2.

TECHNOLOGY LIFE CYCLES

THE S-CURVE OF TECHNOLOGICAL PROGRESS

The S-Curve of Technological Progress illustrates how technology improves over time in a three-stage lifecycle, with
performance measured against time. Here's a breakdown of the key points:

Stages of the S-Curve:

1. New Invention Period (Embryonic Stage):

o The technology experiences slow growth as it undergoes experimentation and refinement.

o Initial performance gains are minimal due to bugs and developmental challenges.

2. Technology Improvement Period (Growth Stage):

o Rapid, sustained growth in performance occurs as improvements are made.

o The technology experiences its peak growth rate, driven by increased knowledge and investment.

3. Mature-Technology Period:

o The technology approaches its natural limits, causing performance improvements to slow.

o Factors like physical limitations (e.g., size, power consumption) constrain further progress.

o Once the limits are reached, the technology is vulnerable to substitution or obsolescence.

Key Concepts:

 Physical Limits of Technology: When technologies hit their physical limits (e.g., the vacuum tube’s size and
power consumption), they cannot progress further. This opens the door for newer, more advanced technologies
to take their place.

 Substitution and Obsolescence: Once a technology matures and cannot improve further, it is at risk of being
replaced by a new technology with higher performance potential. For example, solid-state transistor technology
eventually replaced vacuum tubes.

 Newer Technologies: Newer technologies (e.g., ceramics replacing metals in engines) often have a higher
potential limit, allowing them to surpass older technologies in performance. This results in the older technology
becoming obsolete over time.

Technological Forecasting and S-Curve:

  Technological Forecasting: The S-curve is a useful model for predicting how technology will progress.
Understanding where a technology is on the curve helps in forecasting its future trajectory, including when it
may reach maturity and be replaced.

 Influence of Development Efforts: A technology’s progression along the curve can vary depending on the
resources (time, money, research effort) devoted to its development. A newer technology may progress faster or
reach a higher performance limit than its predecessor.

Example - Vacuum Tubes vs. Transistors:

 Vacuum tubes had limitations due to their size and power consumption, which became insurmountable.

 Transistors, by contrast, overcame these barriers, allowing for miniaturization and reduced power consumption,
starting a new S-curve in technological progress and rendering vacuum tubes obsolete.

This model underscores the importance of understanding the life cycle of technologies for making strategic decisions,
especially when managing innovation and technology development.

The Technology Life Cycle and Market Growth

The Technology Life Cycle (TLC) also impacts market growth, which follows a predictable pattern as technologies move
from development to obsolescence. Below is a breakdown of how the market volume (y-axis) evolves over time (x-axis)
across different stages of the TLC:

Stages of the Technology Life Cycle and Market Growth:

1. Technology Development Phase (A):
o At this stage, there is no market response. The technology is still in development, with significant
investment in research, prototype creation, and testing.
o Market volume is zero because the technology is not yet available to the public, and no income is
generated.
o This is a high-cost, no-revenue phase, making it crucial to minimize its duration for efficiency.
2. Application Launch Phase (B):
o After the technology is launched, there is slow initial growth. Early adopters begin using the technology,
but the market is still small.
o The focus is on market penetration, where the technology is introduced and tested in the real world.
o The market volume starts to rise as the technology begins to gain traction.
3. Application Growth Phase (C):
o The technology enters rapid growth, driven by innovation and increasing demand. More customers
adopt the technology.
 o This phase sees a sharp increase in market volume, with adoption accelerating due to better product
offerings, improved performance, and wider availability.
o The growth rate will eventually slow as the technology matures.
4. Mature Technology Phase (D):
o The growth rate begins to slow down as the technology approaches its natural performance limits.
o The market reaches its peak volume, with the technology fulfilling most of the needs it was designed to
address.
o At this point, companies that continue to rely on the existing technology may face stagnation in market
share and revenue, as it no longer offers significant improvements.
5. Technology Substitution Phase (E):
o As new, better technologies emerge, the old technology starts to lose market share.
o The market volume starts to decline as customers switch to newer, more advanced alternatives that
offer better performance or lower costs.
o Companies that fail to innovate may see shrinking revenue and a diminishing customer base.
6. Technology Obsolescence Phase (F):
o In this final stage, the technology is essentially obsolete and has little or no market value.
o It has been entirely replaced by newer technologies, and market volume is very low or nonexistent.
Key Insights for Managers:
 Reducing Development Time: The technology development phase is costly and does not generate revenue.
Therefore, it’s essential for R&D managers to shorten this phase to minimize costs and start generating income
sooner.
 Market Penetration: During the application launch and growth phases, focusing on innovation and addressing
market needs is crucial to boost adoption and accelerate the technology’s market share.
 Maturity Management: As the technology matures, companies should innovate to stay ahead of competitors
and anticipate the shift to newer technologies.
 Obsolescence Awareness: Recognizing when a technology is approaching obsolescence allows companies to
transition to newer technologies and maintain competitiveness.
This lifecycle pattern helps organizations understand when to invest heavily, when to expect revenue growth, and when
to plan for technological transitions.

