What Are the Risks for Companies Moving into New Areas of Business Made Possible by Fast-Changing Technology?

The main worry for any business planning to enter a market that utilises technology which has a high rate of change would be that anything they invest in today would be outdated tomorrow. Apex is a typical example of a company that was around when the internet was an emerging technology.

The internet wasn't the only new area that Marina was looking to explore. She also suggested producing menus for film productions published on the most common optical media at the time: the Compact Disc. With the benefit of hindsight one may think it would have been an excellent move for company such as Apex to grasp opportunities they had to enter the market for website design and also to start working with Video Compact Discs (which would've been good preparation for when the DVD came into existence). But the decision to move into these new areas of work is not so easy.

When a new market is created out of technological advancements there are two things a company can do: be the first to service the market hoping to grab an early customer base, or secondly they can enter the market later but with a product that is superior in some way. Marina believes that Apex would have a sufficient amount of interest in the new products that would come from existing customers. These customers would expect the same quality of product that they received in earlier dealings with Apex. Now if Apex were to try to become the early bird in web design as the internet developed, it is possible their product would not be up to scratch. So it seems clear to me that for Apex the best course of action would be to wait until they have a rock-solid foundation in web design (the correct equipment and staff training) before they start selling their product.

A recent example of a company that entered a new market created out of technological advance first, and failed, is the Three mobile network. In the year Three started doing business, between the months April and September, they had an average of 2.97 complaints per 1000 customers. Compare this to an average of 0.2 per 1000 for T-Mobile, Orange and O2 and you will see that Three were failing their customers. (22 November 2003, Oftel: More complaints from 3 subscribers. [WWW] http://www.3gnewsroom.com/3g_news/nov_03/news_3960.shtml (05/10/2005))

Another major risk for Apex would be being swallowed up by the big fish. Producing products for the internet means computers are needed, and the speed of advancements in computing technology has been astoundingly fast. In 1995 Intel released a computer processor that ran at a speed of 120MHz. Now, in 2005, Intel are selling processors that run at a speed of 3.7GHz - that is more than a twenty five times increase in speed in just ten years. If Apex were to compete whilst these technologies were advancing they would need to upgrade their computer systems from time to time. This is expensive and it would mean Apex wouldn't be able to keep up with all the hardware improvements that became available. But this doesn't mean that there isn't a multi-billion pound company that can't. Companies larger than Apex would be willing to make losses early on to drive out potential competitors in the future. Apex would need a clear strategy before they make the decision to start producing corporate web sites.

(Timeline of Computing. [WWW] http://www.answers.com/main/ntquery?method=4&dsid=2222&dekey=Timeline+of+computing+1990-forward&gwp=8&curtab=2222_1&linktext=1990-