Christian Long

Chris Anderson: Tech’s Long Tail

In TED Talks on April 11, 2010 at 11:43 pm

Reflection by ANDREW R.

Original TED page w/ speaker bio, links, comments, etc:

Chris Anderson:  Tech’s Long Tail

Chris discusses his “grand unified theory of predicting the future,” which he jokingly calls the “petite theory of predicting the future.” This theory is based on the belief that every single technology product at least goes through one of four stages throughout its lifespan.

The first stage that the product may go through is critical price. The first move to the advancement of the product is that is falls below this certain critical price. If all goes well, the produce will rise above critical mass, which is the second possible stage of a product, after going under the critical price. The third stage that a product might go through is displacement, where the product puts another product out of place. The fourth and final stage that a product might, and most likely will, endure during its lifespan is when it becomes nearly free. These four stages are very important in the drive for succession of the product.

Chris uses Wi-Fi as a small example of a product that has only gone through the stages of critical price and critical mass. He carries on to use the DVD as an example that has gone through all four of the stages. When the device first came out around 1997, it was very expensive, but by 1998, it was $400. The price of $400 is quite the “psychological threshold,” as Chris says. People looked at $400 and saw that even though that wasn’t that cheap, it wasn’t ridiculously expensive. Throughout the years, the hidden inflection point of the DVD has gone way up. Chris points out that with the increased rate of DVD players being sold, so did Home Theaters. Another company that succeeded as DVDs did was Netflix, which was created by Reed Hastings in 1999.

Chris uses some newer products, as of 2004, as examples of the stages. The first example he uses is gene sequencing. He predicts that by the end of 2004, the human genome could be duplicated for just $40 million. Although this may sound like a lot of money, only a few years before, it was about $1.6 billion dollars to perform the same thing. Chris uses AIDS medications, Linux, hybrid cars, and Voice Over IP as examples but the second most interesting product to gene sequencing is long-distance phone calls. Fiber optics play a major role in the business of long-distance calls, which is why the abundance fiber has decreased prices of long-distance calling to basically free. In 1990, it was about $2 per minute for a phone call to India. Not too many people could afford this, so communication was quite scarce between the United States and India. By 2004, the product went through the fourth stage of technology by commoditizing to become 7 cents per minute for a long-distance call to India.

All in all, Chris Anderson shares the patterns he’s discovered during his career of working with technology. His assumptions prove to be correct with all of the examples he used and this video was very interesting to watch.

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