MULTIPLE-GENERATION TECHNOLOGIES
Multiple-Generation Technologies refer to systems where a technology
is made up of several subtechnologies or components, each of which
has its own technology life cycle. These technologies evolve through
multiple generations, with each new generation building upon the
previous one, driving progress and improving overall performance.
Key Concepts:
1. Hierarchy of Technology:
o Technology is not a single entity; it often consists of
subsystems and components. Each of these can have
its own life cycle, and collectively they shape the overall
technology life cycle.
o Example: The personal computer (PC) is a complex
technology that consists of multiple subtechnologies like the microprocessor, memory, software, and
peripheral devices.
2. Multiple Generations of Technology:
o Subtechnologies within a larger technology often evolve through multiple generations of innovation.
 o Example: The microprocessor has gone through several generations, such as the 8088, 286, 386, 486,
and Pentium series. Each new generation of the microprocessor improves performance and extends the
technology's overall life cycle, also boosting the technology life cycle of the PC itself.
3. Impact of Multiple Generations on the Technology Life Cycle:
o Subtechnology Evolution: Each subtechnology has its own technology life cycle, and improvements in
each generation extend the life and capabilities of the overall technology system.
o Example in Software Technology: A software application typically undergoes several generations of
updates and improvements. If a company stops developing its software after one generation while
competitors continue to innovate, it will find itself unable to compete with the newer, more advanced
versions of software.
o Acquisition and Update Strategy: For companies investing in software, acquiring an older version
without updating it may lead to obsolescence. To keep up with the market and maintain
competitiveness, they may need to invest in updates or newer versions that extend the software’s
capabilities and life cycle.
4. Technology Life Cycle of Subtechnologies:
o In the case of multiple-generation technologies, the overall technology life cycle is shaped by the life
cycles of the subtechnologies that make up the system. The evolution of each subtechnology (such as
microprocessors, software updates, etc.) influences the progression of the entire technology.
o For example, as microprocessors improved (from the 8088 to the Pentium), the overall PC technology
advanced as well, offering better performance, more capabilities, and extended product life.
Implications:
 Innovation and Competition: Companies must continually innovate to stay competitive. If they stop developing
their subtechnologies, they risk falling behind as competitors release new generations of their technologies.
 Investment and Update Costs: Companies investing in technologies (such as software or hardware) may need to
plan for ongoing updates to ensure they benefit from the latest improvements and don't fall into obsolescence.
 Longer Technology Life Cycles: Technologies with multiple generations of subtechnologies have the potential for
longer life cycles. The evolution of each component can extend the life of the larger system, offering
opportunities for continued profitability and market presence.

TECHNOLOGY AND MARKET INTERACTION

Technology and Market Interaction describe the dynamic relationship between technological development and market
forces. This interaction can drive innovation and economic growth in different ways, through science-technology push
and market pull.
1. Science-Technology Push:
Science as the Base for Technology: Technological breakthroughs
often stem from prior scientific discoveries. For example:
o Nuclear energy emerged from Einstein’s 1905 paper
on mass-energy equivalence (E=mc²).
o Transistor technology was based on A. H. Wilson’s
1931 theory of semiconductors.
o Genetic engineering followed Watson and Crick's
discovery of DNA structure in 1952.
 These scientific breakthroughs created new technologies that led to new markets, economic growth, and industrial develo
 Radical Innovations: Technologies like the Xerox machine (xerography) transformed markets. Initially seen as
impractical, xerography became a massive industry, demonstrating how radical innovations can reshape business
practices and create entirely new markets.

2. Market Pull:
  Technology Driven by Market Demand: In many
cases, technologies are developed to meet specific
market needs or demands. This is especially common
with incremental innovations, which improve existing
technologies or products.
 Consumer Influence: Consumers often don't know
what new technologies are in development, but their
needs or demands can drive innovation. For instance,
the demand for a vaccine for AIDS triggered
breakthroughs in biomedical technology.
 Impact of Market Pull: Market pull encourages
companies to respond to consumer needs and
demands, often leading to incremental
improvements that enhance productivity, quality, and
competitiveness.

