This post is the first in Novelr’s Interesting Problems in Publishing series. Read more about that here.
Disrupted industries tend to follow a common pattern. I spent the last month or so reading Clayton M. Christensen’s The Innovator’s Dilemma, and realized, at the end of it, that the $0.99 ebook is really a part of one such pattern. But in order to understand that, we need to know how a disrupted industry looks like. So let’s begin by talking about hard disk drives.
The first hard drives were developed between 1952 and 1956. They were horrendously large (in physical size) and ridiculously small (in memory). But what followed this initial innovation is instructive when thinking about pricing, technology, and industry-wide disruption.
In 1978 the dominant hard disk drives on the market were 14-inch drives, at 300 to 400 MB of memory. They were used in large mainframe computers.
In the same year, the first 8-inch drives hit the market, built and sold by startups at the margins of the hard drive industry. Nobody wanted them. The models weren’t taken seriously. The drives themselves were small — at 20, 30, 40 MB capacity — which meant that they were of no use to any mainframe computer maker.
So what do you do when the mainstream computer manufacturers reject your product? The new 8-inch drive makers turned their attentions to the smaller (and therefore less profitable) minicomputer market. This market didn’t mind paying for less capacity; they prized other attributes such as the smaller size of the new hard drives.
And so the minicomputer market exploded. The startups found that they could increase the capacity of their small drives at a rate far faster than that of the 14-inch drive makers. When they became good enough — that is, when the new 8-inch drives had enough memory to be of use to the mainframe computer manufacturers, the mainframe companies began to take a closer look at the 8-inch drives. They discovered that the smaller models had several other valuable attributes: lower mechanical vibration, for instance. The new drives began to invade the mainframe computer market, and the incumbents were driven out of business.
Fast forward 3 years. Seagate Technology introduces a 5.25-inch hard drive. At capacities of 5 & 10 MB, these new drives were of no use to the minicomputer market. And so the new startups turned to the PC market.
When the 5.25 inch drives became large enough for minicomputers to use, other attributes became more important. The wide adoption of personal computers meant that it made sense for many mainframe and minicomputer manufacturers to switch over to 5.25-inch drives. All the older companies (with the exception of Micropolis) were wiped out.
(Incidentally, this cycle is repeated for the next two waves of hard drives! 2.5 inch drives, for instance, were poo-pooed, but were used in laptops and eventually became large enough to invade the market categories above them. The attribute that mattered, in this case, was the fact that 2.5-inch drives were more rugged than their bigger cousins).
