The_Innovators_Dilemma__Clayton

Figure 2.7 Improvements in Areal Density of New Disk Drives (Densities in Millions of Bits per
Square Inch)
Source: Data are from various issues of Disk/Trend Report.
Insights from the Value Network Framework
The value network framework asserts that none of the foregoing frameworks is a sufficient predictor of
success. Specifically, even where established firms did not possess the requisite technological skills to
develop a new technology, they would marshal the resources to develop or acquire them if their
customers demanded it. Furthermore, the value network suggests that technology S-curves are useful
predictors only with sustaining technologies. Disruptive technologies generally improve at a parallel
pace with established ones—their trajectories do not intersect. The S-curve framework, therefore, asks
the wrong question when it is used to assess disruptive technology. What matters instead is whether the
disruptive technology is improving from below along a trajectory that will ultimately intersect with
what the market needs.
The value network framework would assert that even though firms such as Seagate and Quantum are
able technologically to develop competitive flash memory products, whether they invest the resources
and managerial energy to build strong market positions in the technology will depend on whether flash
memory can be initially valued and deployed within the value networks in which the firms make their
money.
As of 1996, flash memory can only be used in value networks different from those of the typical disk
drive maker. This is illustrated in Figure 2.8, which plots the average megabytes of capacity of flash
cards introduced each year between 1992 and 1995, compared with the capacities of 2.5- and 1.8-inch
drives and with the capacity demanded in the notebook computer market. Even though they are rugged
and consume little power, flash cards simply don’t yet pack the capacity to become the main mass
storage devices in notebook computers. And the price of the flash capacity required to meet what the
low end of the portable computing market demands (about 350 MB in 1995) is too high: The cost of
that much flash capacity would be fifty times higher than comparable disk storage. 23 The low power
consumption and ruggedness of flash certainly have no value and command no price premium on the
desktop. There is, in other words, no way to use flash today in the markets where firms such as
Quantum and Seagate make their money.
54