3. Integrating Technology Push and Market Pull:

 Combining Both Forces for Innovation: Technological
progress can be accelerated by integrating both push
(scientific advancements) and pull (market demand)
mechanisms. The most successful innovations often
arise when the forces of technology development and market demand are aligned.
 Commitment to Technology Adoption: Munro and Noori (1988) suggested that a company's commitment to
adopting technology is strengthened by integrating both push and pull. This requires a strategic approach that
combines scientific research, market insight, and company resources (financial, technical, human).
Opportunities for Innovation:
 Science Push Opportunities: Includes scientific discoveries, applied knowledge, intellectual capital (e.g.,
scientists and engineers), and recognized societal needs.
 Market Pull Opportunities: Driven by market demand, proliferation of application areas, entrepreneurs, and the
pursuit of profitability, quality, and productivity improvements.
Conclusion:
Both technology push (scientific breakthroughs) and market pull (consumer-driven demand) are integral to
technological innovation. The most successful innovations arise from the synergistic interaction of these two forces,
where scientific research meets market needs, leading to impactful technological progress.

THE PRODUCT LIFE CYCLE

The Product Life Cycle (PLC) outlines the journey of a product from its conception to its eventual decline or
obsolescence. The progression of a product through various stages closely mirrors the technology life cycle, influencing
how products interact with markets and evolve over time. Here's an overview of the key phases in the PLC:
1. Concept and Design:
 The initial phase involves developing a product concept, which is then translated into an engineering design and
typically represented by engineering drawings.
 Prototype development follows, ensuring the product meets its performance specifications and aligns with the
design parameters.
 No market value exists at this stage because the product has yet to reach the marketplace.
2. Product Launch:
 The product is introduced to the market in the launch phase, where it is tested by consumers.
 Sales are slow at first, as the market is unfamiliar with the product.
 The company invests in marketing to build awareness and trust, driving initial demand.
3. Product Growth:
 As market acceptance grows, sales accelerate during the growth phase.
 The product becomes more established, and market penetration increases.
 Competition increases as other companies enter the market with similar or improved products.
4. Maturity:
 Eventually, the product reaches the mature stage where the market becomes saturated.
 Sales growth slows as most potential customers have adopted the product.
 The focus shifts towards differentiation and cost optimization to maintain competitive advantage.
 Process innovations often play a role in this phase, improving the efficiency and quality of production.
5. Substitution and Obsolescence:
 New products, technological advancements, or shifting market needs can lead to product substitution.
 As the product becomes obsolete, its monetary value diminishes.
 In some cases, obsolete products may continue to be recycled, repurposed, or preserved as collector’s items.
6. Technological Discontinuity:
 This phase occurs when technological advancements or disruptive innovations cause turbulence in existing
markets. A new product or technology might replace or radically alter the landscape of the industry.
 Product innovation and process innovation continue to evolve, sometimes leading to dominant product designs
that define industry standards.
 For instance, diesel-powered engines replaced steam engines, but may eventually be replaced by electric
engines, following the same lifecycle patterns.
Technological Discontinuity and Its Impact:
 Technological progress is often marked by a discontinuity — a breakthrough that leads to the introduction of a
new dominant design.
 This discontinuity resets the product cycle, starting a new life cycle for a different technology.
 For example, diesel engines have replaced steam engines, and electric engines may replace diesel, continuing
this cyclical process.
The Digital Age and Shorter Life Cycles:
 The digital age has accelerated innovation cycles, especially in electronics and software.
 Technologies such as microprocessors and software are evolving much more rapidly today than they did in
previous centuries.
 As a result, the product life cycle has shortened dramatically, with newer products constantly emerging to
replace older ones.
Key Points of the Product Life Cycle:
 The product life cycle resembles the technology life cycle in structure.
 Innovation cycles have become shorter due to rapid technological advancements, especially in the digital realm.
 Technological discontinuities reset the product life cycle, often leading to new market leaders and dominant
designs.
COMPETITION AT DIFFERENT PHASES OF THE TECHNOLOGY LIFE
CYCLE
Competition at Different Phases of the Technology Life Cycle
The Technology Life Cycle (TLC) is crucial for understanding the dynamics of competition across its various phases. The
