Technological environment change changing the market scenario


One of the most dramatic forces shaping people’s lives is technology. Technology has released such wonders as penicillin, open-heart surgery, and the birth control pill. It has released such horrors as the hydrogen bomb, nerve gas, and the submachine gun. It has also released such mixed blessings as the automobile and video games.

Every new technology is a force for “creative destruction.� Transistors hurt the vacuum-tube industry, xerography hurt the carbon paper business, autos hurt the railroads, and television hurt the newspapers. Instead of moving into the new technologies, many old industries fought or ignored them, and their businesses declined. Yet it is the essence of market capitalism to be dynamic and tolerate the creative destructiveness of technology as the price of progress.

Look out Dell, HP, Apple, and Microsoft: According to some seers, “smart� mobile phones will eventually eclipse the PC.


“One day, 2 or 3 billion people will have cell phones, and they are all not going to have PCs,� says Jeff Hawkins, inventor of the Palm Pilot and chief technology officer for Palm One. “The mobile phone will become their digital life,� Hawkins predicts. After a slow start, mobile have become ubiquitous—there are 1.5 billion in the world today—and smarter. Today’s most sophisticated phones already have the processing power of a mid-1990s PC while consuming 100 times less electricity. The phones are used to send e-mail, browse the Web, take pictures, and play video games. Hawkins predicts that within the next few decades all phones will be mobile phones, capable of receiving voice and Internet signals at broadband speeds, and that mobile-phone bills will shrink to a few dollars a month as phone companies pay off their investment in new networks. New smart phones in the works include Palm’s pocket-size Treo600, with a tiny keyboard, a built-in digital camera, and slots for added memory; and Motorola’s MPx, which features a “dual hinge� design. The handset opens in one direction and appears to be a regular phone, but it also flips open on another axis to look like an e-mail device, with the expanded phone keypad serving as a small, conventional keypad.

The economy’s growth rate is affected by how major new technologies are discovered. Unfortunately, technological discoveries do not arise evenly through time—the railroad industry created a lot of investment, and then investment petered out until the auto industry emerged. Later, radio created a lot of investment, which then petered out until television appeared. In the time between major innovations, an economy can stagnate. In the meantime, minor innovations fill the gap: freeze-dried coffee, combination shampoo and conditioner, antiperspirants and deodorants, and the like. They involve less risk, but they also divert research effort away from major breakthroughs.

New technology also creates major long-run consequences that are not always foreseeable. The contraceptive pill, for example, led to smaller families, more working wives, and larger discretionary incomes-resulting in higher expenditures on vacation travel, durable goods, and luxury items.

The marketer should monitor the following trends in technology: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulations.

Accelerating pace of change

Many of today’s common products were not available 40 years ago. Public were not knowing personal computers, digital wristwatches, video recorders, fax machines, personal digital assistants, or the Internet; nor has the pace of the technological change slowed down. The Human Genome project promises to usher in the Biological Century as biotech workers create new medical cures, new foods, and the new materials. Electronic researchers are building smarter chips to make our cars, homes, and offices more responsive to changing conditions. The blending of personal computers, scanners, fax and copy machines, wireless phones, the Internet, and e-mail has made is possible for people to telecommute—that is work at home or on the road instead of traveling to an office. This trend may reduce auto pollution, bring the family closer together, and create more home-centered shopping and entertainment.

The time between the appearance of new ideas and their successful implementation is all but disappearing. So is the time between introduction and peak production. Ninety percent of all the scientists who ever lived are alive today, and technology feeds upon itself.