1 00:00:04,480 --> 00:00:12,520 Speaker 1: Welcome to Tech Stuff, a production from iHeartRadio. Hey there, 2 00:00:12,560 --> 00:00:16,239 Speaker 1: and welcome to tech Stuff. I'm your host Jonathan Strickland. 3 00:00:16,320 --> 00:00:19,560 Speaker 1: I'm an executive producer with iHeart Podcasts and how the 4 00:00:19,600 --> 00:00:22,279 Speaker 1: tech are you? So today I wanted to talk about 5 00:00:22,360 --> 00:00:26,480 Speaker 1: a particular theory relating to technology. Now, I've done episodes 6 00:00:26,520 --> 00:00:31,240 Speaker 1: on various quote unquote laws regarding tech. These laws are, 7 00:00:31,560 --> 00:00:34,360 Speaker 1: you know, like stuff like Moore's law, which today we 8 00:00:34,440 --> 00:00:38,919 Speaker 1: often interpret as this concept that every two years or so, 9 00:00:39,120 --> 00:00:43,279 Speaker 1: computing power doubles. The original observation, which was made by 10 00:00:43,320 --> 00:00:47,199 Speaker 1: Gordon Moore back in nineteen sixty five, was that semiconductor 11 00:00:47,280 --> 00:00:51,480 Speaker 1: chip manufacturers were doubling the number of transistors that could 12 00:00:51,560 --> 00:00:56,120 Speaker 1: fit on an inch square wafer of silicon at regular intervals, 13 00:00:56,440 --> 00:01:00,320 Speaker 1: although the length between those intervals has changed over time, 14 00:01:00,600 --> 00:01:03,040 Speaker 1: like whether it's twelve months or eighteen months or twenty 15 00:01:03,080 --> 00:01:06,880 Speaker 1: four months. Moore's argument was that economic factors drove the 16 00:01:06,880 --> 00:01:12,400 Speaker 1: push to make processors more complex, to cram more components 17 00:01:12,560 --> 00:01:16,560 Speaker 1: on processors, not that there was some fundamental force that 18 00:01:16,640 --> 00:01:19,760 Speaker 1: allowed this to happen. And in order to keep Moore's 19 00:01:19,840 --> 00:01:23,760 Speaker 1: law relevant, we have fudged his observation several times. So 20 00:01:23,920 --> 00:01:27,960 Speaker 1: rather than talking about physically doubling the number of transistors 21 00:01:28,000 --> 00:01:31,679 Speaker 1: on a chip, we talk about computational output, you know, 22 00:01:31,720 --> 00:01:34,440 Speaker 1: like processing speed, that kind of thing, because you can 23 00:01:34,480 --> 00:01:37,800 Speaker 1: make the argument that the more important thing here isn't 24 00:01:37,959 --> 00:01:42,080 Speaker 1: how many transistors are on the chep, it's how powerful 25 00:01:42,280 --> 00:01:45,600 Speaker 1: is that chep? Because doubling the transistors, at least in 26 00:01:45,640 --> 00:01:48,800 Speaker 1: the early days, was kind of shorthand for saying this 27 00:01:49,080 --> 00:01:51,840 Speaker 1: processor is twice as powerful as one that came out 28 00:01:51,920 --> 00:01:56,280 Speaker 1: last year. Right anyway, stuffing Moore's law or even stuff 29 00:01:56,360 --> 00:01:59,480 Speaker 1: like Worth's law, that kind of thing. That's all stuff 30 00:01:59,480 --> 00:02:01,440 Speaker 1: that I've I've covered on this show in the past. 31 00:02:01,680 --> 00:02:04,480 Speaker 1: Today we're going to look at a different theory that 32 00:02:04,560 --> 00:02:08,960 Speaker 1: relates to technology, and it's all about early adopters. Really, really, 33 00:02:09,000 --> 00:02:11,880 Speaker 1: it's more than that. It's about the diffusion of innovation. 34 00:02:12,120 --> 00:02:15,240 Speaker 1: That's what the theory is called. The idea comes from 35 00:02:15,480 --> 00:02:19,200 Speaker 1: a guy named Everett M. Rogers, who is a sociologist 36 00:02:19,280 --> 00:02:22,440 Speaker 1: and a professor who in nineteen sixty two published his 37 00:02:22,600 --> 00:02:28,280 Speaker 1: observation on how societies ultimately accept new ideas, including new 38 00:02:28,280 --> 00:02:33,120 Speaker 1: innovations like technologies. Now. He described his observation as sort 39 00:02:33,160 --> 00:02:35,919 Speaker 1: of a bell curve. So imagine a bell curve. Right, 40 00:02:36,000 --> 00:02:39,679 Speaker 1: it's low at the front end, then it peaks up 41 00:02:39,800 --> 00:02:43,600 Speaker 1: into a hill, and then it slopes off and becomes 42 00:02:43,639 --> 00:02:45,799 Speaker 1: low at the back end. Right, So the front end 43 00:02:46,200 --> 00:02:50,399 Speaker 1: would be a group of people that he called the innovators. 