The_Innovators_Dilemma__Clayton

Figure 2.8 Comparison of Disk Drive Memory Capacity to Flash Card Memory Capacity
Source: Data are from various issues of Disk/Trend Report.
Hence, because flash cards are being used in markets completely different from those Quantum and
Seagate typically engage—palmtop computers, electronic clipboards, cash registers, electronic
cameras, and so on—the value network framework would predict that firms similar to Quantum and
Seagate are not likely to build market-leading positions in flash memory. This is not because the
technology is too difficult or their organizational structures impede effective development, but because
their resources will become absorbed in fighting for and defending larger chunks of business in the
mainstream disk drive value networks in which they currently make their money.
Indeed, the marketing director for a leading flash card producer observed, “We’re finding that as hard
disk drive manufacturers move up to the gigabyte range, they are unable to be cost competitive at the
lower capacities. As a result, disk drive makers are pulling out of markets in the 10 to 40 megabyte
range and creating a vacuum into which flash can move.” 24
The drive makers’ efforts to build flash card businesses have in fact floundered. By 1995, neither
Quantum nor Seagate had built market shares of even 1 percent of the flash card market. Both
companies subsequently concluded that the opportunity in flash cards was not yet substantial enough,
and withdrew their products from the market the same year. Seagate retained its minority stake in
SunDisk (renamed SanDisk), however, a strategy which, as we shall see, is an effective way to address
disruptive technology.
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