In reality, I think often, it's kind of a mix of both.
We see both technology push and
demand pull, interacting with one another to drive market forward and
ultimately, lead to the emergence of these new technologies or business models.
In the graph here, you see one way to conceive of this.
It's another S-curve here,
a different S-curve than our cumulative revenue S-curve.
This one refers to simply the underlying performance of a technology.
What's interesting to note, is that as we apply effort, as we study and research
a new technology, we eventually see this huge learning curve piece of this.
This is the upward swinging part of the S-curve.
But eventually we begin to tap out our ability to continue to innovate
in that area.
Take the internal combustion engine,
the gasoline powered internal combustion engine.
We've had over 100 years of research advancing that technology.
Arguably, the effort needed to even get a marginal improvement in the efficiency in
the internal combustion engine is quite high.
We've basically tapped out all the easy innovations,
the low-hanging fruit, that could emerge out of that technology.
Compare and contrast that with a more emergent technology like
electric vehicles.
Now electric vehicles are interesting since they have been around for
over 100 years.
However, very little effort had been put into electric vehicles over the last 80,
90 years, until more recently.
So as that effort's increased, there's been improvement in the technology, and
one could argue we might face that steep part of the S-curve, moving forward here.
Take for example, hydrogen fuel cells, another alternative powertrain for
an automobile.
Similarly, they've been around for awhile, but not necessarily much
research has been done, not much effort has been done for awhile.
And as that increases, perhaps that will take off as well.
So again, as we invest in a technology, as we learn about that technology,
we eventually might get decreasing returns to research and effort.
And that opens up the window for
a new technology to emerge to supplant the old technology.
And this, once again, leads to this new, competitive reordering.
And once again, a new dominant design emerges, and
what's interesting about this process is that the new technologies that emerge,
may at first, be worse than the existing technologies.
In fact, they are often worse than the existing technologies.
But they're on a different part of this S-curve, I was just referring to.
They're at a different point in terms of the effort put in to advancing them.
And it's over time, that they start to improve.
Going to automobiles once again, when Toyota first introduced the Prius and
the hybrid engines that they were pioneering, they were very inefficient and
costly.
But over time, they've learned to improve them, and now they are very profitable and
increasing efficiency engines there.
One could imagine similar dynamics playing out again in electric vehicles or
hydrogen fuel cell powered vehicles and the like.
So, we see the emergence of these new technologies.
They come in, they might be inferior to existing technologies, but
they might eventually supplant them.