Every need is satisfied by a technology that has a “life cycle,” characterized by introduction, growth, maturity, and decline. But later with the advent of the 2G networks the pagers saw a steep downfall and finally vanished away from the industry.
The product life cycle can be explained using the cell phone market very well. On an average every 3 months a new cell phone is seen being launched by the manufacturer. What’s the reason?? With the growing needs of the customers and every improving technology, cell phones have become a fad statement. Everyone or rather most people would want a cell phone which has the best of the application (GPS) and the best support system, but who really uses these applications? Hence the mobile handsets have a very small product life cycle. For many years PDH and later SDH were dominating in the technology that used to connect Optical Fibre Mux Center’s across cities. These systems had a range of speeds from 2Mbps to 40Gbps.
Some improvements often achieved with only minor modifications have produced order-of-magnitude gains that have effectively, postponed the introduction of a new generation of transmission technology. Time-division multiplexing, for instance, now allows a pair of wires to carry 24 voice channels instead of just one; consequently, this made fiber optics and cable more expensive and less attractive as a solution for local and low-volume connection.
Combined with fiber optics the laser has revolutionized telecommunications. In the 1960s,the best transatlantic phone cable could carry only 140 conversations concurrently. In 1988, the first fiber-optic cable could convey 40,000 conversations concurrently, and in1997, CNET, the research and development laboratory of France Telecom, the French telecommunication carrier, failed to saturate the transmission capacity of the last generation of fiber-optic cable, meaning that the transmission capacity is almost limitless.Despite this achievement, the patent lawyers at Bell did not apply for a patent to the laser, believing it could not attract interest in the telephone industry.
The other reason why it is difficult to beat the uncertainties associated with new technology is that, frequently, the impact of an innovation relies on complementary inventions, which contribute to a full system solution that will add to its performance and, consequently, its demand. For instance, the telephone has existed for more than 100 years, but only recently has its performance been improved by facsimile transmission, voice mail, conference calls, data transfer, and on-line services. In the telecommunications industry, the laser was useless on its own. Associated with fiber optics, however, lasers are revolutionizing telephone transmissions.
Though optical fiber was available in a primitive form in the 1960s when the first lasers were developed, it took many years to discover that fiberoptic technology allow a tremendous augmentation in bandwidth, because the light spectrum is a thousand times wider than the radio spectrum. In addition, fiber-optic technology provides a better quality of transmission because of its lack of electromagnetic interference.
Standardization usually appears during the growth phase, when a technology starts to reach its peak and new competitors want to offer solutions or products to a growing number of customers. E.g. 2.5 G technology was introduced by Orange in India followed by many other players. Contrary to what a lot of technologists think, the “best” technology does not always manage to become the de facto standard. There are many firms that developed a superior technology but which failed to establish their technology as a standard. Today, Microsoft is fighting hard with Nokia to impose its operating software as the standard of the new generation Web-friendly phones.
Traditional theory states that industries are inclined to diminishing returns as a result of firms competing for scarce resources. However, according to the law of increasing returns, returns from marginal investments go up rather than down. E.g. Airtel started with phone manufacturing and later entered in to the GSM market. As some firms continue investing, their profitability grows, and eventually one or two firms end up dominating the market, because the other firms are unable to match their level of investment. For instance Vodafone and Airtel are dominating the GSM market in Mumbai while MTNL is not able to match their level of investment.
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