Product Description

Inside the Tornado teaches a startling lesson. As markets change, the very skills that you′ve just perfected become your biggest liabilities, and if you can′t put them aside to acquire new ones you′re in for tough times. This is a challenging lesson to apply but Geoffrey Moore uses inspiring examples from market–leading firms to illuminate every dimension of managing a market–focused business strategy. All industries which rely on technology – not just computer hardware, software and telecommunications, but entertainment, publishing, broadcasting, banking, insurance,healthcare, aerospace, defence, utilities, pharmaceuticals, retail and pretty well every other type of industry – must learn to thrive Inside the Tornado.

Product Details

• Amazon Sales Rank: #374245 in Books
• Published on: 1998-01-01
• Original language: English
• Binding: Paperback
• 256 pages

Amazon.co.uk Review
This is Moore's second book expounding his high-tech marketing theories, focusing on what to do when you've followed his advice in Crossing the Chasm so well that customers are beating down your door and crawling in the windows, putting your business into a new lifecycle stage: the mass market.

Excerpted from Inside the Tornado by Geoffrey A. Moore. Copyright © 0. Reprinted by permission. All rights reserved
The Development of Hypergrowth Markets

Chapter One The Land of Oz

At the beginning of The Wizard of Oz, Dorothy and Toto are caught up inside a tornado, swept away from their mundane world of Kansas, and deposited into the marvelous land of Oz. This miraculous form of ascension is also reenacted from time to time on our own public stock exchanges.

Consider the following:

Compaq Computers, which in recent years has overtaken IBM as the leader of the Intel-based PC market, grew from zero to $1 billion in less than five years.

Ditto for Conner Peripherals, the disk-drive storage company who slipstreamed Compaq's hypergrowth by supplying it, as well as many of its competitors, with low-cost Winchester hard drives.

Over a six-year period from 1977 to 1982, Atari's home game business doubled in size every year, driving the company from $50 million to $1.6 billion in revenues.

In successive years during the mid-1980s, Mentor Graphics grew from $2 million to $25 million to $85 million to $135 million to $200 million.

For the entire decade of the 1980s, Oracle Corporation grew at an annually compounded rate of 100 percent. * More recently, Cisco Systems and Bay Networks have appeared out of nowhere to become billion-dollar companies--leaders, respectively, in the network router and the network hub markets. We didn't even know what routers and hubs were until just a few years ago.

In the seven years prior to 1992, Sony shipped their first ten million CD-ROM players. The next ten million were shipped over the following seven months, and the ten million after that in the following five months.

Hewlett-Packard's PC printer business, a $10 billion enterprise in 1994, shipped its first product a scant ten years earlier.

And finally, Microsoft in less than fifteen years has grown from a boutique language software company focused on BASIC to the richest and most powerful software company in the world. Such are the market forces generated by discontinuous innovations, or what more recently have been termed paradigm shifts. These shifts begin with the appearance of a new category of product that incorporates breakthrough technology enabling unprecedented benefits. It is immediately proposed as the natural replacement for a whole class of infrastructure, winning early converts and enthusiastic predictions of a new world order. But the market is a conservative institution, and it presses back against the new changes, preferring to stay with the status quo. For a long time, although much is written about the new paradigm, little of economic significance happens. Indeed, sometimes the innovation is never embraced, falling back into some primordial entrepreneurial soup, as did artificial intelligence in the 1980s and pen-based computing in the early 1990s. But in many other cases there comes a flash point of change when the entire marketplace, under the pressure of continually escalating disequilibrium in price/performance, shifts its allegiance from the old architecture to the new.

This sequence of events unleashes a vortex of market demand. Infrastructure, to be useful, must be standard and global, so once the market moves to switch out the old for the new, it wants to complete this transition as rapidly as possible. All the pent-up interest in the product is thus converted into a massive purchasing binge, causing demand to vastly outstrip supply. Companies grow at hypergrowth rates, with billions of dollars of revenue seeming to appear from out of nowhere.

We have seen this happen again and again in our own lives. Take communications. After the better part of a century being content with letters, telegrams, and telephones, we have in the past thirty years adopted touch-tone phones, direct-dial long distance, Federal Express, answering machines, fax machines, voice mail, e-mail, and now Internet addresses. In every case, until a certain mass was reached, we didn't really need to convert. But as soon as it was, it became unacceptable not to participate. As members of a market, our behavior is invariable: we move as a herd, we mill and mill and mill around, and then all of a sudden we stampede. And that is what creates the tornado.

Nowhere has the tornado touched down more often in the past quarter-century than in the computer and electronics industry. In the domain of business computing, it began with the proliferation of the IBM mainframe, which won worldwide support as the first major computing infrastructure standard. Then, in the space of less than a decade beginning in the late 1970s, three new architectures arose to challenge and displace that paradigm: the minicomputer, the personal computer, and the technical workstation, and we came to know a whole new set of companies, including DEC, HP, Sun, Apollo, Compaq, Intel, and Microsoft. In conjunction with these three architectures came a communications networking paradigm shift that moved from the centralized hub-and-spokes approach of mainframe-centric computing to the decentralized world of Local Area Networks interconnected via Wide Area Networks, and we met companies like 3-Com, Novell, Cisco, and Bay Networks. And concurrent with both these shifts, virtually all of our software, from the underlying operating systems to the databases, to the applications and the tools that build them, was overthrown or reworked, in most cases more than once, driving companies like Oracle, Sybase, Lotus, Ashton-Tate, and WordPerfect into our consciousness.

Yet during this same period we still bought most of our cars from General Motors, Ford, and Chrysler. And we flew United or American or Delta. And we drank Coke or Pepsi or Dr. Pepper. While some sectors, in other words, were generating whole industries out of thin air, creating hordes of market leaders from early unknowns, others continued along relatively familiar paths--because they did not introduce discontinuity into their infrastructure paradigms. The car you drive today is not materially different from one driven forty years ago. Ditto for the air transportation and the soft drinks. By contrast, high tech's insistence on repeatedly swapping out all its infrastructure is exceptionally expensive, and more than one corporation has challenged the whole rationale behind this…

Customer Reviews

Read 'Information Rules' instead if you want the real facts!
Geoffrey Moore's prescription for marketing types and company officers in high tech industry suffering from eCommerce/Internet complaint is TALC, the Technology Adoption Life Cycle (ha, was that supposed to be funny?). Originally written in the mid 90's so I've made allowances for the lack of empirical evidence for Geoffery's assertions which seem to based more on gut feel or instinct. TALC and the Inside the Tornado has too much intuition, read Hal and Varian's 'Information Rules' if you want to find out what is really going on. Unorganised, poorly edited and of little current relevance.
Over uses 'to be sure'.

The concepts will radically focus your marketing activities!
The concepts introduced by Moore can radically reduce marketing communciation costs by reducing inaproporate and un-timely marketing activities. He focuses on segementing the marketing in an additional dimension called 'Technology Adoption Life Cycle'. This is used to measures the degree of assimilation of a customer and readiness to adopt a new techncology. Moore suggests new ideas how this information can be used to turn customers from sceptics to supportive prospects. It becomes clear how appropriate and timely marketing communication stragtegies enable new products to cross the 'chasm' into the 'tornado'.

An excellent books which I have practically used and and demonstrated that the concepts can also be applied to technolgy service organisations as well as technology products.

Colin Robert Bacon (M.Sc. Cranfield, UK)

insightful marketing framework for an engineer
I'm a systems engineer and found the framework developed in the book useful in understanding where different high-tech companies are in their respective product life-cycles. Perhaps, this is elementary knowledge for marketing folks.