Technology change, economic feasibility, and creative destruction: the case of new electronic products and services

Abstract

This article shows how new forms of electronic products and services become economically feasible and thus candidates for commercialization and creative destruction as improvements in standard electronic components such as microprocessors, memory, and displays occur. Unlike the predominant viewpoint in which commercialization is reached, as advances in science facilitate design changes that enable improvements in performance and cost, most new forms of electronic products and services are not invented in a scientific sense, and the cost and performance of them are primarily driven by improvements in standard components. They become candidates for commercialization, as the cost and performance of standard components reach the levels necessary for the final products and services to have the required levels of performance and cost. This suggests that when managers, policy makers, engineers, and entrepreneurs consider the choice and timing of commercializing new electronic products and services, they should understand the composition of new technologies, the impact of components on a technology’s cost, performance and design, and the rates of improvement in the components.