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LCD - a Disruptive Technology

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How LCD displaced Cathod Ray Tube television.

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LCD - a Disruptive Technology

  1. 1. LCD TV- A Disruptive Technology
  2. 2. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  3. 3. Over the last years, our TVshave been on a remarkablysuccessful diet...
  4. 4. Remember what they used to look like?
  5. 5. Big…
  6. 6. Clumsy…
  7. 7. Heavy…
  8. 8. That’s part of the past… What happened?
  9. 9. Well, a technologicalshift occurred…
  10. 10. … LCD has been one of the technologies that disrupted the old Cathod Ray Tube (CRT) technology.
  11. 11. Let’s take a look at how this shift happened…
  12. 12. This is what the old CRT TV looked like.
  13. 13. In 1888, the Austrian physicist Friedrich Reinitzer discovered a substance that he called Liquid Crystal.
  14. 14. After that, not much happened until Richard Williams at the American company RCA discovered that Liquid Crystals had some very interesting opto-electronic properties.It turned out that if a small current is added to a thin layer of Liquid Crystal, it could display various patterns.
  15. 15. Further discoveries were made by George H. Heilmeier at RCA in 1962-64.Thus, RCA hade developed an extensive knowledge about this new technology in those early days.
  16. 16. Though RCA pioneered LCD, it was one of the dominant players in the dominant CRT technology.
  17. 17. In 1968, the company held a conference in New York where they proclaimed that a new TV was going to be developed, using LCD. It would be very light, require less energy and be very thin.George Heilmeier at RCA was in charge of this project at RCA and he had a vision about a flat TV.
  18. 18. He wanted to commercialize LCD and tried to persuade top management to do so, but failed.Later on, Heilmeier left RCA and the industry.
  19. 19. According to Heilmeier, top management did not want to distract RCA from its core business, CRT-TV.
  20. 20. By that time, RCA made fantastic profits on this technology. In 1953, RCA’s technology had become the national standard for colour-TV in the United States.Thereby, it also became the national standard in most of the western world, and thus the profits were tremendous.
  21. 21. A british scientist, George McFartane tried to persuade the UK Minister of State for Technology that the UK should try to develop the LCD technology.McFartane had the following reason for this: the UK paid more in royalties to RCA than it had cost to develop the Concorde airplane!
  22. 22. The British project turned out to be successful and the LCD technology was developed much further.Some displays were delivered to Japan and the spin-outs from this venture were later on sold to Philips.
  23. 23. At RCA, more research was done in the LCD area, up until 1971.At this point, a scientist approached the corporate lawyers with a breakthrough and wanted the company to apply for a patent on this discovery.However, the corporate lawyers did not show any interest since the value of this discovery was deemed to be lower than the cost for patenting!
  24. 24. In the late 60s and early 70’s, RCA was frequently visited by Japanese companies who showed great interest in the new technology.Once RCA had decided not to commercialize LCD, they were very generous and shared much of the knowledge with the Japanese delegations.
  25. 25. Among other things, this resulted in the success of Seiko in the watch industry, where LCD turned out to be the perfect technology for digital watches.
  26. 26. The LCD screen became part of the dominant design in digital watches in the late 1970s. The LCD was a low power consumption device, could display the time continuously, and was extremely inexpensive to manufacture.
  27. 27. LCD Screens also became part of the dominant design for digital calculators, another area where the Japanese firms disrupted old, stable Western industries…
  28. 28. After a while, it turned out that static small screens in black and white were not so different from displaying moving objects in colour on a bigger screen.The technology was essentially the same and now it was just a matter of many, many incremental improvements…
  29. 29. In the following decades, LCD screens were used in many different applications.Those usually had a few things in common – the applications did not demand a high picture resolution, but required low weight and low energy use.
