WEBVTT - The Diffusion of Innovation Theory 0:00:04.480 --> 0:00:12.520 Welcome to Tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.560 --> 0:00:16.239 and welcome to tech Stuff. I'm your host Jonathan Strickland. 0:00:16.320 --> 0:00:19.560 I'm an executive producer with iHeart Podcasts and how the 0:00:19.600 --> 0:00:22.279 tech are you? So today I wanted to talk about 0:00:22.360 --> 0:00:26.480 a particular theory relating to technology. Now, I've done episodes 0:00:26.520 --> 0:00:31.240 on various quote unquote laws regarding tech. These laws are, 0:00:31.560 --> 0:00:34.360 you know, like stuff like Moore's law, which today we 0:00:34.440 --> 0:00:38.919 often interpret as this concept that every two years or so, 0:00:39.120 --> 0:00:43.279 computing power doubles. The original observation, which was made by 0:00:43.320 --> 0:00:47.199 Gordon Moore back in nineteen sixty five, was that semiconductor 0:00:47.280 --> 0:00:51.480 chip manufacturers were doubling the number of transistors that could 0:00:51.560 --> 0:00:56.120 fit on an inch square wafer of silicon at regular intervals, 0:00:56.440 --> 0:01:00.320 although the length between those intervals has changed over time, 0:01:00.600 --> 0:01:03.040 like whether it's twelve months or eighteen months or twenty 0:01:03.080 --> 0:01:06.880 four months. Moore's argument was that economic factors drove the 0:01:06.880 --> 0:01:12.400 push to make processors more complex, to cram more components 0:01:12.560 --> 0:01:16.560 on processors, not that there was some fundamental force that 0:01:16.640 --> 0:01:19.760 allowed this to happen. And in order to keep Moore's 0:01:19.840 --> 0:01:23.760 law relevant, we have fudged his observation several times. So 0:01:23.920 --> 0:01:27.960 rather than talking about physically doubling the number of transistors 0:01:28.000 --> 0:01:31.679 on a chip, we talk about computational output, you know, 0:01:31.720 --> 0:01:34.440 like processing speed, that kind of thing, because you can 0:01:34.480 --> 0:01:37.800 make the argument that the more important thing here isn't 0:01:37.959 --> 0:01:42.080 how many transistors are on the chep, it's how powerful 0:01:42.280 --> 0:01:45.600 is that chep? Because doubling the transistors, at least in 0:01:45.640 --> 0:01:48.800 the early days, was kind of shorthand for saying this 0:01:49.080 --> 0:01:51.840 processor is twice as powerful as one that came out 0:01:51.920 --> 0:01:56.280 last year. Right anyway, stuffing Moore's law or even stuff 0:01:56.360 --> 0:01:59.480 like Worth's law, that kind of thing. That's all stuff 0:01:59.480 --> 0:02:01.440 that I've I've covered on this show in the past. 0:02:01.680 --> 0:02:04.480 Today we're going to look at a different theory that 0:02:04.560 --> 0:02:08.960 relates to technology, and it's all about early adopters. Really, really, 0:02:09.000 --> 0:02:11.880 it's more than that. It's about the diffusion of innovation. 0:02:12.120 --> 0:02:15.240 That's what the theory is called. The idea comes from 0:02:15.480 --> 0:02:19.200 a guy named Everett M. Rogers, who is a sociologist 0:02:19.280 --> 0:02:22.440 and a professor who in nineteen sixty two published his 0:02:22.600 --> 0:02:28.280 observation on how societies ultimately accept new ideas, including new 0:02:28.280 --> 0:02:33.120 innovations like technologies. Now. He described his observation as sort 0:02:33.160 --> 0:02:35.919 of a bell curve. So imagine a bell curve. Right, 0:02:36.000 --> 0:02:39.679 it's low at the front end, then it peaks up 0:02:39.800 --> 0:02:43.600 into a hill, and then it slopes off and becomes 0:02:43.639 --> 0:02:45.799 low at the back end. Right, So the front end 0:02:46.200 --> 0:02:50.399 would be a group of people that he called the innovators. 