Wednesday, July 29, 2009

Creative Destruction: Killer Apps and Killer Devices

The term "killer app" typically refers to the software application that is regarded as the sole driver for mass adoption of a particular hardware device. In the early days of personal computing, that killer app was VisiCalc. This software program is widely regarded as the spark that ignited the personal computing explosion.

In more recent history we are experiencing a complete reversal of the order in which the smart phone - in particular the iPhone - would seem to be the "killer device" that is regarded as the sole driver for mass adoption of an entire class of software applications. In the process, whole categories of products and services are falling by the wayside.

Back in the fall of 2006, I was sitting on the commuter train taking me to my job in Portland, Oregon and reading my daily edition of the Wall Street Journal. Somewhere in the middle pages of the Tech section was a mention of Apple's intention to introduce their cell phone to the market "sometime in the spring of '07." (If you recall, back then Apple was riding high due to the success of its "killer device", the iPod.) The article went on to say that Apple's version of the mobile device would include a fully functional web browser and an email client that fully supports HTML-formatted email. By the conclusion of that article I immediately knew that history would be in the making for two reasons: (1) this was the very first smart phone targeted directly to the consumer, and (2) Apple's core competence is Useability - with a capital "U".

Here we are three years later and the iPhone has proven to be the killer device and is now the Gold Standard of requirements for all mobile devices. The smart phone is truly the killer device because it has actually killed entire categories of hardware devices. First went digital cameras and then PDAs. More recently it appears that dedicated GPS devices are becoming extinct. Some people have suggested to me that perhaps satellite radio may be the next casualty. And now this just in: B of A is shutting 600 of their banking branches. Reason: online and mobile banking trends reduces needs for physical presence.

We are truly experiencing what Joseph Schumpeter called "Creative Destruction".

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