Posted on 5 Comments

The disruptor and the incumbent

I was just reading Matt Asay’s post on Open source’s “superficial impact” on the database market. I don’t think it’s a matter of “having to start somewhere”.

The assessment/conclusion trail of the 451 Group (and other experts, analyst and even regular people in the industry) is typical of most, and it’s adequately covered in “The Innovator’s Dilemma” by Clayton Christensen which I believe I’ve mentioned here before.

The assessment is correct (it’s based on facts), but the conclusions are simply irrelevant since they presume that there is a single correct objective or market – in the case of databases, “enterprise” or “mission critical” deployments. But just look at the situation: the definition of both is vague and continually shifting. Some companies don’t regard their website as mission critical, even though their online presence is critical to their survival. Go figure.

Anyway, disruptive technology tends to not take over the incumbent’s market, but find or develop a completely new market, and indeed take over in that space. The question then is, does the incumbent’s market remain intact, or does it change/evolve naturally and perhaps shrink or even completely disappear over time. Generally, the market-dominant incumbent continues to survive in a niche (where they are obviously dominant, but no longer in the market overall). In short, the market changes and with it its rules and demands.

Christensen tracks this pattern through the development of harddisk technology over time, as well as with non-computer products like diggers (from cable-driven to hydrolic). Most companies and business people are in denial about this recurring pattern, but that doesn’t make it not occur 😉
A few decades ago I invented a little saying: “Not all that is not seen by all does not exist at all“. But perhaps it’s grammatically too complicated (or even incorrect).

But staying with the topic… looking at harddisks for instance, 3.5” half-height drives were fairly useless for the desktop PCs at the time, because even though they were more reliable they cost much more per MB and the smaller formfactor didn’t matter. However, for portables it was a key enabler. Similarly, hydrolic diggers didn’t take over from the old big gear (at first) but instead found a completely new market digging small trenches in back yards and sidewalks.

In both cases, the incumbent companies failed to capitalise on this because they were trying to plug the new products to their existing customers – as you can easily tell from the above two examples, that was a senseless exercise. However, incumbents may be condemned to this, as their business processes and cost structures are in many ways geared/tied to the existing market in which they operate. Their success in their own space also makes them unable to go elsewhere. The IBM PC only succeeded because it was set up as a completely independent business unit in a different location – otherwise it would have been undermined by IBM’s mainframe/minicomputer business. At the time the two would have just conflicted, even though we know that they targeted different markets: for the IBM PC, a completely new market came into existence.

By the way, I know I’m taking some shortcuts here with the stories, so please don’t nitpick – I do believe the essense is correct. Do read the book if you’re interested in this phenomenon. I find it particularly interesting because even companies that are well aware of it (such as MySQL was, its CEO Marten Mickos being the person recommending the book to me!) can’t avoid some of its effects. Many things disrupt the disruptor! That doesn’t mean they won’t remain successful, it just shows there’s plenty of opportunities even in markets that appear saturated with huge incumbents and popular disruptors. There are ways to “please more people” but noone can please everyone. And that’s a good thing. In our technology space things move quickly, and there are plenty of viable niches to be explored, with new ones popping up all the time. I actually thought of a new idea (not MySQL related) only a few days ago, I’ll just have to see whether I can do something with it quickly.

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5 thoughts on “The disruptor and the incumbent

  1. I was thinking the same thing myself today. To that, I would only add that this pattern only occurs if the newcomer is going after a market that is rapidly growing. They achieve economics of scale and are able to starve the incumbent even though they live in a high profit market.

  2. Christensen also mentions that the main market moves on to value some else higher. As per his and your example with portability with disk drives. The incumbent continues on the high performance high margin business path and essentially vacates the low end.

    First SQL Server and then PostgreSQL and MySQL have moved into the low end. I cover this in more detail in a couple of blogs posts
    http://disruptioncity.blogspot.com/

    IMHO, the next database wave is in customized databases, i.e. a database which is designed and used for a specific function. MySQL pluggable storage engines allow MySQL to continue in this space but they need to not drop the ball on this as they pursue RDBMS nirvana and chase Oracle, DB2 and SQL Server.

    Solid State Drives (SSD) are actually disrupting hard drives now. Flash memory/RAM started life in cameras and now slowly but surely their price/performance is getting better and they start to eat into the low end.

  3. Thanks for the insight Arjen. I have to say we faced our own dilemma in this – do we analyze the market as it stands right now, or try and predict the future? Ultimately you have to do the former before you can do the latter, and as well as the ‘superficial impact’ finding we did also point towards increased adoption in the future as the market evolves. We will of course be following events as it does so.

    Matt

  4. SSDs are going into the ultralight laptops now (like the Asus Eee). New market.
    Actually SSDs are one of the things that can make a laptop ultralight, since: no space or structural support needed for regular HD, and lower power requirements. With laptops there is a direct demand for less size/weight, so I see SSDs competing directly with the small form HDs in this market.

    “Below” MySQL is already another product, for several years already: SQLite. For the really simple, as well as embedded stuff (and even Google Gears!), SQLite is a more appropriate solution. If you look at how Richard Hipp has done things, he’s basically outdone MySQL on taking some shortcuts and methodology… it’s Monty to the next level, but for a very specific purpose. Excellent stuff.

    I don’t see why MySQL should chase (or is chasing) Oracle and DB2, they don’t operate in the same space. There is overlap and the overlap is shifting up, but still.

  5. You can’t analyse a disruptor’s marketplace, since it doesn’t exist yet. It defies traditional market research methodology.
    What you do is explore the market quickly with whatever you come up with, while spending the least possible amount of money, or at saving sufficient money to change track a number of times until you get it “right”. So basically you invest in exploration of the live market while remaining agile, rather than on analyzing the market before going in.
    It’s the new way -and it scares marketing and traditional business types to no end! very funny.

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