0:02:50.760 --> 0:02:53.640 This would consist of just two and a half percent 0:02:53.960 --> 0:02:58.200 of the overall population that ultimately adopts this idea. So 0:02:58.280 --> 0:03:01.160 not two point five percent of the entire population of 0:03:01.200 --> 0:03:04.440 the world, just two point five percent of all the 0:03:04.480 --> 0:03:08.440 people who ultimately adopt whatever it is we're talking about. 0:03:09.000 --> 0:03:12.760 So these are the innovators. Behind them are the early adopters, 0:03:12.919 --> 0:03:17.440 and this represents another thirteen point five percent of that population. 0:03:17.840 --> 0:03:20.959 And then after that you get the majority of adopters 0:03:21.000 --> 0:03:23.360 and rogers. Divided them into two halves, he had the 0:03:23.400 --> 0:03:26.840 early majority and the late majority. Each of these consist 0:03:27.040 --> 0:03:30.359 of around thirty four percent of the population that adopts 0:03:30.360 --> 0:03:33.680 this idea. Then, bringing up the rear are the laggards 0:03:34.080 --> 0:03:36.760 sixteen percent of the population. These are the people who 0:03:36.840 --> 0:03:40.440 are slow to accept this new idea or product, but 0:03:40.520 --> 0:03:43.320 ultimately they do come around to it. But even with 0:03:43.360 --> 0:03:45.920 all these there will still be people who just never 0:03:46.120 --> 0:03:49.840 come around to accepting an idea or technology. So this 0:03:49.920 --> 0:03:52.160 is really just a way to describe the folks who 0:03:52.240 --> 0:03:56.160 do now. On top of that, to be considered an adopter, 0:03:56.280 --> 0:03:59.080 each person first must be aware of how this thing 0:03:59.280 --> 0:04:03.320 addresses some need or want. It's not enough for it 0:04:03.360 --> 0:04:06.600 to just be a new whatever it is, a new 0:04:06.640 --> 0:04:10.320 idea or a new product. That thing has to be 0:04:10.360 --> 0:04:13.440 able to do something that people perceive as being useful. 0:04:13.640 --> 0:04:16.520 If it doesn't solve a problem, then the company or 0:04:16.720 --> 0:04:20.440 person whomever is putting forth this innovation they need to 0:04:20.440 --> 0:04:23.479 come up with a way to invent a problem that 0:04:23.640 --> 0:04:26.160 this thing does solve. Steve Jobs is pretty darn good 0:04:26.160 --> 0:04:28.760 at this. He was good at convincing a general public 0:04:28.880 --> 0:04:31.960 that new technologies from Apple solve problems they didn't even 0:04:32.000 --> 0:04:35.400 know that they had had. The adopter also obviously has 0:04:35.480 --> 0:04:38.080 to make the decision to take the plunge and actually 0:04:38.160 --> 0:04:41.480 adopt this new idea, and then they have to use 0:04:41.520 --> 0:04:44.440 it and continue to use it. So the theory also 0:04:44.520 --> 0:04:48.960 identifies five factors that affect the adoption of a new idea. 0:04:49.040 --> 0:04:52.680 They are relative advantage. So how and to what extent 0:04:52.760 --> 0:04:55.920 does this new idea solve a problem or improve upon 0:04:56.000 --> 0:04:59.839 an earlier innovation. There's compatibility. You know, is the new 0:05:00.080 --> 0:05:03.719 idea or product or whatever aligned with the values and 0:05:03.839 --> 0:05:06.920 needs of potential customers. If they're in conflict, people are 0:05:06.920 --> 0:05:10.360 not going to adopt it. There's complexity. Is the new 0:05:10.400 --> 0:05:14.240 idea or whatever is it easy to understand and use? 0:05:14.440 --> 0:05:19.680 That's pretty self explanatory. There's triability, as in, can someone 0:05:19.720 --> 0:05:22.400 actually give