Call me Forest Gump over here but Sony and MS have 2 Incumbent bisness plan/model. Correct? or incorrect?

And why?

1) That was an exaggeration, I explained answering mai that I think Nintendo is currently disruptive in the portable market, but it relaxed a little bit on the home console. It's not behaving as incumbent, yet, but the risk is present, it's i the human nature to risk becoming conservative when you achieve the power.

2) No, that's one of my point: I can't know it, you can't know it and MS and Sony can't know it, so it wouldn't make sense for them to surrender without fighting. Obviously Nintendo already knows at least roughly what it will do, because development of consoles takes years and they most probably already started, but like MS and Sony, Nintendo too doesn't know the competitors most secret plans.

3) No, you still get the wrong meaning: saying that nothing can grant Nintendo will keep on being disruptive absolutely DOESN'T equal to say that it cannot, it just means that nothing can grant it for sure, very different. "Nothing can grant" means we cannot be sure, but the chances for Nintendo to succeed can range from 0 to just under 100%.

4) Again, "nothing grants it" doesn't mean that they can't. They can, but it's not granted. I DON'T say I'm sure they can't, I'm saying that it's not sure whether they'll succeed totally, partially or not at all.

Note: it looks like the issue in points 2 to 4 isn't about concepts, but semantics... About point 1, I'm guilty, I mildly exaggerated just to fuel the discussion...   

5) Possible counter attacks? Even this is not sure, but just like Nintendo MUST be reasonably sure, and appear so, of what it's doing, so MS and Sony must too. To have a chance they need two things to start: HW that works seamlessly and good SW running on it. When they got these two, they need a third thing: persuading people that their product is different enough, or a lot better, or both. Obviously also persuading people that their product doesn't lack anymore an important feature that was previously their competitor's exclusive can help. Yes, the borderline between counter-disrupting or just reacting as the incumbent normally does, so playing into the disruptor's hands is quite thin, MS and Sony must never give the impression of a "me too" attitude, or they'll lose, they must appear sure, to persuade the others, that what they are doing is different and better. Marketing and PR are heavily involved, but design too. And just as for Nintendo, nothing can grant they'll manage to stop disruption, but they MUST try. If they just fill the feature gap, they are dangerously close to play as incumbent, if they keep their differences, add new significant differences to their novelties and persuade people, they are closer to stop disruption. Not to win, even if they succeed, Wii remains this gen's winner and Zii still has high chances of being market leader next gen, but in a less overwhelming way.

BTW, the longer Sony and MS manage to keep Wii under 50%, the deeper the dichotomy between Wii and HD markets become, and SW offer is shaped by this and contributes to shape it on its turn, so again, the key for them is to make their use of motion control different enough, because just conforming to Nintendo would give the edge to the latter. But at the same time persuading people that their products don't lack anything anymore.

One last thing about going upmarket: are we sure Nintende really wants it? Attracting power whores to "steal" them from Sony and MS could increase Zii's costs more than what Nintendo could like. But even just attracting hardcores that aren't power whores requires at least additional investments on SW. Nintendo already has its hardcores, but attracting Sony's and MS' ones obviously requires something else, otherwise they'd already be Nintendo gamers. Nintendo main goals are to get huge revenues with huge profit margins and to be market leader, if trying to crush Sony and MS requires to significantly lower its margins, it will gladly leave costly minorities to them. This also because the potential world market is still huge, a lot bigger than getting a bigger share of the current one, there are hundreds million possible future gamers to be conquered when emerging countries' average incomes will grow enough, keeping the entry price low is of the essence to arrive first on these new markets. But hey, even the current less expensive console, PS2, still has a luxury price for emerging countries middle classes income, so maybe it will be someone else, not Nintendo, neither Sony, nor MS, to conquer those markets. But apart this, upmarket is neither the only direction, nor the potentially most lucrative, Nintendo already won this gen disrupting and expanding the market, as long as there are potential new markets bigger than the existing one, it can be done again (and it's not about just expanding demographics cutting price to meet income, different countries, different cultures mean that different and new things must be done).

