Of the three types of uncertainty that characterize high-tech markets, which type is ESRI experiencing most acutely? Elaborate and provide strategic implications for ESRI.
Market uncertainty, technological uncertainty, and competitive volatility are those features that characterize modern high-tech market. Basically, the intersection of these three uncertainties determines further development of the innovation industry (Mohr, Sengupta, & Slater, 2010, p.34). In 1990s, ESRI faced both: technological uncertainty and competitive volatility. Market was demanding new technologies with customer friendly interfaces. Besides individual consumers, large corporations and governments were also interested in the GIS technology. New companies entered this market rapidly, which, unfortunately, resulted in the failed the competition and lost leader’s positions of ESRI (Mohr, Sengupta, & Slater, 2010, p.34).
Therefore, instead of following the current popular desktop technologies and staying one step behind the major producers, ESRI should focus on more thorough market researching so that to be able to give clients exactly what they need. Of course, this will also require the company to invest into its innovation process, as new technologies are to be used. ESRI should develop their product considering wide use of the Internet and touchscreen gadgets.
What are the characteristics of the newest competitors that have allowed them to gain traction in the GIS industry?
ESRI’s major competitors are Microsoft and Google, whose advantage against the classical GIS technology lies in the user-friendly principle. Saying in other words, they focus on the average consumer, who does not need extensive analytical options in the geographic navigation. Therefore, once the software is simple and interactive, it attracts more people. Free Internet access made GeoWeb as simple and commonly used as a regular phone call. And, as a result, both Microsoft and Google have got an opportunity to gain additional profit from adds and commercials, while the main GIS is mostly free of charge (Mohr, Sengupta, & Slater, 2010, p.497).
Disruptive innovation can be defined as a process of creating new products that are simpler that their predecessors, but cheaper at the same time. In most cases, these new products are more comfortable in use and appeal to customers at the lower end of the market. (Mohr, Sengupta, & Slater, 2010, p.25) In case of ESRI, they faced the exact lower-end disruption, as since 1990s, most new GIS are simplified and available for everyone almost for little or no fees. Theory of disruptive innovation has been recognized as one of the most successful models in the high-tech industry. However, it should not be mixed with any breakthrough that changes an industry’s competitive patterns (Christensen, Raynor, & McDonald, 2015). Thus, every company should analyze the market prior to adopting the low-end or new-client disruption model.
Should ESRI explicitly target the new GIS customer (mainstream, nonprofessional, low-end)? If so, what organizational changes might this require (Chapter 2, Chapter 3)?
Definitely, ESRI lacks of the customers, thus it would be good to focus on some new target audience. However, ESRI still has a good potential to be developed within the current segment. Focusing only on the new GIS customers may be not successful, as it will require extensive researches and lots of efforts to establish relationships so that to enter new markets. Meanwhile, new customers is a source of new ideas, as after a good marketing research the company should have answers on what their target customers need. Thus, improving their technology and developing some new ones may become a good competitive advantage in the current niche.
How would you characterize GIS diffusion in terms of the categories of adopters? Has it crossed the chasm?
According to the Moor’s theory, crossing the chasm is a gap between the early adopters of the innovative product and early majority or pragmatic clients. Therefore, I would say that ESRI has already crossed the chasm, as GIS technologies are now widely used. However, it is obvious that firm has not reached its peak yet.
How can companies such as ESRI compete in this era of “free” (Chapter 10)?
In order to remain profitable and enlarge their market share, ESRI should cooperate with the current market leaders, like Microsoft and Google. First of all, sharing experience and resources will be mutually beneficial. Secondly, this will help ESRI to concentrate on their strong sides, while partners may back up on others. But hat is more, ESRI will save time and energy on walking the path, which other companies have already passed.
What should the traditional GIS vendors such as ESRI do, in light of the new industry trends?
Innovation and invention process are different in their nature. Thus, ESRI should focus on the market research and analysis so that to understand the main tendencies and customers’ needs. Otherwise, their high-tech products will remain either outdated or too early for their time inventions (Singh, 2013, pp.2-3). Besides a solid market research, the company should create a fully completed product, which will be simple in use and support other functions, except of the main one. Establishing strong relations via web services is another option for the firm to attract new clients and gather their feedback.
References
Mohr, J., Sengupta, S., and Slater, S. (2010) Marketing of High-Technology Products and Innovations. 3rd ed. Upper Saddle River, NJ: Pearson Education, Inc. ISBN-13: 978-0-13-604996-8
Christensen, C.M., Raynor, M.E., and McDonald, R. (2015) What Is Disruptive Innovation? Harvard Business Review. Available at: https://hbr.org/2015/12/what-is-disruptive-innovation
Singh, V. (2013) Innovation Diffusion Categories And Innovation-Related Needs. International Conference On Engineering Design, ICED13. Aalto University, Finland. Available at: https://wiki.aalto.fi/download/attachments/80938572/ICED_445.pdf?version=1&modificationDate=1385305987000&api=v2
