Assessing the possible impact of new technologies

One of the motivations in studying history is to anticipate the future. We shall now discuss how to visualize the impact on market shares by new technologies.

Rather than using regression, we can specify the parameters for a logistic. This is useful when few or no data are available, as is the case for new technologies seeking to be market leader.

Continuing with the example of recording media, we consider a prospective competitor to follow CD's: the digital versatile disk, or DVD, which has the same size as a CD with about 10 times the storage capacity. We used Loglet Lab to estimate the $\Delta t_i$ and $t_{m_i}$ that characterize the speed and span of the rise of LP's, cassettes, and CD's; based on these numbers, we could estimate on our own similar values of $\Delta t_4$ and $t_{m_4}$ for DVD's. We chose a $\Delta t_4$ of 13 years and a $t_{m_4}$ of 2012 to generate Figure 11, which shows how the new competitor would affect the market that we had presented in Figure 10.

Figure 11: Logistic Substitution of US Music Recording Media with the Introduction of a Hypothetical New Technology. Source of data: [18].

Figure 12 shows the example of competition and substitution among canals, rails, roads, airways, and a possible competitor, maglevs⁵. Here, market share is the length of existing canals, rails, roads, and air routes, not unit sales. This figure also demonstrates familiar competitors (modes of transportation) over a much longer time span than the recording media example and increases the competitors to five. The estimated rates of change of kilometers of each competitor and of the whole American transportation infrastructure illuminate the forces at work. This history of substitution begins in the era of the Erie Canal and extends a century and half into the future.

Figure 12: The Logistic Substitution of U.S. Transportation Infrastructure. Source of Figure: [2].