Disruptive Technologies and Schumpeter's Creative Destruction Model

Disruptive Technologies and Schumpeter's Creative Destruction Model

Just as a number of jurisdictions awarded Western Wireless "Eligible Carrier Status," signaling improved competitive operating conditions for wireless providers versus land-line carriers, the FCC and the National Telecommunications and Information Administration (NTIA) have both publicly exclaimed in numerous speeches, press statements, and written documents their dissatisfaction with the speed with which traditional land-line carriers are deploying broadband capability to "last mile customers." ^[5] To this end, the FCC, in 2002, is ardently conducting tests of an extremely disruptive wireless technology—ULTRA WIDEBAND RADIO (UWB). ^[6] This technology is literally so robust that Intel Corporation is working on a 500 MBPS UWB chip. ^[7] That data rate is the approximate equivalent of 11 T3s coming to a laptop or other device wirelessly. Other wireless technologies are also pushing the broadband envelope, as shown in Table 5. ^[8]

This competitive technology landscape is somewhat particular to the United States and several other countries. That is, in the United States, when one obtains a wireless license from the FCC, the FCC stipulates frequencies, bandwidth, channels, and power authority. That is, in the United States, regulators decoupled technology from the license itself. This is at odds with most other non-U.S. wireless regulators, where the license authority also specifies the technology, i.e., 3G licenses in Europe require W-CDMA technology. This fundamental state in the United States drives Schumpeter's "creative destruction" model. ^[9] That is, no technology is sacrosanct, and as soon as something newer and better comes along, U.S. businesses have been quick to change and envelop the new—without regulatory encumbrances. Intel championed Schumpeter's concept of "creative destruction" by constantly introducing newer and better chip solutions before their existing offerings have run their respective full lives. ^[10] Such competitive actions permitted Intel to strategically manage prices, moving back and forth from what Michael Porter refers to as "pricing by differentiation" and "pricing to cost." ^[11] And, Texas Instruments just announced development of a single-chip wireless communications device by 2005. ^[12] Additionally, we can see from figures that product development and technology adoption rates are taking place in shorter time frames, thereby increasing the chance for miscalculations.

Further defining the competitive landscape and "time-to-market" imperatives, a survey of wireless system and product design engineers indicated a significant compression of development cycle times. ^[13] This survey yielded the data in Table 6.

Charting these results emphasizes how dramatically professional opinions have changed concerning development times and "time-to-market" imperatives. As we can see, opinions have virtually flip-flopped in just two years regarding development cycle time. Complementing cycle time reductions, we also see newer, disruptive technologies generally being adopted at faster rates.