on to a different type of product to get the emotional positive feeling from.

Interesting comment - I will try and find out.

The other side of the coin is perhaps post-rationalisation, trying to justify to yourself why you spent the extra money in the first place re-enforcing your initial irrationality further, and making the whole effect last longer?

Re: What Clayton Christensen got wrong

#19

Post by tlogan »

I think this exactly proves his theory (or at least my understanding of it).

He says: "technology matures and becomes good enough..." But phones before iPhone were definitely not "good enough". Honestly, they all sucked. And Android phones are still kinda plastic and clumsy with bad support (upgrades, etc.) - definitely not "good enough" for me.

Also iPhone and iPads are disruptive to PC market.

In short, it is nearly impossible to predict disruptive technology. First, it is really hard to measure what is "good enough" at which "price points". And sometimes it is even impossible to figure out which market is being disrupted.

Re: What Clayton Christensen got wrong

#20

Post by whatusername »

abtinf wrote: post #4
aaronbrethorst wrote: post #3

In a June 2007 interview, again with Businessweek, Christensen reiterated that the iPod was doomed, and further predicted that the iPhone would not be successful The iPod was doomed, and it was the iPhone that killed it. Also, Apple has demonstrated time and again that they're willing to 'disrupt' themselves by introducing hugely popular new products that erode their own margins. See, for instance, the iPod nano, the…

You should try reading the whole article. The OP's point is that Christensen has two theories of disruption, one of which is invalid. The first, new market disruption, to which you are referring with your comment, is not controversial. The OP would likely agree with you. The second, low-end disruption, holds in business-to-business markets but fails in consumers markets. Thus, the iPod was not killed by a low-cost an…

That sounds like low-end disruption to me (Possibly I'm misunderstanding the theory). The iPod was killed when the marginal cost of an MP3 Player moved to $0. Same thing is happening to Point and Shoot Camera's. My Phone isn't quite as good a music player as a dedicated MP3 Player. And it's not quite as good as a P&S camera. But their marginal cost to me as a consumer is $0.
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