this thing a whirl? Can they give it 0:05:22.440 --> 0:05:26.040 a test before they commit to adopting it, and if so, 0:05:26.240 --> 0:05:30.480 that definitely improves adoption. And then there's observability. Is it 0:05:30.560 --> 0:05:34.080 possible to see or perhaps even measure the outcome of 0:05:34.120 --> 0:05:38.320 adopting the innovation to say, I know that it has 0:05:39.240 --> 0:05:42.840 been an improvement because here are the ways I can measure, 0:05:43.160 --> 0:05:46.600 So can you tell that the thing is working? Generally speaking, 0:05:47.040 --> 0:05:51.240 this theory, this diffusion of innovation is a pretty decent observation. 0:05:51.480 --> 0:05:54.240 It's pretty rare for a new technology or idea in 0:05:54.320 --> 0:05:58.400 general to just take the world by storm instantaneously. Usually 0:05:58.680 --> 0:06:01.520 this is a process. We should also mention there are 0:06:01.560 --> 0:06:05.719 additional factors when you take into account technology. This isn't 0:06:05.960 --> 0:06:09.640 just a case of some people being more adventurous or 0:06:09.680 --> 0:06:12.760 more open to new ideas. Other stuff makes a really 0:06:12.800 --> 0:06:17.280 big difference, particularly when we're talking about tech, and one 0:06:17.360 --> 0:06:20.919 big thing about that is cost, because often when a 0:06:20.960 --> 0:06:25.400 new technology debuts, it's expensive. Really new technologies take a 0:06:25.400 --> 0:06:28.280 lot of money to develop and to produce. The companies 0:06:28.400 --> 0:06:32.440 that are making these things then pass those costs along 0:06:32.480 --> 0:06:34.840 to us, the consumers, at least most of the time, 0:06:35.080 --> 0:06:37.960 and that does make sense. You can't go making something 0:06:37.960 --> 0:06:40.560 that costs you, you know, hundreds of dollars to produce 0:06:40.680 --> 0:06:42.240 and then you turn it around and you sell it 0:06:42.279 --> 0:06:44.480 for twenty bucks, because you would be out of business 0:06:44.520 --> 0:06:46.880 in no time. But this does mean that the folks 0:06:46.920 --> 0:06:50.119 who will buy your do hiky have to be both 0:06:50.160 --> 0:06:53.560 willing to adopt something that is new and they have 0:06:53.600 --> 0:06:56.480 to be able to afford it, and that reduces the 0:06:56.520 --> 0:06:59.640 potential pool of customers a bit. So let's take the 0:06:59.720 --> 0:07:03.919 HUM CD player as an example. The first commercially available 0:07:03.960 --> 0:07:07.039 CD player came out in Japan back in nineteen eighty two. 0:07:07.320 --> 0:07:10.679 In October of nineteen eighty two. This was the Sony 0:07:10.840 --> 0:07:14.280 CDP one oh one, and Sony had worked in partnership 0:07:14.320 --> 0:07:17.040 with other companies like Phillips to develop the CD player 0:07:17.080 --> 0:07:20.080 technology for the market. So they had been working on 0:07:20.080 --> 0:07:22.520 this throughout the nineteen seventies, and it sunk a lot 0:07:22.560 --> 0:07:26.240 of money into making this thing happen, and there were 0:07:26.280 --> 0:07:30.320 a lot of battles as well to actually ultimately arrive 0:07:30.520 --> 0:07:34.600 at the CD form factor. The pitch of CDs to 0:07:34.720 --> 0:07:37.160 the consumer was that they were going to offer far 0:07:37.240 --> 0:07:40.760 more clarity than other forms of media that were available 0:07:40.760 --> 0:07:43.680 in the market, like vinyl albums and cassette tapes. But 0:07:43.760 --> 0:07:46.679 if you wanted one of these first players, you first 0:07:46.720 --> 0:07:50.200 had to cough up one hundred and sixty eight thousand yen. Now, 0:07:50.280 --> 0:07:53.200 back in October nineteen eighty two, in