Failing to Disrupt: The case of the Network Computer

Abstract

In 1995, the future of home computing was in the balance. The dominant technology, the PC, was threatened by the entry of a potentially disruptive technology, the Network Computer (NC). Yet in 2005 almost 200 million PCs were sold globally and the pioneering NC was not to be seen. In this paper we take a co-evolutionary view of the development and attempted diffusion of the NC. We observe that the lack of technological and market complementarities were central to its failure, restricting the adoption of the NC and the growth of its business ecosystem. In competition with the significantly more mature PC ecosystem, in which these complementarities were highly evolved, the NC failed to generate the expectation that it was a viable proposition. This episode provides insight into the difficulties facing new entrants with potentially disruptive technologies and shows why, nevertheless, incumbent technologies that initially overcome such challenges may remain under longer term threat.

Keywords: technological co-evolution, innovation, business ecosystems, complementarities, failure, network computer, personal computers, PCs, networking, new technologies, dominant technologies, technology adoption

JEL Classification: L63, M13, O32, O33