Matakuliah
Tahun
: A0814/Investment Analysis
: 2009
THE TECHNOLOGY CURVE
Pertemuan 13-14
S-Curve
• In technological environments, paybacks from
technology depend on the position along the technology
curve.
– Initial stages
there is a lot of experimentation and less payback.
– Portion step
curve is the highest payback, which is a period of high
technology improvement.
Bina Nusantara University
3
Technology Curve
• The essence of the technology curve is the argument
that there are limits to technologies, and it is vital to
recognize when a technology has reached its limit.
• The key to staying competitive, from a technology curve
standpoint, is for companies and individuals to realize
when the technology plateau has been reached and
make a transition to the next technology.
Bina Nusantara University
4
Is There Evidence for The Existence of
Technology S-Curves?
Reliability
Integrated
Circuits
Transistors
Vacuum Tubes
Bina Nusantara University
Times
5
Drawing an S-Curve
Step 1.
Identify the relevant axes.
On ther vertical axis (y-axis) is the performance criteria
that is of interest to and valued by the user of the
product.
On the horizontal axis (x-axis) is a measure of effort.
Step 2
Identify the limit on technical performance.
Understand the limiting mechanism that will then shed
light on the limit on performance
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6
Drawing an S-Curve
Step 3
Historical data on performance criteria as well as the extent
of technical effort is plotted on the axeds.
While the more accurate the technology S-curve will be
with a greater number of data points used, three to four
points, coupled with information about the limit, can be
sufficient to draw a relevant S-curve.
Bina Nusantara University
7
Implications
• Payoff depends on the position on the technology curve
• Pay attention to S-Curves of new technologies
• Become comfortable with rendering your product
obsolete
• Recognize competitors in related fields
• Reduce market acceptance time.
Bina Nusantara University
8
Technology Trend Curves
Investment
Trailing-Edge
Technology
Bleeding-Edge
Technology
10-25%
50 – 75 %
10 -25%
Leading-Edge
Technology
Time
Bina Nusantara University
9
Disruptive Technologies
• Technological change is inevitable and when
technologies or markets change, many leading
companies fail to stay at the top of their industries due to
the inability of company executives for foresee the
impact of these changes and jump technology curves.
Bina Nusantara University
10
• The technological changes that drastically affect
established companies are usually not completely new
or complex from a technological perspective.
• 2 important characteristics:
– Typically present a novel package of attributes that at least
initially are not valued by existing customers
– The attributes that existing customers do value improve at such
a rapid pace that the new technology can invade established
markets.
Bina Nusantara University
11
Bower and Christensen proposed for disruptive
technologies
• Step 1
Identify what constitutes a disruptive technology.
• Step 2
define the strategic significance of disruptive
technologies.
• Step 3
locate the initial market for disruptive technologies.
Bina Nusantara University
12
Technologies of The Future
“I have a rule in my business: to see what happends
in the next ten years, look at what happened in the
last ten years.”
Andy Grove, Former CEO of Intel Corporation
Bina Nusantara University
13