THE TECHONOMIC SWEETSPOT

It is not sufficient for a new technology to simply work. It must work at a price
the market will embrace. Great new technology takes the market in one of two
directions. Either it opens a new field of endeavor (like space exploration), or it
makes common practice endeavors that were previously accessible only to the elite
(such as telegraph for distance messaging).

Sometimes, great technology simultaneously opens new fields and rapidly becomes economically accessible to the masses (like books from the printing press). A great technology is so compelling that, as we look back in history, its introduction and massive application appears to coincide.
What distinguishes a great technology from the merely good one? Significant
increase in benefit vs. cost over other existing approaches is the indicator of a
breakthrough technology.

As the techonomic metric increases, the potential for market acceptance of the endeavor also increases. While there are many good ideas and good opportunities, the great ones lie in the region where both performance and value proposition are significant — and coincide. When
we survey opportunities for resource deployment, this region of greatest opportunity
is the area to seek.

In the formative years of my company, we developed a video camera system that
performed image pan and tilt without any moving parts. This device used electronics
to select and correct the portion of interest from a wide-angle fisheye lens. Our first
commercial deployment of the system was targeted at video security applications.
The system required $3700 of electronics to perform the image processing for a
standard video signal (NTSC 640×480 pixel resolution image quality). The product
had two shortcomings in its first embodiment: it cost too much relative to competing
mechanical systems, and its resolution was not sufficient to see clear details from
segments of the images. While these items are obviously important, we had conquered
hundreds of other challenges just to get the product to the marketplace. But the
marketplace could not care less about what obstacles we had overcome. The marketplace
cared only about performance at a competitive price. In its purest form, the
market is a rational, unemotional filter for performance and cost.

After a good introductory quarter for the product (the distribution pipeline filled),
we had a dismal second quarter, and it was evident that we had to refine our offering
or cease to exist. Timing coincided with the earliest popularization of the Internet.
A company called Netscape had just provided the first massively utilized browser,
and personal computers were connecting to the Web everywhere. In adapting our
product to this new environment (the Internet), we recognized the opportunity to
provide a similar function for mass distribution over the Web at a much-reduced
cost to the consumer. By using other people’s electronics (personal computers rather
than our own electronics) and distributing software over the emerging network (the
Internet), the capability to pan, tilt, and magnify a 360°
image was provided at a fraction of the original hardware cost.

In the first hardware-based system, old image transmission standards for television
limited the resolution of the captured image and resulted in a limited-quality display
for the end user. Transforming from the old standard (NTSC video signals) to the
emerging distribution network for digital images on the Internet, much higher resolution
input images were possible, improving the quality of the result. Using scanned
photographs rather than video, we were able to increase the resolution 4 to 8 times.
Technology provided multiple order-of-magnitude improvements in both cost and
performance, moving the product much closer to the techonomic market sweetspot.
Using software rather than hardware, we were able to reduce delivery cost to the end
user from $3700 hardware to a few pennies per download, while simultaneously
improving the resolution 4 to 8 times. Revisiting the performance/cost relationship,
these combined developments improved the performance proposition 6 to 7 orders
of magnitude and eliminated the need for closed-circuit system operation. This tremendous
shift in the performance/cost relationship for the experience delivered to the
customer was the key to refocusing our resources. The product was later named iPIX
and continues to be widely used for interactively viewing 360°
images of homes, automobiles, apartments, and resorts on the Internet.