44 00:02:50,760 --> 00:02:53,640 Speaker 1: This would consist of just two and a half percent 45 00:02:53,960 --> 00:02:58,200 Speaker 1: of the overall population that ultimately adopts this idea. So 46 00:02:58,280 --> 00:03:01,160 Speaker 1: not two point five percent of the entire population of 47 00:03:01,200 --> 00:03:04,440 Speaker 1: the world, just two point five percent of all the 48 00:03:04,480 --> 00:03:08,440 Speaker 1: people who ultimately adopt whatever it is we're talking about. 49 00:03:09,000 --> 00:03:12,760 Speaker 1: So these are the innovators. Behind them are the early adopters, 50 00:03:12,919 --> 00:03:17,440 Speaker 1: and this represents another thirteen point five percent of that population. 51 00:03:17,840 --> 00:03:20,959 Speaker 1: And then after that you get the majority of adopters 52 00:03:21,000 --> 00:03:23,360 Speaker 1: and rogers. Divided them into two halves, he had the 53 00:03:23,400 --> 00:03:26,840 Speaker 1: early majority and the late majority. Each of these consist 54 00:03:27,040 --> 00:03:30,359 Speaker 1: of around thirty four percent of the population that adopts 55 00:03:30,360 --> 00:03:33,680 Speaker 1: this idea. Then, bringing up the rear are the laggards 56 00:03:34,080 --> 00:03:36,760 Speaker 1: sixteen percent of the population. These are the people who 57 00:03:36,840 --> 00:03:40,440 Speaker 1: are slow to accept this new idea or product, but 58 00:03:40,520 --> 00:03:43,320 Speaker 1: ultimately they do come around to it. But even with 59 00:03:43,360 --> 00:03:45,920 Speaker 1: all these there will still be people who just never 60 00:03:46,120 --> 00:03:49,840 Speaker 1: come around to accepting an idea or technology. So this 61 00:03:49,920 --> 00:03:52,160 Speaker 1: is really just a way to describe the folks who 62 00:03:52,240 --> 00:03:56,160 Speaker 1: do now. On top of that, to be considered an adopter, 63 00:03:56,280 --> 00:03:59,080 Speaker 1: each person first must be aware of how this thing 64 00:03:59,280 --> 00:04:03,320 Speaker 1: addresses some need or want. It's not enough for it 65 00:04:03,360 --> 00:04:06,600 Speaker 1: to just be a new whatever it is, a new 66 00:04:06,640 --> 00:04:10,320 Speaker 1: idea or a new product. That thing has to be 67 00:04:10,360 --> 00:04:13,440 Speaker 1: able to do something that people perceive as being useful. 68 00:04:13,640 --> 00:04:16,520 Speaker 1: If it doesn't solve a problem, then the company or 69 00:04:16,720 --> 00:04:20,440 Speaker 1: person whomever is putting forth this innovation they need to 70 00:04:20,440 --> 00:04:23,479 Speaker 1: come up with a way to invent a problem that 71 00:04:23,640 --> 00:04:26,160 Speaker 1: this thing does solve. Steve Jobs is pretty darn good 72 00:04:26,160 --> 00:04:28,760 Speaker 1: at this. He was good at convincing a general public 73 00:04:28,880 --> 00:04:31,960 Speaker 1: that new technologies from Apple solve problems they didn't even 74 00:04:32,000 --> 00:04:35,400 Speaker 1: know that they had had. The adopter also obviously has 75 00:04:35,480 --> 00:04:38,080 Speaker 1: to make the decision to take the plunge and actually 76 00:04:38,160 --> 00:04:41,480 Speaker 1: adopt this new idea, and then they have to use 77 00:04:41,520 --> 00:04:44,440 Speaker 1: it and continue to use it. So the theory also 78 00:04:44,520 --> 00:04:48,960 Speaker 1: identifies five factors that affect the adoption of a new idea. 79 00:04:49,040 --> 00:04:52,680 Speaker 1: They are relative advantage. So how and to what extent 80 00:04:52,760 --> 00:04:55,920 Speaker 1: does this new idea solve a problem or improve upon 81 00:04:56,000 --> 00:04:59,839 Speaker 1: an earlier innovation. There's compatibility. You know, is the new 82 00:05:00,080 --> 00:05:03,719 Speaker 1: idea or product or whatever aligned with the values and 83 00:05:03,839 --> 00:05:06,920 Speaker 1: needs of potential customers. If they're in conflict, people are 84 00:05:06,920 --> 00:05:10,360 Speaker 1: not going to adopt it. There's complexity. Is the new 85 00:05:10,400 --> 00:05:14,240 Speaker 1: idea or whatever is it easy to understand and use? 86 00:05:14,440 --> 00:05:19,680 Speaker 1: That's pretty self explanatory. There's triability, as in, can someone 87 00:05:19,720 --> 00:05:22,400 Speaker 1: actually give this thing a whirl? Can they give it 88 00:05:22,440 --> 00:05:26,040 Speaker 1: a test before they commit to adopting it, and if so, 89 00:05:26,240 --> 00:05:30,480 Speaker 1: that definitely improves adoption. And then there's observability. Is it 90 00:05:30,560 --> 00:05:34,080 Speaker 1: possible to see or perhaps even measure the outcome of 91 00:05:34,120 --> 00:05:38,320 Speaker 1: adopting the innovation to say, I know that it has 92 00:05:39,240 --> 00:05:42,840 Speaker 1: been an improvement because here are the ways I can measure, 93 00:05:43,160 --> 00:05:46,600 Speaker 1: So can you tell that the thing is working? Generally speaking, 94 00:05:47,040 --> 00:05:51,240 Speaker 1: this theory, this diffusion of innovation is a pretty decent observation. 