the CDP one 0:07:53.240 --> 0:07:55.920 oh one first debut, the exchange rate of yen to 0:07:56.040 --> 0:07:58.400 dollars was two hundred and sixty eight point five to 0:07:58.480 --> 0:08:01.600 five yen to one US dollars. So this would mean 0:08:01.720 --> 0:08:04.120 that the first CD player costs around six hundred and 0:08:04.120 --> 0:08:07.600 twenty six dollars in nineteen eighty two dollars. Now, if 0:08:07.640 --> 0:08:10.480 we adjust that for inflation, that would mean that buying 0:08:10.600 --> 0:08:13.520 a CD player when it first came out would cost 0:08:13.520 --> 0:08:16.520 you around two thousand and seventy five bucks or so 0:08:16.840 --> 0:08:20.680 two grand for a CD player. And here's the thing, 0:08:20.960 --> 0:08:24.440 other early CD players were even more expensive than the 0:08:24.480 --> 0:08:27.040 CDP one oh one. And remember this is a brand 0:08:27.040 --> 0:08:30.320 new technology. There's a limited library of CDs that are 0:08:30.360 --> 0:08:33.280 even available to purchase to play on the ding dang 0:08:33.360 --> 0:08:36.720 dern thing. So early adopters of CD tech had to 0:08:36.720 --> 0:08:39.520 have a lot of income at their disposal as well 0:08:39.559 --> 0:08:42.240 as a desire to experience something new in the world 0:08:42.320 --> 0:08:45.959 of audio. That's a pretty small slice of the overall market. 0:08:46.280 --> 0:08:49.880 Other technologies would follow the very same path. When the 0:08:49.880 --> 0:08:54.160 first HDTV sets debuted in America, they had a pretty 0:08:54.160 --> 0:08:57.360 hefty price tag as well. There was a Samsung rear 0:08:57.480 --> 0:09:02.200 projection HDTV that went on sale in nineteen ninety eight 0:09:02.320 --> 0:09:06.600 and it sold for eight thousand dollars. That's a lot 0:09:06.600 --> 0:09:10.360 of money. Eight grand to get an early HDTV. Some 0:09:10.440 --> 0:09:12.959 things were not quite as expensive when they first debuted. 0:09:13.000 --> 0:09:15.240 I mean, they would still set you back a good 0:09:15.320 --> 0:09:17.719 chunk of change, and they were really limited in their 0:09:17.840 --> 0:09:22.880 initial variations. For example, the first MP three player could 0:09:22.880 --> 0:09:25.880 only hold half an hour of audio and it sold 0:09:25.920 --> 0:09:28.600 for two hundred and fifty bucks back in nineteen ninety eight. 0:09:28.760 --> 0:09:31.000 Two hundred fifty dollars. I mean, that's a good chunk 0:09:31.040 --> 0:09:34.920 of change. It's not the craziest number we've talked about 0:09:34.960 --> 0:09:37.560 on this show, but for only half an hour of audio, 0:09:38.040 --> 0:09:40.960 that's asking a lot. All Right, When we come back, 0:09:41.000 --> 0:09:43.840 I'm going to talk more about early adopters and how 0:09:43.880 --> 0:09:46.800 important they are and also how risky it is to 0:09:46.880 --> 0:09:49.920 be one. But first let's take a quick break to 0:09:49.960 --> 0:10:03.600 thank our sponsors. So one role that early adopters play, 0:10:04.200 --> 0:10:08.480 typically at least in the tech ecosystem, is akin to 0:10:08.520 --> 0:10:11.840 a beta tester. Right. When you're an early adopter of 0:10:11.880 --> 0:10:16.120 a new technology, you're also a source of feedback to 0:10:16.320 --> 0:10:19.360 the company, right, Like you can tell the company, hey, 0:10:19.800 --> 0:10:23.520 this one feature is totally useless, or I really wish 0:10:23.600 --> 0:10:28.480 this technology had X, Y and Z features, or this 0:10:28.720 --> 0:10:31.800 is something that is really frustrating when I try and 0:10:31.920 --> 0:10:36.000 use this tech. So early adopters are often important to 0:10:36.080 --> 0:10:39.520 a company because they provide information about how to further 0:10:39.679 --> 0:10:43.439 refine a product so that it will have mass market appeal. 