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Clayton Christensen argues here [1] that Tesla is going to have a problem with BMW etc. - he says that it has been easier in the past to disrupt existing market

Clayton Christensen argues here [1] that Tesla is going to have a problem with BMW etc. - he says that it has been easier in the past to disrupt existing markets from the low end and with low margin products; the field of high margin cars has a lot of sophisticated players that might give Tesla considerable trouble in the long run - on the high end. Fascinating and very enjoyable talk: [1] https://www.youtube.com/watch?v=rHdS_4GsKmg https://www.youtube.com/watch?v=rHdS_4GsKmg

mtgx 10y ago
I think Clayton Christensen is wrong here for the same reason he was wrong about the iPhone. First off, I think Christensen has been narrowing his disruption theory too much - pretty much to the "low-end" disruption strategy. But if I remember correctly, the original theory was a little more flexible, and it was more about the "next paradigm" technology/product, although it still put a lot of emphasis on the disruptor having lower cost structures than the incumbents. However, at the same time, I was reading Blue Ocean Strategy, which is somewhat similar to the disruption theory, but a little more flexible, and it applies to pretty much any industry, not just the technology ones. What I get from these two theories is that Tesla's cars are a "next-paradigm", which will at the very least make Tesla a "market builder," where it's the leader in that market, but unless Tesla also decides to make the lowest-end cars, then it will not end up dominating the new + old markets. So in this way, it's similar to what happened to Apple. Apple was clearly the leader in "touchscreen smartphones" for a long time, but because it refused to make $200, and $100, and $50 touchscreen smartphones, it made it impossible to remain the leader in terms of sales. So from that point of view, Christensen would be right that Tesla will not end up dominating the EV market in terms of sales, when companies like Renault/Nissan/GM will start making $12,000 EVs with 200-mile ranges in 10 years. But that doesn't mean Tesla will not be successful. It will probably remain the market leader in terms of "who makes the best EV," for a long time, because EVs is what Tesla lives and breathes, and they already have more than a decade of expertise in making production EVs, which will be hard to catch-up to (just like it took most OEMs at least 5 years to even approach the iPhone in quality). I'm actually quite disappointed myself that Musk said Tesla will never make a lower-end car than the Model 3. I was hoping they would at least make a $20,000 one in 5 years or so. I think he may be overestimating how fast self-driving taxis will be adopted by the majority of the population in a way that it makes sense to not have a car anymore (for people who would supposedly not have the money for a Model 3). Will Americans really do 20-30 miles commutes in self-driving taxis, every day, twice a day? I don't know if that math will add-up anytime soon. I mean, even if it does happen, but it's 15 years from now, does it really make sense to hold-out on making a $20,000 EV and getting much more market share in the meantime? I don't think it does, but who knows. I think it's a "safer" strategy to build that $20,000 car than not to do it, though.
- MichaelMoser123 10y ago
  i think Apple is doing find because it still is known as a friendly and otherwise great UI; it also creates a lock-in effect because you can't just get a phone from a different vendor with the same UI;

mtgx 10y ago

I think Clayton Christensen is wrong here for the same reason he was wrong about the iPhone. First off, I think Christensen has been narrowing his disruption theory too much - pretty much to the "low-end" disruption strategy. But if I remember correctly, the original theory was a little more flexible, and it was more about the "next paradigm" technology/product, although it still put a lot of emphasis on the disruptor having lower cost structures than the incumbents. However, at the same time, I was reading Blue Ocean Strategy, which is somewhat similar to the disruption theory, but a little more flexible, and it applies to pretty much any industry, not just the technology ones. What I get from these two theories is that Tesla's cars are a "next-paradigm", which will at the very least make Tesla a "market builder," where it's the leader in that market, but unless Tesla also decides to make the lowest-end cars, then it will not end up dominating the new + old markets. So in this way, it's similar to what happened to Apple. Apple was clearly the leader in "touchscreen smartphones" for a long time, but because it refused to make $200, and $100, and $50 touchscreen smartphones, it made it impossible to remain the leader in terms of sales. So from that point of view, Christensen would be right that Tesla will not end up dominating the EV market in terms of sales, when companies like Renault/Nissan/GM will start making $12,000 EVs with 200-mile ranges in 10 years. But that doesn't mean Tesla will not be successful. It will probably remain the market leader in terms of "who makes the best EV," for a long time, because EVs is what Tesla lives and breathes, and they already have more than a decade of expertise in making production EVs, which will be hard to catch-up to (just like it took most OEMs at least 5 years to even approach the iPhone in quality). I'm actually quite disappointed myself that Musk said Tesla will never make a lower-end car than the Model 3. I was hoping they would at least make a $20,000 one in 5 years or so. I think he may be overestimating how fast self-driving taxis will be adopted by the majority of the population in a way that it makes sense to not have a car anymore (for people who would supposedly not have the money for a Model 3). Will Americans really do 20-30 miles commutes in self-driving taxis, every day, twice a day? I don't know if that math will add-up anytime soon. I mean, even if it does happen, but it's 15 years from now, does it really make sense to hold-out on making a $20,000 EV and getting much more market share in the meantime? I don't think it does, but who knows. I think it's a "safer" strategy to build that $20,000 car than not to do it, though.

MichaelMoser123 10y ago
i think Apple is doing find because it still is known as a friendly and otherwise great UI; it also creates a lock-in effect because you can't just get a phone from a different vendor with the same UI;