innovation cycle
Tim O'Reilly has an interesting post in which he discusses the innovation cycle as it applies to open source, web 2.0 and companies in general. Two excerpts:
His term 'senescent commoditization' refers to the interchangability of competitor offerings in a mature ('senescent') market. For instance, long distance telephone service is largely a commodity now, but it wasn't until the entry of Spring and MCI in the 1980s. When I worked in the web hosting industry very early on, the industry had not yet commodified (commmoditized? whatever the word is!) and we were free to innovate and set prices as we saw fit because we had no real competitors.
He then talks about the innovation cycle and provides this picture showing some innovations in the computer industry:
click for larger view
...[O]penness is characteristic of the early pre-commercial stages of a new industry when many of the participants are in it just for fun; that proprietary advantage is characteristic of the middle phase; and that openness returns in senescent commoditization; which throws open the doors to innovation, and the whole cycle repeats.
His term 'senescent commoditization' refers to the interchangability of competitor offerings in a mature ('senescent') market. For instance, long distance telephone service is largely a commodity now, but it wasn't until the entry of Spring and MCI in the 1980s. When I worked in the web hosting industry very early on, the industry had not yet commodified (commmoditized? whatever the word is!) and we were free to innovate and set prices as we saw fit because we had no real competitors.
He then talks about the innovation cycle and provides this picture showing some innovations in the computer industry:
click for larger view
There's a repeating cycle of open and proprietary, innovation and exploitation, driven by greed and ignorance overriding joyful exploration....As long as companies create more value than they capture, they create a vibrant ecosystem around them. As soon as they capture more value than they create, they stagnate, however big the bank balance they build up before that becomes apparent.
