I'll be first to agree that "disruption" is an overused word. I hear it all the time -- companies pitching me their new business idea describe how they're going to disrupt this or disrupt that. And here at CES 2013, I see and hear the word disruption everywhere I turn. Sometimes these companies really mean disruption. But often, they just mean that they're going to use technology to compete aggressively. Instead of simply saying "compete," they invoke the moral authority of Clayton Christensen and say they intend to "disrupt" the rest of the competitive field.
My concern with the overuse of the word disruption is not just that it waters down the power of the ideas behind disruption. It's that a muddy understanding of disruption will stop us from comprehending just how powerful digital disruption will be. Because the addition of digital to the word disruption does not merely enhance it, it accelerates it, making digital disruption orders of magnitude more powerful, a case I made in late 2011 and a case that has only strengthened since.
This week Wal-Mart announced that it would put significant weight behind the new Boxee TV box, a $99 set-top box that competes with the market-leading Apple TV and the runner-up Roku boxes. Wal-Mart also sells the Apple TV and Roku devices, so it might not seem like a big deal, but it is. Because Wal-Mart is going to promote Boxee TV with in-store displays and outbound marketing support. Why? Because in addition to the regular apps like Hulu, Netflix, and the rest, Boxee gives Wal-Mart customers three things they can't get from Apple or Roku:
Regular TV shows from local broadcasters. Boxee's new box has a digital tuner that lets you tune to digital signals from ABC, CBS, CW, Fox, NBC, PBS, and Univision through either an over-the-air antenna or via ClearQAM.
Unlimited DVR. Not only will Boxee let you watch these channels, it is offering unlimited cloud DVR for $9.99 a month (in only the top eight markets for now) to record any shows from those networks, without managing a hard drive or paying extra if you want to store hours and hours of video.
Multidevice viewing. This is the real coup for Boxee. Because its DVR is in the cloud, it can send your recorded content to any device you log in to -- whether it's in your home or in your hands while traveling for business.
It's now a year later and a lot has happened. Digital Disruption will soon be available as a hardback book (also as an eBook, natch). You can pre-order a copy now at Forr.com/DDbook. To complete the book I had to get far outside of my comfort zone -- I work with media companies and consumer product companies primarily, but to prove that digital disruption is a fundamental change in the way we all do business, I had to interview people in the pharmaceutical industry, the military camouflage industry, and I even recently spoke to the CIO of a cement manufacturer! And to my pleasant surprise, they were every bit as digitally disruptive as their counterparts in the consumer-facing enterprises that we think of when we imagine digital disruption.
One of the main reasons every company can be and eventually must be a digital disruptor is the rise of digital platforms. These platforms are founded on a set of devices, wrapped together with software experiences that identify each customer individually, and are open to app contributions from thousands of partners. The platform owners that matter today are Amazon, Apple, Facebook, Google, and Microsoft.
You have heard the word disruption; you know what that is. And you have heard the word digital. You know what that is, too. But put them together – digital disruption – and they add up to much more than the mere sum of their parts. Digital disruption, when properly understood, should terrify you.
Three sources of digital power – the prevalence of free tools and services that enable disruptors to rapidly build products and services, the rise of digital platforms that are easily exploited by aspiring competitors from all directions, and the burgeoning class of digital consumers ready to accept new services – have combined to unleash a disruptive force that will completely alter every business on the planet. Digital disruption isn’t disruption squared. It’s the disruption of disruption itself.
Most people I meet think they get digital disruption. And a survey of global executives we conducted shows that 89% of executives believe that digital will disrupt their industry. But they don’t realize just how big a deal disruption will be when it finally hits them.
I have been writing and speaking about digital disruption for years – full time for more than a year now – and it still manages to surprise me. In the month of October, I’ll keynote several Forrester Forums and there confess that digital disruption is even more powerful than I thought it was when I wrote the original Disruptor’s Handbook in 2011. What have I learned?
The poorly kept secret that is the Google Nexus 7 tablet was just announced amid much developer applause and excitement. The device is everything it was rumored to be and the specs — something that only developers care about, of course — were impressive, including the 12 core GPU that will make the Nexus 7 a gaming haven. True, it's just another in a long line of tablets, albeit a $199 one that competes directly with Amazon's Kindle Fire and undercuts the secondary market for the iPad.
But as a competitor to the iPad, Nexus 7 isn't worth the digital ink I'm consuming right now.
But Google isn't just selling a device. Instead, the company wants to create a content platform strategy that ties together all of its ragtag content and app experiences into a single customer relationship. Because the power of the platform is the only power that will matter (see my recent post for more information on platform power). It's unfortunate that consumers barely know what Google Play is because it was originally called Android Market, but the shift to the Google Play name a few months back and the debut of a device that is, according to its designers, "made for Google Play," show that Google understands what will matter in the future. Not connections, not devices. But experiences. The newly announced Nexus 7, as a device, is from its inception subservient to the experiences — some of them truly awesome — that Google's Play platform can provide through it.
