Friday, September 16, 2022

"Hybrid" is a Risk-Reducing Strategy for Nearly All Firms

“Hybrid” is an important business strategy for communications service providers of all types. Hughes Network Systems, for example, has added 4G terrestrial connectivity in some markets to improve latency performance.  


In fact, “hybrid” tends to be a reasonable migration strategy for any firm or industry when new technologies emerge to replace older platforms. If software-defined wide area networks start to displace Multiprotocol Label Switching, most customers and suppliers will sell and support both. 


Initially, especially when MPLS legacy revenues are significant, suppliers will joust about the merits of the newer technology. But if customers start to switch, so will the marketing and sales stances. 


At some point, if and when low earth orbit satellite constellations begin to take market share, suppliers of geosynchronous satellite service will offer both, often acquiring assets to do so. 


Eventually, older platforms have shrunk so much in terms of revenue and usage that firms will shift reliance virtually exclusively to newer platforms. 


If you are familiar with the concept of the S curve, you know that at some point in the product life cycle of any technology, growth halts. So the logical strategy is to begin development and sales of the newer technologies before market saturation hits. 


source: Strategic Thinker


One sees this sort of thing all the time in the computing, software and connectivity businesses. There never is a flash cut from a legacy platform to a next-generation platform. Hybrid is virtually always the model. 


Users begin by buying the new platform, if they can, for new installations or sites (green field). They continue to operate the legacy platform as well, gradually beginning a replacement process (brown field). 


Cable operators did precisely that when they began grafting optical fiber into their access networks. “Hybrid fiber coax” was the strategy. Eventually, even cable operators are likely to transition to all-fiber access.


But the strategy might still be hybrid. To the extent possible, cable operators will, in some cases, continue to deploy more advanced versions of their DOCSIS access platform, up to the point that upgrades to the physical infrastructure are required. 


They already are starting to deploy FTTH in the dense service areas for business customers. Then FTTH will replace HFC in dense urban areas for home broadband, while keeping HFC in lower-density markets. Over time, FTTH will replace more of the legacy network. 


But “how long” matters. As with development of the metaverse, it matters for suppliers and real-world practitioners how long it takes for various forms of augmented reality and virtual reality to reach commercial volume. 


Being too early can doom a firm. Being too late also can have serious consequences. Hybrid therefore is one way to limit execution risk.


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