level and nature of competition vary significantly during each stage, shaping strategies and decisions made by
companies. Here’s a breakdown of competition at different stages:
1. Embryonic or Emerging Technology Stage:
 Nature of Competition: In the early phase of the TLC, also known as the embryonic stage, innovation is the
primary driver of competition. The technology is still developing and has not yet gained widespread acceptance.
 Competition Focus: Companies compete on the novelty and potential of their innovations. Their goal is to add
value through their unique approaches to the technology, and they strive to be the first to demonstrate the
benefits of the new technology.
 Market Acceptance: At this stage, there is still uncertainty about the technology’s success. Consumers and
investors are unsure if the technology will thrive.
 Example: Early development of the personal computer or the internet were in their embryonic stages before
widespread adoption.
2. Early Growth Stage:
 Nature of Competition: During this stage, the technology begins to show its potential and market size starts
expanding. The technology now has the capacity to change the competitive landscape.
 Competition Focus: The focus shifts from mere innovation to gaining market share and customer adoption.
Companies must carefully balance their efforts between growth strategies (scaling production, expanding reach)
and continuous innovation to keep improving the technology.
 Strategic Consideration: Companies may face challenges in adapting their business models to a growing market.
Early market leaders might begin to emerge, but the technology is still evolving. Companies must avoid
complacency, continuing to innovate while scaling up.
 Example: The Osborne Computer Company case (as mentioned) highlights how growth can lead to missteps if
innovation falters while the company focuses too much on scaling.
3. Key Technology Stage (Late Growth / Early Maturity):
 Nature of Competition: Once the technology has proved its value in the market and is well-accepted, it may
become a key technology. This stage is marked by the emergence of a dominant design, where the industry
standard becomes clear.
 Competition Focus: At this stage, competition is no longer primarily about innovation but about establishing
leadership in the industry. Patents, proprietary technology, and industry standards become key competitive
advantages. Companies that have established themselves early on in the market may now begin to dominate.
 Market Dynamics: The technology often brings about significant improvements in cost, quality, and
performance across the industry. Those companies that have adopted the dominant design early can maintain a
competitive edge.
 Example: The Intel microprocessor and the rise of Windows OS in computing are classic examples of key
technologies that define the market.
4. Maturity Stage:
 Nature of Competition: In the maturity phase, the technology becomes more standardized and is widely
adopted across the market. Innovation slows down, and the focus shifts from developing new features to
optimizing existing ones.
 Competition Focus: At this point, the technology becomes a commodity. Companies have little room for
differentiation based on the technology itself. Instead, competition revolves around cost, efficiency, and brand
loyalty.
 Innovation Decline: As technological improvements become incremental, companies no longer compete based
on cutting-edge innovations but on how well they leverage and optimize the existing technology.
  Example: The landline phone industry or traditional television sets—these products reached a point where the
technology became commoditized, and competition centered on price and market share.
5. Technology Becomes a Commodity (End of Life):
 Nature of Competition: In the final phase, technologies that were once key become base technologies, offering
little competitive advantage. The market is flooded with similar products, and differentiation becomes
increasingly difficult.
 Competition Focus: With innovation no longer a major competitive factor, companies focus on maintaining
profitability through cost reduction and operational efficiencies.
 Example: PCs in the late 1990s or early 2000s, where every major manufacturer used similar components and
technology, leading to a focus on marketing, price differentiation, and customer service.
Key Insights:
 Early Stage: Competition is based on the novelty and uniqueness of the technology itself. Companies are focused
on proving the technology’s viability.
 Growth Stage: Market expansion occurs, and companies focus on scaling while still innovating. The technology
begins to disrupt existing industries.
 Key Technology Stage: The technology reaches maturity, and companies that can define the industry standard
or establish dominant designs gain significant advantages.
 Maturity and Commoditization: As the technology becomes a commodity, companies compete mainly on
efficiency, cost leadership, and service rather than innovation.
Understanding these phases helps companies develop strategies that are aligned with the current stage of their
technology in the lifecycle, whether it’s focusing on innovation, market leadership, or cost efficiency.

