The Perils of Jumping in Place

One strong piece of evidence for technical debt in the software industry is the number of products that must be completely rebuilt in order to keep up with competitive products or to respond to a major technology change. Completely rewriting a product requires a massive investment in effort and time, and the result is most often a loss of market share while the next generation (replacement) product is built. These companies are building new products to jump in place, to address the same market with a similar product! Even if the product is truly better, the loss of market share and customer mindshare is not easily overcome, especially since existing competitors will have gotten stronger and new competitors entered the market during the time required to build the next generation product.

An extreme example of losing market share when jumping in place is best dubbed the Osborne effect after Osborne Computer, Inc. Osborne produced one of the first portable computers in the 1980s. It was the size of a small suitcase and could barely fit under an airplane seat, yet it revolutionized personal computers at the time because it came preinstalled with useful software and was portable to some degree, something that is taken for granted today, largely thanks to Osborne. Not many users took advantage of the portability of the computers due to their size and weight, but it didn't matter because of the value of the system and its preinstalled software. Osborne had a successful computer on the market that was selling well. Then, for some reason, it decided to build a replacement rather than refining its current product. Osborne compounded its mistake by preannouncing the next generation of its computer with a larger screen, faster processor, etc. This was a huge mistake; customers stopped buying Osborne computers to wait for the new generation, cash got tight, the new product fell behind schedule, and soon Osborne Computer was in Chapter 11 bankruptcy.

Bankruptcy is the extreme end of a spectrum of lost market share. Lost market share in any form requires effort to get back to the former position, and this is wasted effort that technology companies must be diligent to avoid.