95 00:05:51,480 --> 00:05:54,240 Speaker 1: It's pretty rare for a new technology or idea in 96 00:05:54,320 --> 00:05:58,400 Speaker 1: general to just take the world by storm instantaneously. Usually 97 00:05:58,680 --> 00:06:01,520 Speaker 1: this is a process. We should also mention there are 98 00:06:01,560 --> 00:06:05,719 Speaker 1: additional factors when you take into account technology. This isn't 99 00:06:05,960 --> 00:06:09,640 Speaker 1: just a case of some people being more adventurous or 100 00:06:09,680 --> 00:06:12,760 Speaker 1: more open to new ideas. Other stuff makes a really 101 00:06:12,800 --> 00:06:17,280 Speaker 1: big difference, particularly when we're talking about tech, and one 102 00:06:17,360 --> 00:06:20,919 Speaker 1: big thing about that is cost, because often when a 103 00:06:20,960 --> 00:06:25,400 Speaker 1: new technology debuts, it's expensive. Really new technologies take a 104 00:06:25,400 --> 00:06:28,280 Speaker 1: lot of money to develop and to produce. The companies 105 00:06:28,400 --> 00:06:32,440 Speaker 1: that are making these things then pass those costs along 106 00:06:32,480 --> 00:06:34,840 Speaker 1: to us, the consumers, at least most of the time, 107 00:06:35,080 --> 00:06:37,960 Speaker 1: and that does make sense. You can't go making something 108 00:06:37,960 --> 00:06:40,560 Speaker 1: that costs you, you know, hundreds of dollars to produce 109 00:06:40,680 --> 00:06:42,240 Speaker 1: and then you turn it around and you sell it 110 00:06:42,279 --> 00:06:44,480 Speaker 1: for twenty bucks, because you would be out of business 111 00:06:44,520 --> 00:06:46,880 Speaker 1: in no time. But this does mean that the folks 112 00:06:46,920 --> 00:06:50,119 Speaker 1: who will buy your do hiky have to be both 113 00:06:50,160 --> 00:06:53,560 Speaker 1: willing to adopt something that is new and they have 114 00:06:53,600 --> 00:06:56,480 Speaker 1: to be able to afford it, and that reduces the 115 00:06:56,520 --> 00:06:59,640 Speaker 1: potential pool of customers a bit. So let's take the 116 00:06:59,720 --> 00:07:03,919 Speaker 1: HUM CD player as an example. The first commercially available 117 00:07:03,960 --> 00:07:07,039 Speaker 1: CD player came out in Japan back in nineteen eighty two. 118 00:07:07,320 --> 00:07:10,679 Speaker 1: In October of nineteen eighty two. This was the Sony 119 00:07:10,840 --> 00:07:14,280 Speaker 1: CDP one oh one, and Sony had worked in partnership 120 00:07:14,320 --> 00:07:17,040 Speaker 1: with other companies like Phillips to develop the CD player 121 00:07:17,080 --> 00:07:20,080 Speaker 1: technology for the market. So they had been working on 122 00:07:20,080 --> 00:07:22,520 Speaker 1: this throughout the nineteen seventies, and it sunk a lot 123 00:07:22,560 --> 00:07:26,240 Speaker 1: of money into making this thing happen, and there were 124 00:07:26,280 --> 00:07:30,320 Speaker 1: a lot of battles as well to actually ultimately arrive 125 00:07:30,520 --> 00:07:34,600 Speaker 1: at the CD form factor. The pitch of CDs to 126 00:07:34,720 --> 00:07:37,160 Speaker 1: the consumer was that they were going to offer far 127 00:07:37,240 --> 00:07:40,760 Speaker 1: more clarity than other forms of media that were available 128 00:07:40,760 --> 00:07:43,680 Speaker 1: in the market, like vinyl albums and cassette tapes. But 129 00:07:43,760 --> 00:07:46,679 Speaker 1: if you wanted one of these first players, you first 130 00:07:46,720 --> 00:07:50,200 Speaker 1: had to cough up one hundred and sixty eight thousand yen. Now, 131 00:07:50,280 --> 00:07:53,200 Speaker 1: back in October nineteen eighty two, in the CDP one 132 00:07:53,240 --> 00:07:55,920 Speaker 1: oh one first debut, the exchange rate of yen to 