The Hardware to Software Technology Shift

When the iPhone hit the market five years ago one of the major shifts in mobile phones evolution took place: the shift from hardware to software. The iPhone was a software platform. Companies like Nokia, RIM and many other ruled in the hardware era of the mobile industry but with the shift to software companies like Apple and Google became the leaders leaving Nokia and RIM fighting for their existence. This shift is not unique to mobile phones. We will see more industries get disrupted because of the hardware becomes commoditized and the software takes over the innovation.

Computers also went though this shift. The first signs of the shift was with Windows 95, the first operating system for the consumer. It was a huge improvement in the evolution of operating systems, and opened the world of computers and the internet to the masses. Still, computing was some work. The final shift was with the tablet when the software became the key element with the multi-touch. Even the notion of a disk drive is gone. People that use tablet don’t even think they are using a computer.

We usually regard products as hardware because we can see them and touch them. And products such as computer, tablets and smartphones are all about hardware. That won’t change. The change is that the dominant innovation is software. The hardware becomes a sustaining innovation while the software creates the growth innovation. The iPhone and the iPad are typical example of growth disruptions.

Among industries that still have to go through this shift, is for example the TV industry. We are seeing early stages of TV as a software platform. The car is another example, increasingly controlled by software, and eventually a software platform with apps. Home appliances can also be programmed using software. Many ovens have built-in cooking programs. What if you can download new programs that come with recipes and install into the oven. The biggest disruption will likely be in manufacturing. Designers and engineers have used CAD software for year to print out 3D objects. With 3D printing in the hands of the general consumer, even customised, a huge disruption will take place.

The reason that software is so powerful is that is so adaptable. We saw this with the general computers that disrupted the calculators and all the adding machines. You can install any software and change the machine. For the smartphones today you can, with few clicks, add apps with new functionality. Software can be changed and it can be distributed instantly. Industries that face this disruption are suddenly in the position that part of their workforce has the wrong skill set. Indeed, Nokia and RIM have gone through huge layoffs.

This shift is not only a challenge to companies, but also to the education system. With more emphasis on software we need more technical workers with programming skills. The programmers of the future will be programming hardware we don’t even have today. Think about all the iPhone developers today – those jobs did not exist 5 years ago when many of the developers were in school learning to program.

For those that follow technology trends and try to spot new disrupting technologies and opportunities should add the software technology shift to the list of things to look for. There are many disruptions ahead.