  30. 30. For instance… Small video games…
  31. 31. Bigger video games…
  32. 32. MP3 players…
  33. 33. It’s remarkable to what extent the LCD technology was explored in the Western world but exploited by Japan.Primarily British and American companies pioneered the technology and developed it further, but failed to commercialize it.
  34. 34. It seems that having a background in the former technology was a great disadvantage for the Western firms.They had something to loose from the new technology, whereas the Japanese companies had no past experience in screens.
  35. 35. The Japanese firm Sharp, for instance, had never been into CRT technology and decided in the mid 1980s to focus bigtime on LCD.
  36. 36. In 1988, Sharp presented the first 14 inch colour LCD-TV for the world. The screen was 1/13 as thick as a CRT and weighed 75% less!This was the point when LCD became a serious threat to the old technology, and now it was just a matter of more time...
  37. 37. In the meantime, LCD kept prospering in new applications… … Digital Cameras…
  38. 38. Cell Phones…
  39. 39. The ”TV-like” screens first started to prosper within notebooks.Thin, low weight, low energy use – these properties turned out to be crucial for lap top computers, due to battery constraints and demands on mobility.
  40. 40. … Then LCD invaded the mainframe computer screen market…
  41. 41. … At this point LCD had been used in a fantastic amount of applications and finally, the technology was ready to haunt the industry where it was once born…
  42. 42. In the years 2003-2007 LCD invaded the TV segment…Both TV screens and the profits of CRT-TV companies were now on a super-diet!
  43. 43. 2005 was the first year when more LCD TVs were sold than CRT TV.The following year, only 25 percent of the market was CRT.
  44. 44. And once the disruption happened, it was Sharp, LG, Sony, Hitachi and Samsung who rapidly gained markets shares with the new technology.Most firms were thus either Japanese or Korean.
  45. 45. In the 3rd quarter of 2007, sales of LCD TVs in Sweden increased 83 percent from the same quarter 2006!
  46. 46. Though the process of disruption had been going on for decades, once the performance is good enough it happens at a furious pace!
  47. 47. It’s amazing to see how RCA more or less invented LCD, but never even bothered to patent the technology and happily gave it away to the Japanese companies. WHY?
  48. 48. One reason:”Small markets do not serve the growth needs of big firms.” // Christensen (1997)
  49. 49. Another reason:There is no financial logic in developing a technology that a firm’s mainstream customers do not demand.
  50. 50. Another reason:If a company has fantastic profits from its core business, any technology which does not initially generate such profitability will be disregarded.All these royalties, patents and sales at RCA must have imposed very high demands upon any alternative investment, since the opportunity cost was so high.
  51. 51. Another reason seems to be that the business logic is different in digital industries.The CEO of Samsung, Mr. Yun said:”In the analog era, it was difficult for a latecomer to catch up.”The same person has said about the digital era that:”If you are two months late, you are dead.”
  52. 52. Interestingly, Heilmeier got the Kyoto Prize in 2005 for his discovery of LCD in 1964.The Kyoto Prize is like a Japanese Nobel Prize, awarded annually for great achivements in Technology, Science and Philosophy.
  53. 53. So, what’s the main lesson from this story?I think it’s a good illustration of how large, successful firms miss out on disruptive opportunities simply because they are so successful in the former technology.Moreover, it’s a nice story about a technology which has attacked from below and invaded a lot of segments over the years.
  54. 54. SourcesGunnarsson, L., Mann, M., Thunström, F. (2008), Strukturomvandling I ett historiskt perspektiv, LCD-TV.Christensen C.M. (1997): The innovator’s dilemma, Harvard Business School Press, Cambridge, Massachusetts.http://www.nyteknik.se/nyheter/it_telekom/article54 832.ecehttp://en.wikipedia.org/wiki/Lcdhttp://www2.cloznet.com/idcfm/issues/2007/03/art4 /art4.pdfhttp://www.eetimes.eu/scandinavia/173602233
  55. 55. Photos taken at:The Radio Museum in Jönköping:http://www.radiomuseet.com/ Thanks!
  56. 56. Image Attributions Thanks!
  57. 57. Find out more:www.christiansandstrom.org