133 00:07:56,040 --> 00:07:58,400 Speaker 1: dollars was two hundred and sixty eight point five to 134 00:07:58,480 --> 00:08:01,600 Speaker 1: five yen to one US dollars. So this would mean 135 00:08:01,720 --> 00:08:04,120 Speaker 1: that the first CD player costs around six hundred and 136 00:08:04,120 --> 00:08:07,600 Speaker 1: twenty six dollars in nineteen eighty two dollars. Now, if 137 00:08:07,640 --> 00:08:10,480 Speaker 1: we adjust that for inflation, that would mean that buying 138 00:08:10,600 --> 00:08:13,520 Speaker 1: a CD player when it first came out would cost 139 00:08:13,520 --> 00:08:16,520 Speaker 1: you around two thousand and seventy five bucks or so 140 00:08:16,840 --> 00:08:20,680 Speaker 1: two grand for a CD player. And here's the thing, 141 00:08:20,960 --> 00:08:24,440 Speaker 1: other early CD players were even more expensive than the 142 00:08:24,480 --> 00:08:27,040 Speaker 1: CDP one oh one. And remember this is a brand 143 00:08:27,040 --> 00:08:30,320 Speaker 1: new technology. There's a limited library of CDs that are 144 00:08:30,360 --> 00:08:33,280 Speaker 1: even available to purchase to play on the ding dang 145 00:08:33,360 --> 00:08:36,720 Speaker 1: dern thing. So early adopters of CD tech had to 146 00:08:36,720 --> 00:08:39,520 Speaker 1: have a lot of income at their disposal as well 147 00:08:39,559 --> 00:08:42,240 Speaker 1: as a desire to experience something new in the world 148 00:08:42,320 --> 00:08:45,959 Speaker 1: of audio. That's a pretty small slice of the overall market. 149 00:08:46,280 --> 00:08:49,880 Speaker 1: Other technologies would follow the very same path. When the 150 00:08:49,880 --> 00:08:54,160 Speaker 1: first HDTV sets debuted in America, they had a pretty 151 00:08:54,160 --> 00:08:57,360 Speaker 1: hefty price tag as well. There was a Samsung rear 152 00:08:57,480 --> 00:09:02,200 Speaker 1: projection HDTV that went on sale in nineteen ninety eight 153 00:09:02,320 --> 00:09:06,600 Speaker 1: and it sold for eight thousand dollars. That's a lot 154 00:09:06,600 --> 00:09:10,360 Speaker 1: of money. Eight grand to get an early HDTV. Some 155 00:09:10,440 --> 00:09:12,959 Speaker 1: things were not quite as expensive when they first debuted. 156 00:09:13,000 --> 00:09:15,240 Speaker 1: I mean, they would still set you back a good 157 00:09:15,320 --> 00:09:17,719 Speaker 1: chunk of change, and they were really limited in their 158 00:09:17,840 --> 00:09:22,880 Speaker 1: initial variations. For example, the first MP three player could 159 00:09:22,880 --> 00:09:25,880 Speaker 1: only hold half an hour of audio and it sold 160 00:09:25,920 --> 00:09:28,600 Speaker 1: for two hundred and fifty bucks back in nineteen ninety eight. 161 00:09:28,760 --> 00:09:31,000 Speaker 1: Two hundred fifty dollars. I mean, that's a good chunk 162 00:09:31,040 --> 00:09:34,920 Speaker 1: of change. It's not the craziest number we've talked about 163 00:09:34,960 --> 00:09:37,560 Speaker 1: on this show, but for only half an hour of audio, 164 00:09:38,040 --> 00:09:40,960 Speaker 1: that's asking a lot. All Right, When we come back, 165 00:09:41,000 --> 00:09:43,840 Speaker 1: I'm going to talk more about early adopters and how 166 00:09:43,880 --> 00:09:46,800 Speaker 1: important they are and also how risky it is to 167 00:09:46,880 --> 00:09:49,920 Speaker 1: be one. But first let's take a quick break to 168 00:09:49,960 --> 00:10:03,600 Speaker 1: thank our sponsors. So one role that early adopters play, 169 00:10:04,200 --> 00:10:08,480 Speaker 1: typically at least in the tech ecosystem, is akin to 170 00:10:08,520 --> 00:10:11,840 Speaker 1: a beta tester. Right. When you're an early adopter of 171 00:10:11,880 --> 00:10:16,120 Speaker 1: a new technology, you're also a source of feedback to 172 00:10:16,320 --> 00:10:19,360 Speaker 1: the company, right, Like you can tell the company, hey, 173 00:10:19,800 --> 00:10:23,520 Speaker 1: this one feature is totally useless, or I really wish 174 00:10:23,600 --> 00:10:28,480 Speaker 1: this technology had X, Y and Z features, or this 175 00:10:28,720 --> 00:10:31,800 Speaker 1: is something that is really frustrating when I try and 176 00:10:31,920 --> 00:10:36,000 Speaker 1: use this tech. So early adopters are often important to 177 00:10:36,080 --> 00:10:39,520 Speaker 1: a company because they provide information about how to further 178 00:10:39,679 --> 00:10:43,439 Speaker 1: refine a product so that it will have mass market appeal. 