Friday, June 10, 2016

Disruptive Technologies in the Telecommunications Market

Over the course of the past decade it has been so secret that mobile phones are taking over the traditional land line telephones.  In addition to mobile phone calls the use of text messaging, internet calling services, and internet video services provide other channels for communication that are cheaper, more convenient, and easily accessible to the global consumer.  If AT&T and similar telecommunications companies are not investing and taking risks on these new technologies they may lose their advantage in the market as internet communication services become the preferred method. Similar to the consumer choice to move toward mobile phones instead of land line use, the same pattern may repeat itself with the switch to internet communications.   There are already major signs that the market is headed in this direction.

When reflecting on this week’s reading the “Blue Ocean Strategy” I see a potential “blue ocean strategy” for the telecommunications companies – completely abandon the cellular network and rely on internet based communications.  This would completely turn smart phone devices into a mobile computer that allows user to make calls over the internet.  One may say that this is already true of mobile phones and you would be correct.  This technology already exists and is in use, however, the telecommunications giants have locked customers into the current cellular and calling plans that may one day become obsolete.  They are all competing in the same “red ocean” to gain advantage over one another and earn the most revenue.  

Instead of trying to compete with their existing business models, telecommunications companies could use one of the strategies that Christensen describes and “set up an autonomous organization charged with building a new and independent business around the disruptive technology.”  This would enable the companies to ignore what is working with their current models in relation to the new technology.  This will provide freedom to explore and make mistakes in designing their use of the disruptive technology.  Eventually when consumers are ready for the change, companies will be positioned to incrementally divest in current mobile technologies and focus resources on internet based calling business models.  The first companies to harness this type of strategy may reap big rewards.

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