Actually the whole Christensen theory was defined well before Chirtensen by James G. March back in 1990, in fact, the idea behind disruption was derived by management theoretics from system theory and theory of adaptive control (and I'm sure there's more). Christensen's work is valuable because it's much more detailed, the one thing it's lacking at this point is math apparatus, but I think in his last book he said he will address this issue and implement methods of quantitative measurements.

But back on topic. To the best of my knowledge the term "incumbent " was never used by J.G. March though, like you said, the concept was defined, and even it's used or there're some other meanings of the word, we're still obliged to use it exactly in the meaning intended by theory invetor, C.Christensen, who defines incumbent through disruptor and vice-versa. It's bare minimum of any science, stick to terms, and if you use the same word in different meaning - define it beforehand so people will udnderstand you. In Christensen's terms Nintendo currently isn't an incumbent.

Sure, but I don't strictly stick to Christensen theories too, or better, I don't believe the competitors are really playing either as ideal disruptor or as ideal incumbent now (while at the beginning of this gen Nintendo was very close to the ideal disruptor and Sony to the ideal incumbent, and I can't really qualify MS role with its clumsy throwing away its head start).

BTW, "incumbent" is very used to define former monopolists or oligopolists of utilities like phones and electricity, and their behaviour towards emerging competitors, both those playing traditionally and the disruptive ones. In the wider sense "incumbent" is defined by the behaviour towards smaller but growing competitors in general, and Christensen knows this meaning, what he found studying the disruptors' success stories is that the typical incumbent reaction doesn't change towards disruptors, it often keeps on reacting to them in the same way it uses towards normal competitors, and that's the reason why it so often fails.

I was merely pointing out simple fact that home console busines as a whole is relatively hign-end compared to other segments. If we build consumer pyramid based on consumer involvement into games (we may define it based on ammount of money or time spent by person on games through given period of time), home consoles will occupy it's peak, while numerous business models on other gaming platforms including PC and mobile will be at the foot of a pyramid. On top of that as a extra barrier for potential consumers to become actual consumers of games for home consoles they need to pay for machine itself. By many gaming console viewed as luxury, while PC and mobile hardware is commodity since they're non-dedicated gaming machines.

All researches suggest that Wii gamers are quite a gamers, they buy a lot of software and spent a lot of time playing on Wii, while ammount and price points of downloadbale games on Nintendo consoles (both Wii and DS) aren't competitive enough for not so involved gamers when compared to ammount and low prices of downloadable games found on PC and AppStore. Nintendo filling WiiWare and DSiWare services with own content in pretty straightforward way, they just take the best suitable IPs they own, and cut them into pieces selling at lower prices (BrainAge, ArtStyle, Electroplankton etc. line of games). In the case of DSiWare it looks like direct respond to similar services on other platforms, seems like they're laying roadblocks to prevent mobile platforms from moving upmarket to their territory in handheld space, rather than moving downmarket themselves.

All in all I dont think they will move downmarket (how? they're in home console business at the end of the day), it's too crowded down there, plus the best way to do that is to move onto non-dedicated gaming platforms (nonsense!). In fact, Nintendo rhetorics about game prices usually points out how Nintendo games (even the simpliest ones, except for those downloadable and 'cut into pieces' on WiiWare and DSiWare) have a lot of content and how 'the price is right' (and honestly, they're right, I'm playing Picross 3D for the third month and still not finished ^_^). So Nintendo may be the most consistent opponent of 'Free' by Chris Anderson.

1) If by 'ideal disruptor' you mean 'disruptor that sucessfully attacked incumbent', and by 'ideal incumbent' - 'incumbent that failed to repulse an attack of disruptor' then pracrically all that happened is according to the book*. Though the latter may be a bit premature to say, since the reaction of the market to the PS Move is yet to be seen. But I think it's clear even to those of us, who aren't great visionaries, that what Sony might get wrong about Wii and Wii games they got it completely wrong with the Move. Unless, of course, they have smth unexcepted up their sleeve at E3 for Move. Natal is a big question mark, can't say anything 'cos I didn't see anything.