179 00:10:43,679 --> 00:10:46,640 Speaker 1: You're not going to have a successful business if the 180 00:10:46,720 --> 00:10:49,440 Speaker 1: only customers you ever get are early adopters and no 181 00:10:49,440 --> 00:10:53,320 Speaker 1: one else ever follows suit. So listening to the early 182 00:10:53,360 --> 00:10:56,800 Speaker 1: adopters is really important, and companies might end up in 183 00:10:56,840 --> 00:11:00,959 Speaker 1: the process, shedding features in order to bring costs down 184 00:11:01,040 --> 00:11:03,720 Speaker 1: so that the mass market is more likely to accept it, 185 00:11:04,040 --> 00:11:07,040 Speaker 1: or maybe they're just features that no one found really 186 00:11:07,160 --> 00:11:11,600 Speaker 1: particularly compelling, or maybe adding in some stuff to create 187 00:11:11,600 --> 00:11:16,120 Speaker 1: it more convenience. So early adopters play a really vital 188 00:11:16,200 --> 00:11:19,880 Speaker 1: role for companies, not just in getting the ball rolling 189 00:11:20,320 --> 00:11:23,360 Speaker 1: for folks to adopt a new technology, but also the 190 00:11:23,440 --> 00:11:26,280 Speaker 1: refining process. To be able to get there, companies have 191 00:11:26,320 --> 00:11:28,960 Speaker 1: to do a lot of stuff like make sure that 192 00:11:29,000 --> 00:11:32,520 Speaker 1: the manufacturing process is refined to make it as efficient 193 00:11:32,520 --> 00:11:34,880 Speaker 1: and cost effective as possible. Otherwise you're never going to 194 00:11:34,880 --> 00:11:38,199 Speaker 1: get into a mass manufacturing situation. Like if you're doing 195 00:11:38,320 --> 00:11:41,199 Speaker 1: everything bespoke and by hand, it's always going to be 196 00:11:41,200 --> 00:11:44,160 Speaker 1: a niche product. Doesn't mean you can't make a business 197 00:11:44,200 --> 00:11:47,160 Speaker 1: out of that. You can just look at Bentley for example, 198 00:11:47,520 --> 00:11:50,320 Speaker 1: but it does mean you're not going to take the 199 00:11:50,360 --> 00:11:55,000 Speaker 1: pathway toward mass manufacturing and mass appeal. But if you 200 00:11:55,120 --> 00:11:57,080 Speaker 1: are able to do that, if you are able to 201 00:11:57,080 --> 00:11:58,920 Speaker 1: take those steps, that's when you can start to see 202 00:11:58,960 --> 00:12:01,640 Speaker 1: the price tag come down and become more affordable to 203 00:12:01,679 --> 00:12:05,280 Speaker 1: the general public. Tapping into early adopters requires a particular 204 00:12:05,280 --> 00:12:09,600 Speaker 1: approach to marketing because early adopters are kind of like visionaries. 205 00:12:09,720 --> 00:12:13,480 Speaker 1: They like big, bold ideas and they like to take 206 00:12:13,600 --> 00:12:17,199 Speaker 1: big leaps from where they currently stand, so you have 207 00:12:17,240 --> 00:12:19,719 Speaker 1: to kind of appeal to that sense. It's almost like 208 00:12:19,760 --> 00:12:22,520 Speaker 1: a sense of adventure. They get really swept up in 209 00:12:22,559 --> 00:12:26,559 Speaker 1: the excitement of possibility. By contrast, when you look at 210 00:12:26,600 --> 00:12:30,200 Speaker 1: the majority of consumers, the mass of people who, if 211 00:12:30,240 --> 00:12:34,360 Speaker 1: you're lucky, will follow those early adopters, they're once and 212 00:12:34,440 --> 00:12:37,800 Speaker 1: perspectives are different. You can't use the same marketing approach 213 00:12:37,920 --> 00:12:41,199 Speaker 1: or you will scare them off. So they want dependability, 214 00:12:41,240 --> 00:12:44,080 Speaker 1: they want practicality. They want to feel like there is 215 00:12:44,160 --> 00:12:47,559 Speaker 1: little to no risk when it comes to adopting the technology, 216 00:12:47,720 --> 00:12:50,000 Speaker 1: and they often will take a wait and see approach 217 00:12:50,040 --> 00:12:52,520 Speaker 1: to make sure that this new tech isn't just going 218 00:12:52,600 --> 00:12:55,200 Speaker 1: to disappear in a puff of smoke overnight. They're not 219 00:12:55,600 --> 00:12:59,120 Speaker 1: foolish to do this. Sometimes jumping on a new tech 220 00:12:59,200 --> 00:13:04,439 Speaker 1: bandwagon does not pay off. Let's consider one notable example 221 00:13:04,640 --> 00:13:09,160 Speaker 1: and take the sad tale of the HDDVD format and 222 00:13:09,160 --> 00:13:12,640 Speaker 1: its fate in the Great Format War. Now we've talked 223 00:13:12,679 --> 00:13:15,840 Speaker 1: about this particular format war before on the show. Many times. 