I'm not sure if the following article, which I've just stumbled onto today, is posted anywhere on this forum. I've decided to post the link here since it mentions the X :)
I saw that too. I do not always like the Huffington post, but some articles are well written by people who are clearly informed, unlike many others who do not appear very knowledgeable at all.
Thanks for posting the link to the article. I absolutely agree with the entire article as I'm a long term investor in TSLA and have reserved an MX.
Great article indeed. Thanks for sharing!
It's a warm article by a fellow disciple, but this passage is off the mark:
"Musk has turned the traditional disruptive product model on its head! Normally, disruptive technology emerges in a low performance product that penetrates the market from the bottom where it is dismissed by incumbents and sneaks its way upstream, as was the case with the PC."
Disruptive technologies appear at the top of the market. Early adopters have disposable income, a tolerance for risk, and a penchant for the cutting edge. Then the technology improves, prices come down, and the market broadens. Examples abound, and it's hard to say PCs really bucked the trend. Sure, they made home computing realistic but PCs were by no means the first computers to find profit; it started with bigger and more expensive machines marketed to deeper-pocketed business clients.
What's been interesting in the EV space is that every other player - from the early glorified golf cart makers to Nissan - has thought this particular tech would defy the traditional disruptive model and start from the bottom of the market. They likely disbelieved that EVs could be cheaper to run while offering a user experience worth a premium price: too focused on the former, they missed the latter and their tech didn't go mainstream.
@dsemmes, I agree with you that the disruptive nature of the PC did not start at the bottom end, but rather at the high end. The first PCs definitely weren't cheap.
However, many car manufactures have used the bottom-end approach to great success (e.g. Datsun/Nissan, Honda, Kia, Hyundai, etc.). All these manufacturers released cheap vehicles at first to enter a market and eventually moved to the high end.
You can't blame them for trying to use the same tactic again. The bottom-end approach works for commodity products like ICE vehicles, but it can't work with new products that require heavy R&D with unproven technology.
I'm sure one day in the future, students will be studying when to use these two approaches in their business classes. :)
Thanks for bringing this Huffington article to our attention. My money is with TESLA not against them. Good article!
Great point dsemmes, I thought that bit sounded off. It's why I never had a computer of my own for a long time.
Shortly after we broke the 640K barrier, I remember being really happy when added memory went down to $50/MB! (PCs were $2500+ at the time.)
I'm pretty sure that though the author used the term 'PCs' he actually meant microcomputers. The idea of building a computer for personal use from microchips used as CPUs was quite foreign and rather radical at the time. Because 'building a computer' literally meant erecting a building before that point. It was as much an architectural project as it was a technological or data transmission endeavor. Specialized HVAC and fire suppression systems, along with backup generators, and multiple redundant components all drove costs into the millions of dollars in expenditures even before you got to licensing fees for operating systems and software. So that was the high end of the only computer industry that existed.
By comparison, the $2,500 to $4,000 investment in a fully integrated microcomputer that could be moved from one desk to another and plugged into an ordinary wall outlet and operated with a couple hundred dollars in off-the-shelf software was undoubtedly low end -- even if it represented a premium over the dumb terminals that diud absolutely nothing without the gazillion buckadollar fancy shmancy computer servers, which might cost thousands of dollars per month just to lease a share of remote access to if you couldn't afford one of your own. And once the computer in the bosses' office could be used as the central control of all the dumb terminals in the office, it made the whole thing that much cooler. Add a modem and a Compuserve account and you were rolling in high cotton at dust bowl prices.
vandacca and desemmes, Disruption is a term popularized by Clay Christensen and is a model when entrants are able to displace incumbents by eroding the low end of the market. At the high end, incumbents nearly always win.
PC is a horrible example, because IBM was just dominating the market with the IBM/360 before having to relinquish it's control of a massive amount of technology and unbundling its software because of anti-trust issues in the 60s and 70s.
According to Christensen's main model, Tesla should fail to the main auto-manufacturers because they are competing in the high end. However, Christensen has a second model, new market disruption where a company slips into the market of the another. In this view Tesla wins by disrupting the grid-storage/energy industry. We'll see!