Technology Displacement is Harder than it Seems

Technology displacement--new for older--is a tricky business. Sometimes a whole ecosystem has to be built before a key innovation can reach mass adoption.  

Not every feasible technology substitute actually displaces other solutions with which they potentially compete, even when the argument is made that the substitute is “better” on some relevant performance metric. 

Sometimes the failures are the result of business execution, as when a promising startup runs out of money, grows too fast or too slowly. 

And customer adoption is almost always related to potential customer underlying habits and preferences. Changing has costs, so the innovation must deliver value in significant excess to the costs of changing. 

Customer experience, broadly defined, always is important. “Better” in some sense is offset by “hard to use,” “inconvenient” or “not worth the extra money.”

Politics and culture sometimes also play a key role. Is an existing way of doing things beneficial to important and powerful interests? Can they resist innovations that threaten those interests? 

Sometimes it is deemed too much hassle to displace an existing solution and ecosystem with a rival. Despite its inferiority to other keyboard layouts, we still use QWERTY, which originally was developed to slow down typing and prevent key jamming on mechanical typewriters.

Some call that path dependence, the idea that small, random events at critical moments can determine choices in technology that are extremely difficult and expensive to change.

“Innovation is more a human process than a technological one,” says Stacy Wood, North Carolina State professor. “Persuasion, environment, culture and context always matter.” 

If the primary end-use value of a smartphone is the expected ability to remain connected “anywhere,” on the go, then it makes sense that Wi-Fi--though a key part of the connectivity ecosystem and experience--is not a direct or convenient substitute.

For perhaps similar reasons, few of us use smartphones without cellular service, though some functionality is possible. 

In the mobile communications business, the service always is bundled: text messaging, voice and internet access being the foundations. It remains possible to purchase a basic bundle including only voice and messaging, but increasingly, the foundation package includes internet access. 

Decades ago, the emergence of Wi-Fi was touted as the potential foundation for mobile phone service, and so it has become, though not in the way some expected. Periodically, it has been suggested that Wi-Fi could be the sole connectivity mechanism for mobile phone service. 

Voice and text messaging still are required features of a 5G network, whether they directly generate lots of specific revenue or not. Customers might willingly buy a 5G-based home broadband service, without voice or texting capabilities. They might buy a 5G dongle for PC internet  access. 

But it remains an open question whether smartphone service without voice and texting is viable, lawful or desirable. In principle, a smartphone can function without a “mobile” account enabling voice, using Wi-Fi and VoIP. 

There are some issues, such as inability to use a phone number or communicate easily with other users of the public telephone network. But think of a smartphone connected to Wi-Fi, with no subscriber identification module and mobile service, as a PC connected to the internet and using Zoom or any other messaging or VoIP service.  

It can be done, but the utility or value is not high, for most people, if the mobile service bundle of value also includes low-cost public network voice and messaging (for domestic communications, for example) as well as the ability to use Wi-Fi or the mobile network when roaming or conducting international communications.

Calling using VoIP over Wi-Fi is possible and useful. In a mobile device context the overall value of a mobile service might be high enough, and the cost low enough, that bothering with a Wi-Fi-only use of the phone is not worthwhile. 

Technology displacement often is quite a bit more complicated than it appears.