224 00:13:15,840 --> 00:13:18,920 Speaker 1: In fact, the birth of tech stuff happened the same 225 00:13:19,040 --> 00:13:23,240 Speaker 1: year that the death of HDDVD happened, So I talked 226 00:13:23,240 --> 00:13:24,920 Speaker 1: about it a lot in the very early days with 227 00:13:25,040 --> 00:13:28,160 Speaker 1: my co host Chris Pollette. But the two main adversaries 228 00:13:28,160 --> 00:13:31,760 Speaker 1: in this format war were Toshiba, which was the company 229 00:13:31,800 --> 00:13:35,760 Speaker 1: behind the HDDVD format, and Sony, which of course is 230 00:13:35,800 --> 00:13:39,040 Speaker 1: the company behind the Blu ray technology. The goal was 231 00:13:39,080 --> 00:13:42,480 Speaker 1: to bring high definition video to home theater enthusiasts, so 232 00:13:42,520 --> 00:13:45,920 Speaker 1: that's what both of these technologies were meant to do, 233 00:13:46,040 --> 00:13:48,960 Speaker 1: and there were technical differences between the two, but for 234 00:13:49,080 --> 00:13:52,080 Speaker 1: a lot of people there wasn't enough of a difference 235 00:13:52,160 --> 00:13:54,920 Speaker 1: to make it easy to decide one versus the other. 236 00:13:55,720 --> 00:13:59,920 Speaker 1: So these two companies each individually announced plans to bring 237 00:14:00,080 --> 00:14:02,880 Speaker 1: the next generation of home video to the market way 238 00:14:02,880 --> 00:14:04,920 Speaker 1: back in two thousand and two. That's when they made 239 00:14:04,920 --> 00:14:09,160 Speaker 1: the announcement. It would actually take four years to do it. However, 240 00:14:09,280 --> 00:14:11,520 Speaker 1: it did not take long for the two companies to 241 00:14:11,559 --> 00:14:15,760 Speaker 1: consider trying to work out a truce between them. Because 242 00:14:15,800 --> 00:14:19,920 Speaker 1: format wars are expensive and they're risky. There is no 243 00:14:20,080 --> 00:14:23,840 Speaker 1: guarantee that the format you have created is going to win, 244 00:14:24,240 --> 00:14:27,480 Speaker 1: and if you engage in a format war. At that point, 245 00:14:27,560 --> 00:14:31,000 Speaker 1: you've already spent millions of dollars on research and development, 246 00:14:31,160 --> 00:14:36,040 Speaker 1: on production, on marketing, and that money is not gonna 247 00:14:36,520 --> 00:14:38,720 Speaker 1: return to you. You're not going to get that back, 248 00:14:38,840 --> 00:14:42,680 Speaker 1: especially if you lose the format war, and consumers obviously 249 00:14:42,720 --> 00:14:46,920 Speaker 1: are not crazy about format wars either. Competing formats hurts adoption. 250 00:14:47,160 --> 00:14:49,360 Speaker 1: A lot of that majority in the diffusion of innovation 251 00:14:49,480 --> 00:14:52,440 Speaker 1: theory will hold back when there are competing formats at play, 252 00:14:52,480 --> 00:14:54,440 Speaker 1: because no one wants to be the person who's holding 253 00:14:54,480 --> 00:14:57,280 Speaker 1: the bag who sunk potentially thousands of dollars in a 254 00:14:57,320 --> 00:15:01,400 Speaker 1: technology that ultimately goes nowhere. Trying to come to some 255 00:15:01,440 --> 00:15:04,840 Speaker 1: sort of compromise, Tashiba and Sony could find no common 256 00:15:04,840 --> 00:15:08,120 Speaker 1: pathway forward. The blu ray format could hold more data 257 00:15:08,200 --> 00:15:11,840 Speaker 1: on a disc, like significantly more, ten gigabytes more in fact, 258 00:15:12,000 --> 00:15:16,400 Speaker 1: but the HDDVD format was easier to incorporate into computer 259 00:15:16,480 --> 00:15:19,560 Speaker 1: systems and so would be less expensive to be able 260 00:15:19,560 --> 00:15:21,840 Speaker 1: to do that sort of thing, and it would require 261 00:15:21,920 --> 00:15:25,640 Speaker 1: less investment on the manufacturing side, because you could upgrade 262 00:15:25,680 --> 00:15:30,560 Speaker 1: a current DVD production facility to HD DVD for far 263 00:15:30,680 --> 00:15:32,960 Speaker 1: less money than it would cost to do Blu Ray, 264 00:15:33,200 --> 00:15:35,800 Speaker 1: and so Tashiba and Sony both got to work on 265 00:15:35,840 --> 00:15:39,520 Speaker 1: their respective technologies, which finally launched in two thousand and six. 266 00:15:39,840 --> 00:15:43,640 Speaker 1: Teshiba tried to undercut Sony. The first HD DVD player 267 00:15:43,680 --> 00:15:46,240 Speaker 1: retail for five hundred ninety nine bucks, which if we 268 00:15:46,280 --> 00:15:49,520 Speaker 1: adjust for inflation today, would be nine hundred forty three dollars. 