0:10:43.679 --> 0:10:46.640 You're not going to have a successful business if the 0:10:46.720 --> 0:10:49.440 only customers you ever get are early adopters and no 0:10:49.440 --> 0:10:53.320 one else ever follows suit. So listening to the early 0:10:53.360 --> 0:10:56.800 adopters is really important, and companies might end up in 0:10:56.840 --> 0:11:00.959 the process, shedding features in order to bring costs down 0:11:01.040 --> 0:11:03.720 so that the mass market is more likely to accept it, 0:11:04.040 --> 0:11:07.040 or maybe they're just features that no one found really 0:11:07.160 --> 0:11:11.600 particularly compelling, or maybe adding in some stuff to create 0:11:11.600 --> 0:11:16.120 it more convenience. So early adopters play a really vital 0:11:16.200 --> 0:11:19.880 role for companies, not just in getting the ball rolling 0:11:20.320 --> 0:11:23.360 for folks to adopt a new technology, but also the 0:11:23.440 --> 0:11:26.280 refining process. To be able to get there, companies have 0:11:26.320 --> 0:11:28.960 to do a lot of stuff like make sure that 0:11:29.000 --> 0:11:32.520 the manufacturing process is refined to make it as efficient 0:11:32.520 --> 0:11:34.880 and cost effective as possible. Otherwise you're never going to 0:11:34.880 --> 0:11:38.199 get into a mass manufacturing situation. Like if you're doing 0:11:38.320 --> 0:11:41.199 everything bespoke and by hand, it's always going to be 0:11:41.200 --> 0:11:44.160 a niche product. Doesn't mean you can't make a business 0:11:44.200 --> 0:11:47.160 out of that. You can just look at Bentley for example, 0:11:47.520 --> 0:11:50.320 but it does mean you're not going to take the 0:11:50.360 --> 0:11:55.000 pathway toward mass manufacturing and mass appeal. But if you 0:11:55.120 --> 0:11:57.080 are able to do that, if you are able to 0:11:57.080 --> 0:11:58.920 take those steps, that's when you can start to see 0:11:58.960 --> 0:12:01.640 the price tag come down and become more affordable to 0:12:01.679 --> 0:12:05.280 the general public. Tapping into early adopters requires a particular 0:12:05.280 --> 0:12:09.600 approach to marketing because early adopters are kind of like visionaries. 0:12:09.720 --> 0:12:13.480 They like big, bold ideas and they like to take 0:12:13.600 --> 0:12:17.199 big leaps from where they currently stand, so you have 0:12:17.240 --> 0:12:19.719 to kind of appeal to that sense. It's almost like 0:12:19.760 --> 0:12:22.520 a sense of adventure. They get really swept up in 0:12:22.559 --> 0:12:26.559 the excitement of possibility. By contrast, when you look at 0:12:26.600 --> 0:12:30.200 the majority of consumers, the mass of people who, if 0:12:30.240 --> 0:12:34.360 you're lucky, will follow those early adopters, they're once and 0:12:34.440 --> 0:12:37.800 perspectives are different. You can't use the same marketing approach 0:12:37.920 --> 0:12:41.199 or you will scare them off. So they want dependability, 0:12:41.240 --> 0:12:44.080 they want practicality. They want to feel like there is 0:12:44.160 --> 0:12:47.559 little to no risk when it comes to adopting the technology, 0:12:47.720 --> 0:12:50.000 and they often will take a wait and see approach 0:12:50.040 --> 0:12:52.520 to make sure that this new tech isn't just going 0:12:52.600 --> 0:12:55.200 to disappear in a puff of smoke overnight. They're not 0:12:55.600 --> 0:12:59.120 foolish to do this. Sometimes jumping on a new tech 0:12:59.200 --> 0:13:04.439 bandwagon does not pay off. Let's consider one notable example 0:13:04.640 --> 0:13:09.160 and take the sad tale of the HDDVD format and 0:13:09.160 --> 0:13:12.640 its fate in the Great Format War. Now we've talked 0:13:12.679 --> 0:13:15.840 about this particular format war before on the show. Many times. 