New Technologies & Future Markets Agenda

Why is Andy Paranoid? • Class Business

Week 2 • The Project
Tuesday, January 10, 2006 • Digital News
• From Last Lecture
• Class Lecture: Andy’s Paranoia
• Team Activities

Safe Harbor Clause Class Business

• “I’m not giving investment advice” • Assignment 2 (triplets, pairs, singletons)
• Declaring Team and Topic
• Project

Agenda Agenda

• Class Business • Class Business

• The Project • The Project
• Digital News • Digital News
• From Last Lecture • From Last Lecture
• Class Lecture: Andy’s Paranoia • Class Lecture: Andy’s Paranoia
• Team Activities • Team Activities

1
 Agenda Last Lecture
• Class Business • What is Creative Destruction? (Stegosaurus
• The Project Brittanicus)
• Digital News • What are some trends that scare Andy?
• From Last Lecture – Changing Industry
– PC Maturing?
• Class Lecture: Andy’s Paranoia
– Networking over PC? Consumer Appliances?
• Team Activities
– Fast Product Development Times?

The Next Dinosaur in 10 Years

• IBM Information Systems
• Intel Chips
Who’s the next Dinosaur? • Microsoft Software
• Dupont Chemicals
• Boeing Airplane Manufacturing
• US West Telecom
• Amazon.com Internet Bookstore
• Kodak Film, Photography Supplies

Table 1
Reported New Product Time Reductions
INDUSTRY % Time Reductions Faster Product Cycles
range median
54
Agriculture 54 54
Aerospace 26,29,45 38-43 40
Automotive12,13,22,32,42,48,59 25-75 50
Chemical21 44 44
Computer14,51 59-71 65
14,21,32,51
Consumer Goods 20-56 47
14,21,56
Electromechanical 24-79 52
15,42,48,49,57
Electronics 40-67 50
Heavy Machinery44,52 60-63 61
Medical Devices 21,54 42-50 46
Telecommunications 33-67 50

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 Summary Points

• The Knowledge Economy Andy’s Paranoia

• The Dynamic Competitive Environment
• Brutal product development cycle times
• Decreasing lag between Big Innovation and
Commercialization
• The dangerous outsider
• Increased need for External Intelligence New Technologies & Future Markets
Tuesday, January 10, 2006

Today there are just two kinds of companies:

The Quick and the Dead
-Andy Grove, Chairman of Intel
What is Grove ’s Law?

“Only the Paranoid Survive” What do you suppose Andy meant by this?

Transition between Two States of a

Business
When Should We Shift Gears?

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 Pros & Cons of Andy’s Intel New Cons for Craig’s Intel
Cons • AMD Threat
PROS
• “Not invented here”
• Engineering Talent • Expense of new fabrication plants
• Voice of the
• Market Leaders • Failed to diversify into communication
Customer?
• Premium Profit – RISC Chips chips
Margins
– Network Computers
• “The War Room” – The Price Performance
Mentality rule
• Focused Vision • 42,000 Employees is
a small firm? Which of these is worst?
• FTC Problems

10x Diagram
Six Forces Diagram

What does a 10x Force Do to an

Strategic Inflection Points
Industry?
• CHANGES THE BASIS OF
COMPETITION
• CREATES DEAD DINOSAURS
• PREMIUM PROFITS FOR LEAD
INNOVATORS
• SURVIVIAL FOR EARLY ADOPTERS

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 Chip Revenues More Mobile Phones Sold than PCs and Cars
Billions of Dollars

160
140
120
100
Communications
80 PCs
60 Others
40
20
0 Semiconductor Industry Assoc.

1995 1999 2003

Chips Everywhere!

Anything Else New?

How Fast Can This Change?

Who has an Internet Telephone?

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Home Networking