269 00:15:49,680 --> 00:15:53,080 Speaker 1: That's still really expensive. But Sony's first Blu Ray player 270 00:15:53,120 --> 00:15:56,320 Speaker 1: retailed for a whopping one thousand dollars. If we adjust 271 00:15:56,320 --> 00:15:59,880 Speaker 1: that for inflation, that's one thousand, five hundred Sony five bucks. 272 00:16:00,040 --> 00:16:03,920 Speaker 1: Sony's format cost significantly more than the Tashiba alternative. Sony 273 00:16:04,040 --> 00:16:08,200 Speaker 1: had one distinct advantage. They had exclusive content. You know, 274 00:16:08,360 --> 00:16:12,200 Speaker 1: Sony had the benefit of being both an electronics company 275 00:16:12,280 --> 00:16:15,200 Speaker 1: and also a movie studio, So when you're pushing a 276 00:16:15,240 --> 00:16:17,680 Speaker 1: home theater technology, it really helps that you're also the 277 00:16:17,800 --> 00:16:21,840 Speaker 1: source for some exclusive content. By withholding Sony Pictures films 278 00:16:21,880 --> 00:16:24,960 Speaker 1: exclusively for the Blu Ray format, Sony could apply leverage 279 00:16:24,960 --> 00:16:29,040 Speaker 1: on Toshiba. Other studios were less eager to throw all 280 00:16:29,040 --> 00:16:32,720 Speaker 1: in on either. Camp Warner Brothers in Paramount, for example, 281 00:16:32,800 --> 00:16:36,480 Speaker 1: both chose to release home theater films on each format, 282 00:16:36,680 --> 00:16:39,000 Speaker 1: and for about a year, Sony and Tashiba were in 283 00:16:39,040 --> 00:16:44,000 Speaker 1: pretty stiff competition among early adopters. So collectively they sold 284 00:16:44,040 --> 00:16:47,800 Speaker 1: fewer than a million units of HDDVD players and Blu 285 00:16:47,880 --> 00:16:50,280 Speaker 1: Ray players, I mean all put together, it was fewer 286 00:16:50,320 --> 00:16:53,000 Speaker 1: than a million units. Tashiba did have an edge over 287 00:16:53,080 --> 00:16:55,720 Speaker 1: Sony in the early days. But then Sony pulled another 288 00:16:55,760 --> 00:16:58,240 Speaker 1: ace out of its corporate sleeve, and that ace was 289 00:16:58,320 --> 00:17:01,680 Speaker 1: the PlayStation three, and he incorporated a Blu Ray player 290 00:17:01,840 --> 00:17:05,080 Speaker 1: into the PS three. And while Sony had decided against 291 00:17:05,240 --> 00:17:08,960 Speaker 1: selling early Blu Ray players below cost of manufacturing, they 292 00:17:09,000 --> 00:17:11,520 Speaker 1: did not do that same thing for the PS three, 293 00:17:11,840 --> 00:17:15,199 Speaker 1: and so Sony sold the consoles at a loss. And 294 00:17:15,320 --> 00:17:17,840 Speaker 1: in fact PS three consoles, a lot of them, were 295 00:17:17,880 --> 00:17:20,879 Speaker 1: priced lower than the other video players that were on 296 00:17:20,920 --> 00:17:24,320 Speaker 1: the market. So this got Blu Ray players into a 297 00:17:24,400 --> 00:17:27,760 Speaker 1: lot more homes. This was a move that really helped 298 00:17:27,800 --> 00:17:30,320 Speaker 1: tip the scales. But what really got things moving was 299 00:17:30,359 --> 00:17:33,760 Speaker 1: when other studios began to make the choice of Blu 300 00:17:33,880 --> 00:17:37,680 Speaker 1: Ray over HDDVD. Now that decision made sense for these 301 00:17:37,680 --> 00:17:40,880 Speaker 1: studios because they saw the installed base for the Blu 302 00:17:40,960 --> 00:17:44,720 Speaker 1: Ray format was growing very quickly, much faster than HDDVD, 303 00:17:45,200 --> 00:17:48,080 Speaker 1: largely due to the PS three. That would mean that 304 00:17:48,600 --> 00:17:51,680 Speaker 1: they could pick that format and hit more homes and 305 00:17:51,720 --> 00:17:55,879 Speaker 1: not produce DVDs or discs in both Blu Ray and 306 00:17:56,080 --> 00:17:58,920 Speaker 1: HDDVD format. They could choose just one and that would 307 00:17:58,960 --> 00:18:02,840 Speaker 1: cut way back on expenses. So if you're going to 308 00:18:02,880 --> 00:18:05,680 Speaker 1: make a choice of picking just one format, it makes 309 00:18:05,720 --> 