Amazon has revolutionized retailing, but Amazon also offers important insight about innovation, as well as innovation in the communications business. The key point is that truly-significant innovations in industries and products has to be measured in decades, not years.
As successful as Amazon was in its first decade, its first-decade success was nothing like what it has seen in its second decade. In the digital era of the mobile industry, where a new network generation appears about every decade, the time to reap rewards arguably is even shorter (two decades of total use, but replacement every 10 years).
“Instant success” does not happen that often in the communications business. Indeed, it often takes a decade or more for some important new innovation to get serious traction.
That is a problem for firms without capital resources to weather that long a climb to serious scale. And, to be clear, that is “most firms,” as few can survive for such long periods of time without substantial current sales volume.
Many of the important innovations we now see in internet applications, mobile applications and new business models, for example, might have been touted at the turn of the century, before the “internet bubble” quashed many of those hopes.
But that is not new. Since the 3G era, proponents have argued that “more bandwidth” would lead to creation of innovative new services. To be sure, such important innovations have happened, but not necessarily because “more bandwidth” was available.
Two decades of Moore’s Law improvements, cloud computing, mobile internet access and much-better smartphone capabilities have been equally important.
So it has been that innovations seen for 3G and 4G seem only now to be scaling, after decades of work and experience.
In the 5G era, similar hopes exist for creation of huge new services and applications, leading to the creation of big new revenue streams. But one has to wonder how long that process might take, and how big the innovations prove to be.
Earlier waves of heavy investment in information technology likewise have taken more than a decade to show up in any measurable way. That productivity paradox happened when major investment in computing resources happened in non-industrial (intangible product) businesses.
A decade or more of heavy investment did not produce measurable improvements in productivity. Some would argue that is because we cannot easily measure such improvements in “quality” of output, and that is likely quite true.
But the important fact is that even big and important advances in how we apply computing and communications can take a very long time to show obvious results. You might argue that 3G took 16 years (globally) to reach 40 percent adoption, suggesting rather-long product cycles.
That probably could remain the case in some markets. Even so, 4G adoption has been faster--globally--than was 3G. In many cases, 3G adoption has been less successful than 2G, with 4G growing much faster.
Still, 3G reached a peak within a decade, in many cases. In virtually every market, 4G is being adopted faster than was 3G. That might suggest that the value 3G was supposed to bring actually did not happen until 4G.
The main point is that we have believed innovations would happen as faster mobile platforms have been introduced. But the end user perceived value arguably was not as clear with 3G as for 4G. So the question is whether innovations we hope will happen with 5G actually happen as quickly as we might hope.
As many of the truly-important “internet” innovations took more than a decade to achieve market scale, so mobile network app innovation seems to have taken more than a decade to reach commercial scale.
The obvious conclusion is that the huge innovations in internet of things might not happen in the 5G era, but 20 years from now. It is possibly going to be a long march.
If you do communications industry research long enough, some patterns are clear. It often takes more than a decade for a promised and promoted “big new thing” to actually get commercial traction at scale. Sometimes it takes nearly two decades to reach economy-changing levels.
That is not historically unusual. Many important innovations have taken a decade to reach 10-percent adoption levels, though it is worth noting that adoption cycles are shorter for digital and non-tangible innovations. It might take another five years (15 years total) for some innovations to reach 40 percent adoption.
In some cases, mobile 4G has been adopted far faster than that.
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