DIFFUSION OF TECHNOLOGY
Diffusion of Technology

The diffusion of technology refers to the process through which an

innovation is communicated and adopted by users over time. It is
influenced by several factors and is critical to understanding how quickly
and widely new technologies are accepted within a social system or
market.
Key Factors Influencing Technology Diffusion:
1. Relative Advantage:
o The degree to which an innovation is perceived to offer a
better advantage over existing technologies or practices.
o Example: A more cost-effective method of manufacturing
a product is likely to be adopted faster.
2. Compatibility:
o The degree to which an innovation aligns with the values, needs, and existing practices of the users.
o Example: A new product that causes pollution may be rejected in environmentally conscious
communities, even if it has advantages in other areas.
3. Complexity:
o The degree to which an innovation is perceived as difficult to understand or use.
o Example: A technology that requires significant retraining for employees or has high initial costs may face
slower adoption.
4. Trialability:
o The ability to try out the innovation on a limited basis before fully committing to it.
o Example: A new drug that physicians can use in small trial doses before prescribing to patients can ease
adoption.
5. Observability:
 o The degree to which the results or benefits of an innovation are visible to others.
o Example: A satellite dish, once seen in use and proving its effectiveness in a community, encourages
others to adopt it as well.
Factors Affecting the Adoption Rate:
 Innovations that are perceived to offer a greater relative advantage, compatibility with existing needs, and less
complexity, and that can be tried out and observed, are more likely to be adopted more rapidly.
Diffusion Curves:
 The diffusion curve illustrates how the adoption of technology occurs over time. It is typically divided into
different segments:
o Innovators: Early adopters who are quick to adopt new technology.
o Early Adopters: People who embrace new technology shortly after it is introduced.
o Early Majority: Individuals who wait for technology to prove its worth before adoption.
o Late Majority: The more skeptical users who adopt technology once it is widely accepted.
o Laggards: The last group to adopt technology, often resistant to change.
Technology Diffusion and Communication Channels:
 Communication channels play a vital role in the diffusion process. Information about an innovation can be
spread through various means, including:
o Mass media (TV, internet, etc.) for broad awareness.
o Interpersonal communication (word-of-mouth, recommendations from trusted sources) for more
targeted influence.
These channels help to spread information about the technology and influence the adoption rate by ensuring that the
right people hear about it at the right time.
Diffusion Decision Time:
 Innovation Decision Time is the period it takes for an individual or organization to make the decision to adopt an
innovation. This time frame varies based on several factors, such as the complexity of the technology, the
perceived risks, and the ability to trial the innovation.
In summary, the diffusion of technology depends on the perceived benefits, ease of use, compatibility with existing
systems, and visibility of the technology’s results. A technology with high relative advantage, compatibility, and
observability and low complexity is more likely to be adopted quickly.

THE DIFFUSION-COMMUNICATION-CHANNEL RELATIONSHIP

The Diffusion-Communication-Channel Relationship
Mahajan et al. (1990) propose that the adoption of an innovation is influenced by two primary communication channels:
interpersonal word of mouth and mass media.
Mass Media Influence:
 Mass media has a strong influence in the early phase of diffusion but continues to play a role throughout the
entire diffusion process.
 It is responsible for spreading awareness about the innovation to a broad audience and creating initial interest.
 Examples of mass media channels include television, newspapers, radio, and online platforms.
Interpersonal Communication:
 Interpersonal communication, such as word-of-mouth or recommendations from peers, influences the decision
to adopt an innovation more during the later phases of the diffusion process.
 As the number of users adopting the innovation increases, people rely more on peer influence and personal
experiences shared by others who have already adopted the technology.
 This leads to a decline in mass media influence over time, while interpersonal communication continues to
drive adoption.
The S-Shaped Diffusion Curve:
 The cumulative adoption rate over time follows an S-shaped curve, which is characterized by:
 o A slow initial adoption phase, driven by mass media and early adopters.
o A rapid adoption phase, spurred by interpersonal communication as more people see the benefits and
hear positive feedback from their peers.
o A slowing down of adoption in the later stages as the market becomes saturated, and only the laggards
are left to adopt the technology.
Innovation-Decision Process:
The adoption of an innovation involves several key stages:
1. Knowledge: The potential adopter becomes aware of the innovation and learns about its features.
2. Persuasion: The individual or organization forms a favorable or unfavorable opinion about the innovation.
3. Decision: The individual or organization decides whether to adopt or reject the innovation.
4. Implementation: The innovation is put into practice or used for its intended purpose.
5. Confirmation: The individual or organization evaluates the performance of the innovation to confirm its benefits.
Time of Decision:
 Technology leaders (innovators) typically go through the adoption decision process much faster than followers
or laggards.
 Followers take more time to make decisions because they need more assurance that the innovation is beneficial.
 Laggards are the slowest to adopt because they tend to be more conservative and hesitant to change.
In summary:
 Mass media influences the initial stages of diffusion, helping to create awareness.
 Interpersonal communication becomes increasingly important as adoption spreads.
 The innovation-decision process involves several stages, and the speed of adoption varies across individuals or
organizations, with innovators adopting quickly and laggards being the last to adopt.