Journal de l'économie mondiale

Disruptive Technologies and Networking in Telecom Industries

Abstract

Erik Strøjer Madsen and Simon Preuthun Hartington

This article discuss’ how economics of scale in supply and demand in the telecommunication industry has developed and how this has had great effect on the widespread usage and popularity of smartphones. By using this assmartphone a theoretical ground the paper looks into technical innovation in the telecommunication industry and finds significant similarities between the industry development and the literature on disruptive technology, which finds that incumbent companies are not able to react in a successful way when disruptions occur in their industry. By studying how the telecommunication industry developed around the introduction of the smartphone and looking closer into the reactions of major players such as Apple, Google, Microsoft and Nokia, we find evidence supporting the finding in the literature of an inadequate strategies among incumbent companies. Large incumbent companies focus too much on incremental innovation of their products which have a more clear short-term return and a solution of this problem is to focus less on short-term efficiency and to allow the individual researcher to follow his/her own ideas’ to a larger extent.