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Reflection – John Tulinsky

by on November 28, 2007

Kindle: A Disruptive Innovation?

Stimulating and sustaining innovation was a common topic for discussion in IMT581. The holy grail of innovation is to create a disruptive technology. Disruptive technologies are innovations that result in new markets and new business models (Christenson, Johnson, Rigby; 2002). Examples of disruptive innovations include the personal computer, digital photography and VoIP technology (Wikipedia, Disruptive Technology). Amazon.com recently introduced Kindle, a wireless reading device to the market. Kindle is based upon a new display technology called electronic paper. Amazon claims that electronic paper eliminates the glare and eye strain associated with reading from a computer monitor and that reading from it is comparable to reading a printed book. The Kindle has 180 MB of memory available for the storage of content and the memory can be expanded via an SD memory card slot. Scanning through the books available for purchase from Amazon.com shows that books on the New York Times bestseller list are electronic files ranging in size from about 500 to 4000 KB. This means that the Kindle can easily contain a library of 50 or more books. The books can be purchased and downloaded immediately through a wireless connection. Subscriptions to newspapers, magazines and blogs are also available. In comparison to embarking on a trip with a book, the day’s newspaper and a magazine or two the Kindle seems to offer many advantages. With its potential to replace books, newspapers, and magazines the Kindle appears to be a candidate to become a disruptive technology. But can it really replace printed media?

Consider some of the challenges faced by Kindle (Levy, 2007; Amazon’s New Book Reader, 2007).
Price: Kindle currently retails for $400 and books are $9.95
Content is in a proprietary format, protected by DRM
Kindle is a standalone device: it can’t be linked or networked with other devices
Proprietary issues mean that content must be purchased from Amazon and Sprint must be used for wireless connectivity.
An important characteristic of disruptive innovations is that they serve a previously unknown or underserved market. An additional characteristic is that often they are only recognized in retrospect (Christenson et al, 2002). When I look at a device like Kindle, the product of years of research and launched with all of the power of a multi-billion dollar company behind it I’m skeptical that it will be truly disruptive. I have no doubt that it is a well-designed piece of cutting-edge technology. However Amazon is a large, successful company and by its very nature is unlikely to take the chance of investing in the development of a new product for an uncertain market. Kindle is clearly targeted to a demographic that can afford to spend $400 on an electronic device and who wishes to have access to large amounts of information from numerous media sources. However, these people already carry a laptop and a smart phone. Is the additional functionality provided by Kindle enough to overcome its cost and the inconvenience of yet another electronic device, and its related AC adapter, memory cards, passwords, and so on?

As a pioneer in ecommerce Amazon is a company that is based upon a disruptive innovation. Christenson et al argue that disruptive innovations are the key to sustained long-term growth. The challenge is for a profitable company, with all of its obligations to shareholders, customers and employees, to find a way to develop them.

References

Christenson, C.M.; Johnson, M.W.; Rigby, D.K. (2002). How to Identify and Build Disruptive New Businesses. MIT Sloan Management Review, 43(3), 22-31.

Levy, S. (2007, November 26). The Future of Reading. Newsweek. Retrieved November 27, 2007 from http://www.newsweek.com/id/70983/page/1.

Vaidhyanathan, S. (2007, November 21). Amazon’s New Book Reader Destined to Fail. The Googlization of Everything. Retrieved November 27, 2007 from http://www.googlizationofeverything.com/2007/11/amazons_new_book_reader_destin.php

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