In his book The Innovator's Solution, Clayton Christensen defines disruptive innovations as those that aren't necessarily improvements on existing products, but which compensate by being easier and more convenient for more people. Instead of impressing customers in an existing market, disruptive innovations reach out to create entirely new markets of their own. I don't know whether Nintendo (OTC BB: NTDOY.CC) executives read Christensen's book, but their new Wii video game console seems every inch a classic example of disruptive technology.
I'm not much of a gamer, and I haven't played the console myself -- but only because it's sold out at all my local stores. Early reviews, however, make it obvious that the Wii isn't just less expensive than Sony's
As proof of this, I'll point not only to my own interest in the console, but also to Walt Mossberg's recent write-up in The Wall Street Journal. He quoted a college athlete as saying that Wii allowed her to feel coordinated playing a video game for the first time in her life, and that she might actually buy the system.
This market clearly represents a huge opportunity for Nintendo, but it also poses a dilemma for Sony. As Christensen accurately explained in his first book, The Innovator's Dilemma, Sony must now figure out how to create products for this new "nonconsumption" market of first-time gamers.
Unfortunately, because most of its time and energy for the past year has been focused on providing more horsepower and fancier graphics for its existing customers -- the hardcore gamers who demanded the upgrades found in the PS3 -- Sony has not busied itself in developing products that appeal to non-gamers.
As a result, it appears that the company is now behind the curve in the development of simpler-to-use and less expensive technologies like the Wii. In fact, Sony, which usually does a very good job of patenting cutting-edge gaming technology, didn't even bother to patent a Wii-like control interface -- one which senses gamers' motions and positions relative to the screen -- until late this summer.
In order to succeed, I would recommend that the executives at Sony take a page out of TheInnovator's Solution and consider creating a new and separate division within the company. That might be what it takes to develop new products for the largely untapped market the Wii has opened.
Sony still has time to do so, but it must act quickly. Otherwise, it could be missing out on a huge opportunity. And as the Wii continues to be upgraded and improved over time with better graphics and new capabilities, it could also begin to woo hardcore gamers. That won't just be a dilemma -- it could be a very big problem for Sony, which is still losing money on the sale of every PS3.
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Fool contributor Jack Uldrich is still hoping to find a Wii for his wii-ttle ones this Christmas. He owns stock in Microsoft. The Fool has a strict disclosure policy.