2) I wasn't aware of that, I use the term 'incumbent' strictly as a part of Christensen theory.

* There's aritcle  somewhere that quotes Christensen who gave Sony a couple of advices how to  successfully co-opt Nintendo disruption tech. Guess what? They choose the worst out of three options - PS Move, and reject an idea to turn PS2 into Wii competitor. BTW I believe the latter idea was much discussed on the Internet in 2007. So yeah, they are pretty successful in choosing the worst options out of all possibilites so far =)

UPD: Here it is.

^ Everyone though Wii would fail too and look what happened.

Yes, I already knew that article, but thanks for the link anyway. And true, if they stick to a "me too" way to use Move, it will automatically become the less effective possible reaction, I totally agree that in that case the best Sony could hope, with a huge amount of luck, is to just slow Nintendo a little bit. Both Sony and MS need to put something of their own in their motion controls, particularly defining their own SW styles that make the difference from Nintendo, if they want to start without a heavy handicap next gen. Kevin Butler ads approach is not bad about this issue, anyway, basically in that ad "from the future" he says that Sony will aim at a more realistic experience and he boldly suggest better too: it remains to be demonstrated, but showing self confidence and "seasoning" it with some humour to avoid looking too arrogant like in the past is good marketing for Sony. This gen is lost anyway, they can only do damage control, that's why it is in a certain way less troubling for them just achieving it and nothing more, because it's really not possible this gen for them to get something better. But when next gen begins, they must be ready.

To know how good their damage control is, and how effective Nintendo moves will be too, we'll have to wait next Autumn, though, Summer slump will prevent us to fully see the effects of what will be presented at E3.

...No, wait, we already know how it will end: Kevin Butler told us!  

About 1), yes, it's what I was meaning.

I must say that we should probably revisit this debate after E3 because I suspect that the 3DS will (in many ways) give us an understanding of what Nintendo’s mindset on system development is at this point in time; as well as an understanding of how they are approaching features that may seem unimportant to Nintendo when they designed the Wii. As an example, if the 3DS includes 3G support, has system wide friend codes, and incorporates some features that are available on XBox Live (like being able to communicate with friends who are playing different games) it would be a fairly good indication that Nintendo is more focused on online than they were before; or if Nintendo demonstrates the 3DS with the same basic online functionality that the Nintendo DS had it would be an indication that their next home console would retain the same basic online functionality of the Wii.

THIS JUST IN. Alby_da_Wolf does not understand disruption.

1)How can you exaggerate calling someone an incumbent? They either are or they are not. Also, the DS is not disruptive. It is a Blue Ocean Strategy. It's goal is to avoid competition by creating a new market with untapped demand, and they archive this with a value innovation. You can tell it's not disruptive because it can co-exist with the PSP.

2)This proves you don't know disruption. Clayton Christensen wrote a book called “Seeing What's Next.” In it, he described how the incumbents will respond to disruption and how the disruptor can beat them out. I'll get to this more in a minute.

3)Yes it does. What you are saying is nothing can grant them, meaning, to say that, you have to believe there is possibility they can't. So, I'll ask again. Why can't they? Not stop being a wimp and answer the question.

4) 4 is the same thing. Stop dodging the question and answer it, or just admit you can't.

(thankfully, you do admit you were wrong in 1)

This is why you don't understand disruption.

Sony and Mirosoft are counter attacking. Anyone with a passing knowledge of disruption can see they are. Because, look, now they are all into motion controls.

Yes, the borderline between counter-disrupting or just reacting as the incumbent normally does, so playing into the disruptor's hands is quite thin, MS and Sony must never give the impression of a "me too" attitude, or they'll lose, they must appear sure, to persuade the others, that what they are doing is different and better.

Not really. Most of what you said is a skewed version of what actually happens. They have three responces

• Growth-Driven Co-Option
• Defensive Co-Option
• Cede the market.

Defensive co-option of just stopping Nintendo at the higher tier they can. This isn't going to be doing it differently. This is doing holding the line and keeping your customer base from jumping ship. It can be “me too.” Microsoft's is a Growth Driving Co-Option, meaning they are trying to take the new market. They can't copy.

