Seagate–Quantum: Encroachment strategies

Few terms in the recent literature on innovation management have been as widely used as the phrase disruptive technology. Yet this term is widely misunderstood. As Christensen and Raynor note, “Many readers have equated in their minds the terms disruptive and breakthrough. It is extremely important, for purposes of prediction and understanding, not to confuse the terms.” This case shows how to recognize a potentially disruptive technology: it diffuses via a process of low-end encroachment. The new technology initially imposes little apparent threat because it sells to low-end or new customers, but it eventually encroaches on the current market from the low end upward. The case compares and contrasts low-end encroachment (using the example of new, smaller disk drive involving the firms Seagate and Quantum) to the case of high-end encroachment, where a new product such as a Pentium IV initially sells to high-end customers. In an oversimplified but concrete way, the case shows how marketing concepts such as conjoint analysis and reservation price tie into the concept of a demand curve, and how operations improvements (via the learning curve, or via product and process design) can lead to market share changes and product diffusion. These all have implications on firm strategy. Thus the case integrates material from multiple disciplines and might be used in MBA, MS, executive, or undergraduate courses that cover topics such as technology management, operations strategy, new product development, marketing strategy, or competitive strategy.