0:13:15.840 --> 0:13:18.920 In fact, the birth of tech stuff happened the same 0:13:19.040 --> 0:13:23.240 year that the death of HDDVD happened, So I talked 0:13:23.240 --> 0:13:24.920 about it a lot in the very early days with 0:13:25.040 --> 0:13:28.160 my co host Chris Pollette. But the two main adversaries 0:13:28.160 --> 0:13:31.760 in this format war were Toshiba, which was the company 0:13:31.800 --> 0:13:35.760 behind the HDDVD format, and Sony, which of course is 0:13:35.800 --> 0:13:39.040 the company behind the Blu ray technology. The goal was 0:13:39.080 --> 0:13:42.480 to bring high definition video to home theater enthusiasts, so 0:13:42.520 --> 0:13:45.920 that's what both of these technologies were meant to do, 0:13:46.040 --> 0:13:48.960 and there were technical differences between the two, but for 0:13:49.080 --> 0:13:52.080 a lot of people there wasn't enough of a difference 0:13:52.160 --> 0:13:54.920 to make it easy to decide one versus the other. 0:13:55.720 --> 0:13:59.920 So these two companies each individually announced plans to bring 0:14:00.080 --> 0:14:02.880 the next generation of home video to the market way 0:14:02.880 --> 0:14:04.920 back in two thousand and two. That's when they made 0:14:04.920 --> 0:14:09.160 the announcement. It would actually take four years to do it. However, 0:14:09.280 --> 0:14:11.520 it did not take long for the two companies to 0:14:11.559 --> 0:14:15.760 consider trying to work out a truce between them. Because 0:14:15.800 --> 0:14:19.920 format wars are expensive and they're risky. There is no 0:14:20.080 --> 0:14:23.840 guarantee that the format you have created is going to win, 0:14:24.240 --> 0:14:27.480 and if you engage in a format war. At that point, 0:14:27.560 --> 0:14:31.000 you've already spent millions of dollars on research and development, 0:14:31.160 --> 0:14:36.040 on production, on marketing, and that money is not gonna 0:14:36.520 --> 0:14:38.720 return to you. You're not going to get that back, 0:14:38.840 --> 0:14:42.680 especially if you lose the format war, and consumers obviously 0:14:42.720 --> 0:14:46.920 are not crazy about format wars either. Competing formats hurts adoption. 0:14:47.160 --> 0:14:49.360 A lot of that majority in the diffusion of innovation 0:14:49.480 --> 0:14:52.440 theory will hold back when there are competing formats at play, 0:14:52.480 --> 0:14:54.440 because no one wants to be the person who's holding 0:14:54.480 --> 0:14:57.280 the bag who sunk potentially thousands of dollars in a 0:14:57.320 --> 0:15:01.400 technology that ultimately goes nowhere. Trying to come to some 0:15:01.440 --> 0:15:04.840 sort of compromise, Tashiba and Sony could find no common 0:15:04.840 --> 0:15:08.120 pathway forward. The blu ray format could hold more data 0:15:08.200 --> 0:15:11.840 on a disc, like significantly more, ten gigabytes more in fact, 0:15:12.000 --> 0:15:16.400 but the HDDVD format was easier to incorporate into computer 0:15:16.480 --> 0:15:19.560 systems and so would be less expensive to be able 0:15:19.560 --> 0:15:21.840 to do that sort of thing, and it would require 0:15:21.920 --> 0:15:25.640 less investment on the manufacturing side, because you could upgrade 0:15:25.680 --> 0:15:30.560 a current DVD production facility to HD DVD for far 0:15:30.680 --> 0:15:32.960 less money than it would cost to do Blu Ray, 0:15:33.200 --> 0:15:35.800 and so Tashiba and Sony both got to work on 0:15:35.840 --> 0:15:39.520 their respective technologies, which finally launched in two thousand and six. 0:15:39.840 --> 0:15:43.640 Teshiba tried to undercut Sony. The first HD DVD player 0:15:43.680 --> 0:15:46.240 retail for five hundred ninety nine bucks, which if we 0:15:46.280 --> 0:15:49.520 adjust for inflation today, would be nine hundred forty three dollars. 