00:18:07,919 Speaker 1: sense to go with the one that has the larger 310 00:18:08,040 --> 00:18:11,200 Speaker 1: install base among customers. So that's what they did. Various 311 00:18:11,240 --> 00:18:13,440 Speaker 1: studios made the decision to go all in with Blu 312 00:18:13,560 --> 00:18:16,640 Speaker 1: Ray and with Sony, and the very last big one 313 00:18:16,800 --> 00:18:19,479 Speaker 1: to do this was Warner Brothers, which signaled the beginning 314 00:18:19,480 --> 00:18:22,040 Speaker 1: of the end for HDDVD. There are even rumors that 315 00:18:22,080 --> 00:18:24,360 Speaker 1: Sony had made the decision a little easier for Warner 316 00:18:24,440 --> 00:18:27,480 Speaker 1: Brothers by greasing the wheels with a half billion dollar payoff, 317 00:18:27,640 --> 00:18:30,119 Speaker 1: but that allegation was never confirmed. As far as I 318 00:18:30,119 --> 00:18:33,760 Speaker 1: can tell, the death of HDDVD happened pretty quickly near 319 00:18:33,800 --> 00:18:35,880 Speaker 1: the beginning of two thousand and eight. I remember attending 320 00:18:35,960 --> 00:18:39,480 Speaker 1: cees that year and seeing the buzz about Tashiba canceling 321 00:18:39,480 --> 00:18:42,960 Speaker 1: the HDDVD presentation just two days before it was supposed 322 00:18:43,000 --> 00:18:44,760 Speaker 1: to happen, and that was all because of the Warner 323 00:18:44,760 --> 00:18:47,760 Speaker 1: Brothers announcement. Later in two thousand and eight, Tishiba announced 324 00:18:47,760 --> 00:18:51,280 Speaker 1: it would stop production on HDDVD systems, and the format 325 00:18:51,320 --> 00:18:54,080 Speaker 1: war had ended and Blu Ray was the clear winner. 326 00:18:54,320 --> 00:18:57,240 Speaker 1: So for some early adopters, the conclusion was a really 327 00:18:57,240 --> 00:19:00,800 Speaker 1: tough blow because some of those adopters sung a not 328 00:19:01,040 --> 00:19:05,520 Speaker 1: inconsiderable amount of money into HDDVD systems and libraries. That's 329 00:19:05,560 --> 00:19:07,879 Speaker 1: precisely the kind of thing that keeps the majority of 330 00:19:07,920 --> 00:19:10,920 Speaker 1: consumers cautious. It's why they are inclined to hold back 331 00:19:11,000 --> 00:19:14,080 Speaker 1: upon the introduction of a new technology, particularly if they 332 00:19:14,119 --> 00:19:18,080 Speaker 1: are competing formats. So that's why early adopters are really important. 333 00:19:18,280 --> 00:19:21,320 Speaker 1: They're kind of the guinea pigs for new ideas and technologies. 334 00:19:21,560 --> 00:19:24,880 Speaker 1: It's why the majority is also more cautious. They don't 335 00:19:24,920 --> 00:19:29,480 Speaker 1: necessarily have the access to discretionary income where they can 336 00:19:29,520 --> 00:19:32,080 Speaker 1: just spend it on a new technology that may or 337 00:19:32,080 --> 00:19:36,000 Speaker 1: may not work out. It's why some technologies just fizzle 338 00:19:36,040 --> 00:19:38,720 Speaker 1: out after a brief period of hype. I think of 339 00:19:38,800 --> 00:19:42,600 Speaker 1: things like Google Glass. Potentially the Apple Vision pro will 340 00:19:42,600 --> 00:19:45,000 Speaker 1: follow that same model. We'll have to see. But yeah, 341 00:19:45,040 --> 00:19:47,679 Speaker 1: I wanted to spend some time to talk about the 342 00:19:47,760 --> 00:19:51,359 Speaker 1: diffusion of innovation. It is a cool idea and I 343 00:19:51,359 --> 00:19:54,320 Speaker 1: think it's a pretty valid observation. You know, it's not 344 00:19:54,359 --> 00:19:57,159 Speaker 1: going to apply universally, but I think it's a good 345 00:19:57,680 --> 00:20:00,960 Speaker 1: general rule to look at, and it's something that a 346 00:20:01,000 --> 00:20:03,679 Speaker 1: lot of businesses pay attention to when it comes to 347 00:20:03,760 --> 00:20:08,440 Speaker 1: how they position their technologies, their new technologies with introducing 348 00:20:08,480 --> 00:20:11,320 Speaker 1: them to the market. Hope you enjoyed this quick episode 349 00:20:11,359 --> 00:20:14,840 Speaker 1: of tech Stuff, and I'll talk to you again really soon. 350 00:20:21,200 --> 00:20:25,840 Speaker 1: Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, 351 00:20:26,160 --> 00:20:29,879 Speaker 1: visit the iHeartRadio app, Apple Podcasts, or wherever you listen 352 00:20:29,920 --> 00:20:31,000 Speaker 1: to your favorite shows.