ESRI CASE STUDY 1. Of the three types of uncertainty that characterize high-tech markets, which type is ESRI experiencing most acutely? Elaborate and provide strategic implications for ESRI. a) In this case, I think the ESRI suffer the most in the technology uncertainty. i. Concerns over obsolescence. Technology is evolved extremely rapidly with the relevant elements develop simultaneously and interactively.
Microsoft and Google integrate PC, Broadband Internet connection and powerful search engines together to offer virtual globes service which challenge the traditional industry model of market segmentation. As the world’s leading vendor of DIS system software, ESPI faced severe challenge of new innovation and products. The key of high-tech companies’ survival is keeping innovation and advancing own technology before its obsolescence. ii.
Initially, the core competitiveness of ESRI software products is its unique geographic database designed for target customers, which provide diverse information to support various customers’ work. As the new high-tech product (Google earth) came out, the classic database had been challenged by new information collection model which construct by mass internet users upload and share information. The uncertainty of technology evolution brings risk to further development of existing technology. ) Currently, the new product may not be professional and target-oriented enough to compete with ESRI’s GIS professional product, but from the strategic angle, new innovation which has been regarded as disruptive technology/product has great potential to compete with existing ones, in addition, that’s the development trend of GIS system and will build new industry standard after widely-dispensed.. ESRI should handle it seriously, interact with the development trend and enhance own strength as well as integrate new advanced technology with own products. . What are the characteristics of the newest competitors that have allowed them to gain traction I n the GIS industry? a) There are several aspects enhance the new products’ competitiveness. i. Strong combination with advanced technology and service. Rather than traditional GIS system provided by ESRI, new product, such as Google earth, is based on innovation of PC, world-wide internet and strong search engine, therefore, Google earth combine new advanced technologies together to create a modern software . ii. Ample and various information.
Google earth allow users interact and share own information onto the software, which considered as UCC (user-contributed content). Therefore, these user-driven efforts serve as a model for the GIS community to publish and share more sophisticated and useful services in this dynamic, new online environment, as a result, this architecture for participation abstracted a lot of users. iii. Correct market segmentation. These new products are aimed on the mass market, which refer to the ordinary internet users who need some information in geography and direction.
Initially, this segmentation had not been regarded as target customers, while as the popularity of PC and internet, large demand occurred in this segment. These new products just enter the blank market and fulfilled the need, then get a rapid increase in customer amount. iv. New business model and 3. To what extend does ESRI face “disruption”, in the classic sense of the word? a) Disruptive technology/innovation describe innovations that improve a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers.
Disruptive technologies are particularly threatening to the leaders of an existing market, because they are competition coming from an unexpected direction. A disruptive technology can come to dominate an existing market by either filling a role in a new market that the older technology could not fill (as cheaper, lower capacity but smaller-sized flash memory is doing for personal data storage in the 2000s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has largely replaced film photography). ) In my opinion, ESRI face very severe challenges bring by the disruptive technologies. i. New innovation came out with bulk of relevant advanced technologies, and gradually absorbed considerable customers and occupied a big market. That what Google earth did and had already put a great threat to existing GIS. The new virtual globe has leaded the GIS industry into a new ear and changes the situation of GIS from professional use to mass entertainment. 4. Should ESRI explicitly target the new GIS customer (mainstream, onprofessional, low-end)? If so, what organizational changes might this require? a) Personally, I think due to the great market potential, ESRI should target this group of internet users as further customer. The internet users among the world increase sharply as the rapid popularity of PC and internet, thus, the great potential of the mass market can not been ignored, otherwise, the market share of professional software will be reduced as the development of competitors. b) Organization Changes.
The company’s value network, business model and particularly the organization structure need to change to adapt to the new market. ESRI organization structure need to be more decentralized, with fluid job responsibilities and extensive lateral communication processes. Members must recognize their interdependence and are willing to cooperate and share market intelligence to sustain the effectiveness of the organization. Effective information sharing in a market-oriented organization demands that bureaucratic constraints on behavior ad information flow be dismantled.
The uncertainty in high-tech markets requires frequency and informality in communication patterns among organization. There is also a need for more cross functional interaction between personnel from R&D and from marketing. 5. How would you characterize GIS diffusion in terms of the categories of adopters? Has it crossed the chasm? a) According to the market situation change, I suppose to divide this discussion into two aspects based on market development period. i. The early generation of the GIS product has already crossed the chasm.
As the leader of the GIS industry for a long time, ESRI use classic smart business practices of listening to its customers, investing in new technology and aligning it to real customers’ need which attracted a large amount of users come from various industries to apply GIS to support their work relevant to geography information, moreover, due to the high quality of its professional database and services, all the customers are in high loyalty. Therefore, customers in this product are no more inventors and visionaries, indeed, already include pragmatists and conservatives who really need the product. i. Come to the new generation product ArcGIS Server 9. 3, which ESRI developed in 2008 to integrate new technology into existing models, still struggling with the chasm, because this new product has different market segmentation with old one, it also target mass market rather than only industry professionals. Due to this, only few curious mass users in the new market element turn to this product. 6. How can companies such as ESRI compete in this era of “free? a) The mainstream of today’s software use is for free, company like ESRI should provide enough valuable services and products to attract customers to pay, i. Professional service. The key factor of ESRI’s longevity is its use of classic smart business practices of listening to customers, and fulfilling the needs by applying new technology. While, so as to survive in the “free” world, ESRI still has to work on this part and provide practical services to various customers, meanwhile, create unique functionality differed to other unprofessional products, to enhance customers’ use of GIS. ii. Unique database.
The new product, such as Google earth, establishes the database by the interactive contribution from various users, which create an ample and interesting information pool but also in lack of expertise. Thus, ESRI should highlight own professional position in this industry as well as the geography knowledge to offer useful, professional information which meet customers’ direct need in using of GIS for geography information. What’s more, all of the data have to be well organized in clear building structure to improve and enhance the simplification of using process and grab wanted information efficiently for users.
Last but not least, traditional GIS have less attention in products’ visualization. So as to attract customers and enhance info’s reasonableness, ESRI should focus on and devote energy on this aspect. 7. What should the traditional GIS vendors such as ESRI do, in light of the new industry trends? a) Although, new mass products haven’t put great threats to traditional GIS so far, even can be regarded as two different categories survive and develop mutually.
But death will be the final destiny if traditional vendors do not work on self-development to meet the new industry trends and indulge competitor grow strongly step by step. In order to avoid obsolescence of own technology and product. Here are suggestions for these companies i. Maintain and enhance own uniqueness and strength. Traditional GIS vendors always have own uniqueness and competitiveness during the long time longevity, which play the core role in attracting and keeping customers in loyalty.
Companies have to devote money and energy to improve this part to be a recognized characteristic among market and customers. ii. Integrate new customer needs and product development trends into own product. Companies should change themselves to suit the changed market, with the PC and internet market increasing shapely, individuals have been recognized a tremendous market in all the segments of IT industry, GIs companies should change own product to meet new customers’ need as well as to utilize the great information contributed by mass internet users iii.
Segment mass market and develop new product to fulfill their particular needs. There is no doubt mass market has great potential for GIS, among these numerous users, segmentation is still necessary for companies to research particular needs and launch products to solve it. In short, companies should always follow the instruction of customers and market , adjust own product into suitable ones, continue to work on R&D and keep eyes on competitors