0:15:49.680 --> 0:15:53.080 That's still really expensive. But Sony's first Blu Ray player 0:15:53.120 --> 0:15:56.320 retailed for a whopping one thousand dollars. If we adjust 0:15:56.320 --> 0:15:59.880 that for inflation, that's one thousand, five hundred Sony five bucks. 0:16:00.040 --> 0:16:03.920 Sony's format cost significantly more than the Tashiba alternative. Sony 0:16:04.040 --> 0:16:08.200 had one distinct advantage. They had exclusive content. You know, 0:16:08.360 --> 0:16:12.200 Sony had the benefit of being both an electronics company 0:16:12.280 --> 0:16:15.200 and also a movie studio, So when you're pushing a 0:16:15.240 --> 0:16:17.680 home theater technology, it really helps that you're also the 0:16:17.800 --> 0:16:21.840 source for some exclusive content. By withholding Sony Pictures films 0:16:21.880 --> 0:16:24.960 exclusively for the Blu Ray format, Sony could apply leverage 0:16:24.960 --> 0:16:29.040 on Toshiba. Other studios were less eager to throw all 0:16:29.040 --> 0:16:32.720 in on either. Camp Warner Brothers in Paramount, for example, 0:16:32.800 --> 0:16:36.480 both chose to release home theater films on each format, 0:16:36.680 --> 0:16:39.000 and for about a year, Sony and Tashiba were in 0:16:39.040 --> 0:16:44.000 pretty stiff competition among early adopters. So collectively they sold 0:16:44.040 --> 0:16:47.800 fewer than a million units of HDDVD players and Blu 0:16:47.880 --> 0:16:50.280 Ray players, I mean all put together, it was fewer 0:16:50.320 --> 0:16:53.000 than a million units. Tashiba did have an edge over 0:16:53.080 --> 0:16:55.720 Sony in the early days. But then Sony pulled another 0:16:55.760 --> 0:16:58.240 ace out of its corporate sleeve, and that ace was 0:16:58.320 --> 0:17:01.680 the PlayStation three, and he incorporated a Blu Ray player 0:17:01.840 --> 0:17:05.080 into the PS three. And while Sony had decided against 0:17:05.240 --> 0:17:08.960 selling early Blu Ray players below cost of manufacturing, they 0:17:09.000 --> 0:17:11.520 did not do that same thing for the PS three, 0:17:11.840 --> 0:17:15.199 and so Sony sold the consoles at a loss. And 0:17:15.320 --> 0:17:17.840 in fact PS three consoles, a lot of them, were 0:17:17.880 --> 0:17:20.879 priced lower than the other video players that were on 0:17:20.920 --> 0:17:24.320 the market. So this got Blu Ray players into a 0:17:24.400 --> 0:17:27.760 lot more homes. This was a move that really helped 0:17:27.800 --> 0:17:30.320 tip the scales. But what really got things moving was 0:17:30.359 --> 0:17:33.760 when other studios began to make the choice of Blu 0:17:33.880 --> 0:17:37.680 Ray over HDDVD. Now that decision made sense for these 0:17:37.680 --> 0:17:40.880 studios because they saw the installed base for the Blu 0:17:40.960 --> 0:17:44.720 Ray format was growing very quickly, much faster than HDDVD, 0:17:45.200 --> 0:17:48.080 largely due to the PS three. That would mean that 0:17:48.600 --> 0:17:51.680 they could pick that format and hit more homes and 0:17:51.720 --> 0:17:55.879 not produce DVDs or discs in both Blu Ray and 0:17:56.080 --> 0:17:58.920 HDDVD format. They could choose just one and that would 0:17:58.960 --> 0:18:02.840 cut way back on expenses. So if you're going to 0:18:02.880 --> 0:18:05.680 make a choice of picking just one format, it makes 0:18:05.720 --> 0:18:07.919 sense to go with the one that has the larger 0:18:08.040 --> 0:18:11.200 install base among customers. So that's what they did. Various 0:18:11.240 --> 0:18:13.440 studios made the decision to go all in with Blu 0:18:13.560 --> 0:18:16.640 Ray and with Sony, and the very last big one 0:18:16.800 --> 0:18:19.479 to do this was Warner Brothers, which signaled the beginning 0:18:19.480 --> 0:18:22.040 of the end for HDDVD. There are even rumors that 0:18:22.080 --> 0:18:24.360 Sony had made the decision a little easier for Warner 0:18:24.440 --> 0:18:27.480 Brothers by greasing the wheels with a half billion dollar payoff, 0:18:27.640 --> 0:18:30.119 but that allegation was never confirmed. As far as I 0:18:30.119 --> 0:18:33.760 can tell, the death of HDDVD happened pretty quickly near 0:18:33.800 --> 0:18:35.880 the beginning of two thousand and eight. I remember attending 0:18:35.960 --> 0:18:39.480 cees that year and seeing the buzz about Tashiba canceling 0:18:39.480 --> 0:18:42.960 the HDDVD presentation just two days before it was supposed 0:18:43.000 --> 0:18:44.760 to happen, and that was all because of the Warner 0:18:44.760 --> 0:18:47.760 Brothers announcement. Later in two thousand and eight, Tishiba announced 0:18:47.760 --> 0:18:51.280 it would stop production on HDDVD systems, and the format 0:18:51.320 --> 0:18:54.080 war had ended and Blu Ray was the clear winner. 0:18:54.320 --> 0:18:57.240 So for some early adopters, the conclusion was a really 0:18:57.240 --> 0:19:00.800 tough blow because some of those adopters sung a not 0:19:01.040 --> 0:19:05.520 inconsiderable amount of money into HDDVD systems and libraries. That's 0:19:05.560 --> 0:19:07.879 precisely the kind of thing that keeps the majority of 0:19:07.920 --> 0:19:10.920 consumers cautious. It's why they are inclined to hold back 0:19:11.000 --> 0:19:14.080 upon the introduction of a new technology, particularly if they 0:19:14.119 --> 0:19:18.080 are competing formats. So that's why early adopters are really important. 0:19:18.280 --> 0:19:21.320 They're kind of the guinea pigs for new ideas and technologies. 0:19:21.560 --> 0:19:24.880 It's why the majority is also more cautious. They don't 0:19:24.920 --> 0:19:29.480 necessarily have the access to discretionary income where they can 0:19:29.520 --> 0:19:32.080 just spend it on a new technology that may or 0:19:32.080 --> 0:19:36.000 may not work out. It's why some technologies just fizzle 0:19:36.040 --> 0:19:38.720 out after a brief period of hype. I think of 0:19:38.800 --> 0:19:42.600 things like Google Glass. Potentially the Apple Vision pro will 0:19:42.600 --> 0:19:45.000 follow that same model. We'll have to see. But yeah, 0:19:45.040 --> 0:19:47.679 I wanted to spend some time to talk about the 0:19:47.760 --> 0:19:51.359 diffusion of innovation. It is a cool idea and I 0:19:51.359 --> 0:19:54.320 think it's a pretty valid observation. You know, it's not 0:19:54.359 --> 0:19:57.159 going to apply universally, but I think it's a good 0:19:57.680 --> 0:20:00.960 general rule to look at, and it's something that a 0:20:01.000 --> 0:20:03.679 lot of businesses pay attention to when it comes to 0:20:03.760 --> 0:20:08.440 how they position their technologies, their new technologies with introducing 0:20:08.480 --> 0:20:11.320 them to the market. Hope you enjoyed this quick episode 0:20:11.359 --> 0:20:14.840 of tech Stuff, and I'll talk to you again really soon. 0:20:21.200 --> 0:20:25.840 Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, 0:20:26.160 --> 0:20:29.879 visit the iHeartRadio app, Apple Podcasts, or wherever you listen 0:20:29.920 --> 0:20:31.000 to your favorite shows.