Jan. 25, 2013 ? The bread and butter of investing for Silicon Valley tech companies is stale. Instead, a new process of presaging a expansion of record could save tech giants millions in investigate and expansion or developments of new products — and assistance analysts and try capitalists establish that companies are on a right track.
The high-tech attention has prolonged used Moore’s Law as a process to envision a expansion of PC memory. Moore’s Law states that a array of chips on a transistor doubles any 18 months (initially any year). A paper by Gareth James and Gerard Tellis, professors during a USC Marshall School of Business and their co-authors Ashish Sood, during Emory and Ji Zhu during a University of Michigan, concludes that Moore’s Law does not request for many industries, including a PC industry.
High-tech companies traditionally use Moore’s Law and other identical heuristics to envision a trail of expansion of competing technologies and to confirm where to flue millions into investigate and expansion or new product development. The paper’s researchers explain that these models are old-fashioned and inaccurate.
The paper offers a new model, Step and Wait (SAW), that some-more accurately marks a trail of technological expansion in 6 markets that a authors tested. According to a researchers, Moore’s Law and other models such as Kryder’s Law and Gompertz Law envision a well-spoken augmenting exponential bend for a alleviation in opening of several technologies. In contrast, a authors found that a opening of many technologies deduction in stairs (or jumps) of large improvements interspersed with waits (or durations of no expansion in performance).
The honeyed mark is in meaningful that record to behind formed on presaging when a new record is going to have a burst in performance.
“We looked during a timberland rather than a trees and see ‘steps’ and ‘waits’ opposite a accumulation of technologies,†Tellis said. While no one law relates to any market, Tellis and his co-authors looked during 26 technologies in 6 markets from lighting to vehicle batteries, and found that a SAW indication worked in all six, in contrariety to several other competing models.
What Tellis and his colleagues did come adult with, are normal opening improvements for a attention in terms of “steps†and wait times (see list to a right). The plea for strategists is to deposit in several technologies to kick these averages.
Tellis pronounced that inscription and mobile phone manufacturers can precedence this data. “Any manager has initial to mangle down his or her products into components, find components for any technology, and afterwards envision a destiny trail of those technologies. For example, a mobile phone consists of 3 critical technological components: memory, display, or CPU, a initial dual of that a authors analyzed. Similarly, tablets, manufacturers could rest on a total for arrangement and memory technologies.â€
An instance of how a SAW indication could have saved a association from decrease is Sony’s investment in TVs. Sony kept investing in cathode ray tube record (CRT) even after glass clear arrangement record (LCD) initial crossed CRT in opening in 1996. Instead of deliberation LCD, Sony introduced a FD Trinitron/WEGA series, a prosaic chronicle of a CRT. CRT out-performed LCD for a few years, though eventually mislaid decisively to LCD in 2001. In contrast, by subsidy LCD, Samsung grew to be a world’s largest manufacturer of a improved behaving LCD. The former marketplace leader, Sony, had to find a corner try with Samsung in 2006 to make LCDs.
Having a SAW indication during a prepared competence have altered their course. “Prediction of a subsequent step distance and wait time regulating SAW could have helped Sony’s managers make a timely investment in LCD technology,†according to a study.
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Story Source:
The above story is reprinted from materials supposing by USC Marshall School of Business, around EurekAlert!, a use of AAAS.
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Journal Reference:
- Sood, Ashish, James, Gareth, Tellis, Gerard J. and Zhu, Ji. Predicting a Path of Technological Innovation: SAW Versus Moore, Bass, Gompertz, and Kryder. Marketing Science., Jul 22, 2012 [link]
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