Last week, we released our newest report about the future of TV and argued in it and the accompanying blog post that the battle for the TV is not really about TV. It’s about the future of the platform giants like Apple, Google, and Microsoft that want to add the TV to their platform ambitions. Surprising to some was our claim that Microsoft was in the lead in the US TV platform battle with its base of millions of Xbox 360 owners generating more online video views on the TV screen than viewers of any other device. Many have challenged this assertion, putting the data about current use aside and asking a good question:
Won’t Apple easily walk away with the TV business once it releases its next big thing, presumably a TV?
You’re in for a big surprise. Microsoft is winning one of the most important battles in the digital world: The battle for the TV. The TV battle is important for reasons you already know: TV consumes more time than anything else and it generates annual revenues from $140 to $160 billion each year in the US alone.
But the stakes of the battle have risen sharply. The fight over the TV is really a fight over the next massive consumer platform that is coming up for grabs. Of platforms there are few: Google owns search, Amazon owns digital retail, Facebook owns social, and Apple owns consumer devices. Microsoft owns, well, nothing at the moment, despite its handsome revenue stream from Windows and Office.
That could change soon. Microsoft’s Xbox 360 is already the most-watched net-connected TV device in the US and soon, the world. With more than 70 million consoles in households worldwide – as many as half of them connected to the Internet, depending on the country – Microsoft can rapidly drive new video services into tens of millions of households.
This week hundreds of us in and around the book industry will converge on Digital Book World 2012 (#DBW12). It's a conference that has risen in significance because this industry has rapidly come to understand that it is uniquely susceptible to digitization -- and poised to benefit from it -- in a way that other media are not.
This awareness has translated into relative optimism among publishers. As I'll share with the DBW12 audience on Tuesday morning, we recently conducted a survey with Digital Book World of publishing executives whose companies together earn 74% of all US trade publishing revenues. As we closed out 2011, 82% of publishing executives we surveyed were optimistic about the digital transition. That's a large number, even if it's smaller than the 89% it was a year ago. But when we take into account all the measures of optimism we threw at them -- about the industry in general, about the fortunes of readers, and the importance of their own roles -- most of them decreased somewhat and some decreased significantly.
Most tellingly, only 28% of these executives thought their own company would be stronger in the future because of digital compared to 51% who agreed with this sentiment the prior year. This suggests that publishers have started to do the hard work of making the digital transition and they're finding that it is, indeed, hard work. It's worth putting ourselves in the shoes of these publishing industry product strategists for a moment to consider just why they aren't positive that their companies are going to come out better off. I see three reasons:
What to do when a failed product concept still lingers, haunting every attempt at injecting it with new life? That's the problem with interactive TV, a term that grates like the name of an old girlfriend, conjuring up hopes long since unfulfilled yet still surprisingly fresh. Gratefully, it’s time to put old product notions of interactive TV behind us because this week Microsoft will release a user experience update to the Xbox 360 that will do for the TV what decades of promises and industry joint ventures have never managed to pull off.
Meet engaged TV. From now on, I will no longer need to plead with the audiences I address, the clients I meet, or my friends who still listen to me to imagine the future of TV. Because Microsoft has just built and delivered it: A single box that ties together all the content you want, made easily accessible through a universal, natural, voice-directed search. This is now the benchmark against which all other living-room initiatives should be compared, from cable or satellite set top boxes to Apple’s widely rumored TV to the 3.0 version of Google TV that Google will have to start programming as soon as they see this. With more than 57 million people worldwide already sitting on a box that’s about to be upgraded for free – and with what I estimate to be 15 million Kinect cameras in some of those homes – Microsoft has not only built the right experience, it has ensured that it will spread quickly and with devastating effect.
Or will someone else do it for you? That's the principal question I have after seeing the first week's worth of responses to our Digital Disruption Readiness Assessment survey. This 5-minute survey (available at forr.com/digitalreadiness) is already revealing critical vulnerabilities in corporate readiness. Consider the following data point:
It's not that people think their industries are safe from digital disruption -- quite the contrary. A full 76% see "significant opportunity" for digital to disrupt the industry they serve. Yet only a third think their companies will put the right resources in place to adapt to the changes that digital will bring.
I spoke at a private conference outside of San Francisco on Tuesday and shared our digital disruption research with the room, elaborating on the Lose It! case study I posted on Mashable last week. Afterward, several entrepreneurs spoke to me about their own experiences as digital disruptors. One of them -- who self-identified as a Gen Yer who had recently received $15 million in funding for his startup -- explained to me that the cost of disrupting has fallen so low that he doesn't even think people like him need to go for the big funding anymore (not that he refused it when it came!). He said, "Especially in software, it only takes $30,000 to build anything in software today."
That's a digital disruptor. He's not bound by traditional economics, old-school partnership boundaries, or even antiquated notions of customer privacy. How are you going to compete with someone who thinks -- and acts -- like that?