Harvard Business School Prof. Clayton Christensen warned Wed. tha...

own half the market. Christensen, a best-selling author, addressed the future of the telecom sector during a speech at the National Press Club. Christensen warned that “disruptive” technologies pose the biggest threat to incumbents like the Bells, citing the steel industry example. Mini-mill operators with their low cost technologies were able to offer steel at 20% below the costs of their larger competitors. Initially, they captured the most- undervalued market segment - rebar or steel used to reinforce cement, he said. Soon, they captured much of the rest. Mini-mill success led to the collapse of prices in the market, with low-cost competitors fighting each other for market share, Christensen said: “Entrants tend to beat the incumbents when they engage in a disruptive strategy. They create a situation where [incumbents] flee rather than fight.” Christensen said it’s not clear how the Bells will fare vs. challengers like Vonage as VoIP becomes more of a disruptive factor in the market. “In almost every instance the disruptive technology appears to the incumbent as a threat and to the entrant as a growth opportunity,” he said: “In the end it always proves to be both. It’s the destruction that by making something simple and affordable creates a new wave of growth. There’s no reason why the incumbent couldn’t cause the growth to happen themselves.”