And just as for Nintendo, nothing can grant they'll manage to stop disruption, but they MUST try.

Nintendo is the disruptor. Why are they trying to stop disruption. They are stopping the counter attack. Microsoft and Sony are not disrupting.

Not to win, even if they succeed, Wii remains this gen's winner and Zii still has high chances of being market leader next gen, but in a less overwhelming way.

No, they are more likely. If the market is disrupted, Nintendo's ways are the norm and Sony and Microsoft can't compete. Next generation, if they get one, will have Nintendo dominate the market and Sony and Microsoft fighting for a shrinking piece.

BTW, the longer Sony and MS manage to keep Wii under 50%, the deeper the dichotomy between Wii and HD markets become, and SW offer is shaped by this and contributes to shape it on its turn, so again, the key for them is to make their use of motion control different enough, because just conforming to Nintendo would give the edge to the latter. But at the same time persuading people that their products don't lack anything anymore.

You always write a lot but say a little. Anyone could say what you did. It has nothing to do with disruption.

Also, Nintendo is going to take more and more market share and more and more gamers convert to Motion Controls.

One last thing about going upmarket: are we sure Nintende really wants it?

This proves you don't know disruption. Look at these.

See how the disruptor always wants to go upmarket. Also, cost wont go up like you think. The new generation is about “feel” not “sight.” Disruption changes the name of the game. We are no longer playing Poker, but playing Uno. If you use the old rules here, you will always be wrong. The “hardcore,” of the new world will want much better motion controls, not better graphics.

Nintendo main goals are to get huge revenues with huge profit margins and to be market leader, if trying to crush Sony and MS requires to significantly lower its margins,

Umm, this is what every business wants, including Sony and Microsoft.

Now, let me tell what is happening and what is going to happen.

Sony and Microsoft have counter attacked Nintendo in a hope to stop them. Up to this point, Nintendo has flown under the radar becuase of their asymetric motivation (expanding gaming). This is why Sony and Microsoft refuse to respond earlier. They have no interest in expanding gaming. However, now they make inroads.

As disruptive attackers follow their own sustaining trajectories, they make inroads into the low end of the market or begin pulling less demanding customers into a new context of use. What happens when the disruptive entrant begins to make inroads? A good way to visualize what incumbents can do when faced with a disruptive attack is to consider how humans respond to a perceived threat. Our body immediately reacts. We produce adrenaline. Our heart rate goes up. Our respiration rate goes up. Blood flow redirects from nonessential areas to critical areas. Our body is prepared for one of two actions: fight or flight.

Fleeing is a natural option from them because their more profitable and best customers are at the higher tiers anyway, so they leave the markets behind. But, eventually, they can not ignore the big giant that has appeared, so they will attack. They will attack, however, when there is no place to run. Sony and Microsoft may be there as they are fighitng for a shrinking market (they control 50% between two systems and this does not include multiple console ownership).

When the incumbent has retreated into the highest tiers of its market and has to fight because there is no room for further retreat, it is at a competitive disadvantage. As the game changes to the one the disruptor plays best, it is very hard for the incumbents to develop new skills quickly.

Disruptors will thanks to an asymmetric skill and an asymmetric motivation. Christensen calls these a sword and a sheild. The sheild is the motivation that prevents a counter attack (Nintendo wants to expand gaming). The sword is the skill that allows them to cut upmarket (Nintendo is an integrated hardware/software comapny). Now, in the new market, the strengths of the incumbent are it's weaknesses, and vis versa for the disruptor. Again, this is playing Uno instead of Poker.

The end can come swiftly and can appear stunning to the untrained eye. Typically, the best an incumbent can do is to belatedly acquire the winning firm and stave off ultimate destruction.

This is the counter attack. Nintendo will ultimatly win since they have the skill and the motivation that Sony and Microsoft lack. The only way for them to survive is to buy Nintendo, and they both can't do that.

All of that can be found here.

The reason I don't think you know disruption is you never prove it. You can use the words, but the the idea. What you said can be parroted by lots of other members here and isn't surprising in the least.