Chapter 3. Technology Transition

Ashish Sood[1] and Gerard J. Tellis[2]

Introduction

Many marketers think market segmentation is the most important engine of growth. (Yankelovich and Meer, 2006). On the contrary, it is technological change that is perhaps the most powerful engine of growth. Numerous examples can be cited from industry to support this claim. Technological change enabled the growth of Microsoft from a fledgling company to the colossus of the computer industry. The emergence of new classes of products (e.g., Internet-enabled products, Walkman, washing machines, etc.) suggests that technology creates new growth markets and fuels the growth of new brands. Finally, the meteoric rise of Amazon and Dell demonstrates how technological change propels small outsiders into market leaders.

Technology transition

However, firms cannot gain from technological change if they do not understand the phenomenon well. New product development and major investments in research depend upon a correct understanding of technological evolution in general and transition between leading technologies for various markets in particular. A central practical problem that faces managers is when to shift investments from the old to the new technology.

We discuss three important dimensions of technology transition: shape of technological evolution, relative performance of competing technologies during the transition, and dimensions of technological competition. In particular, we discuss the following questions: ...

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