When did this change?
I'm reading an old-car book while eating breakfast as usual.

One theme popped out of a book on the '30s: Innovation started in the middle, not the top or bottom. The base models of Chevy and Ford were simply last year's car. The Deluxe models got this year's new styling and improved engines. Superexpensive cars like Stutz and Duesenberg and Pierce didn't change at all. They were 5 years behind. When Packard introduced its middle-class 120 model, the 120 got new features like independent front suspension and hydraulic brakes. The senior limos had to wait.

Now we expect innovation to start from the top. Early adopters are rich and high-status. In the auto world, Tesla proves the point.

This article on the start of the Net, like most such articles, follows the modern assumption and completely omits CompuServe. The article traces the high-status Berkeley and EU academics who "invented" the Net, totally ignoring the millions of CServe users who were ALREADY ENJOYING all the features of the modern Net when the academics finally got around to "inventing" those features. When CServe users were forcibly switched to the HTTP net, we felt downgraded. The REAL CHANGE happened after 2005 when broadband connections made video possible. It wasn't the protocol, it was the hardware.

CompuServe marked the end of the old "middle first" innovation rule. (Neither way is absolute, but both are pretty fair generalities.)

What caused the shift?

Before 1980, PROFIT drove corporations. Giving a new development to the top end won't amortize it. Each sale has high profit, but quantities are low. Giving it first to the base loss leader model won't amortize either, because the loss leader has near zero profit. You want to start with the second tier, the Pontiac or Mercury level, where quantity times unit profit will pay down the development costs.

After 1980, SHARE VALUE drives corporations. Amortizing no longer depends on profit; it's solely in the stock sales. Middle-class people don't buy stocks. High-status people buy stocks, so that's where you focus your buzz and sizzle.

Come to think of it, we no longer have a Pontiac or Mercury. Nuff said.

Labels: Asked and answered, the broken circle

  ¶ 4:55 AM