Tesla entering the car market created pressure among auto makers to create electric cars. Now a dozen companies offer electric car options.
Google fiber made broadband companies realize they had to offer gigabit speed if they wanted to compete with Google. Now several offer gigabit internet.
So with examples like this where a company was able to bring a new and valuable product to market, but lacked the incentive until a new competitor came to the market and pressured them, what other fields or services are ripe for new and better advances and products if a good competitor enters the market and forces them to compete?
I believe Atul Gawande said posting medical prices online led to more expensive medical services going down in price. I wonder if easy to obtain overseas medical care would incentivize cheaper medical care in the USA by forcing competition. I assume so.
The funny thing about both of your examples is that neither made a real dent in the market.
Google Fiber never really took off. According to wiki it has about half a million customers nationwide. After five plus years? Not really burning up the marketplace.
Tesla? Who the hell knows. With production delays and Musk apparently losing his fucking mind on camera who knows. But the firm has barely dented the auto market as a whole.
You could be right that these firms caused larger, more muscular - and less rock star enabled - firms to move forward on projects they otherwise wouldn’t have. But it might also be a matter of ‘when it’s time to railroad, people get railroading’. When the state of the art finally arrives, people start innovating.
I do agree with you that publicizing what hospitals charge for medical events - and increasing overseas competition for pricier events - would bring the cost down in the United States. No doubt in my mind, there.
Neither company really established themselves in the market. But they created pressure which pushed the established companies to offer better goods and services in order to compete.
Even if Tesla and Google fiber both fail, they still encouraged the wealthier, entrenched companies to provide better products to the public to compete with the upstarts.
I don’t know whether it’s true, but I hypothesize that the best thing about the rise of Starbucks is that any business that had terrible coffee was suddenly put under immense pressure to do something about it.
The “public option” of the ACA, if it was ever enacted, would definitely shake up the health insurers in a big way, though I’m not sure how they would react. One constructive way they could react might be to try to offer that option themselves, essentially creating a commodity policy that was the same regardless of which insurer you bought it from, which would greatly streamline administration and help commoditize the industry and move it toward something resembling Germany’s regulated public “sickness funds”.
What you would probably want to look for is a situation where everyone is more or less dissatisfied with the current selection available, but goes along with it anyway because all the companies are the same. The best example of this I can think of is health insurance. The intorduction of a company that finds a good way to provide good service to their subscribers and yet keep costs under control could be a game changer.
This already happened. I don’t know if you remember McDonald’s and Denny’s coffee from the 1990s, but it was godawful. The stuff they serve now is not gourmet, but it’s significantly better than it used to be. I attribute that change to the coffee craze of the 90s, spearheaded by Starbucks and highlighted by Frasier.
And I was watching some old commercials from the 60s recently, advertising instant Folger’s crystals (“It tastes fresh perked because it is fresh perked!”). I really don’t know how people lived like that. Percolated coffee is awful, and instant coffee is worse. So coffee has had more than one society-wide improvement in the last 50 years. But the one I distinctly remember is the turn of this century. Fast food and diners everywhere really upped their coffee game around 1999-2003.
Almost all US coffee used be the Robusta type and a lot of people percolated(burned) it. Those were 2 bad things. Starbucks made people switch to drip coffee making and Arabica coffee.
Another great example from the past that I remember vividly was the introduction of broadband. Turns out that ADSL signaling over conventional copper wiring was first developed way back in the 80s, but nothing was really heard about it for more than a decade. The telcos were still plodding along promising ISDN with 64Kbit channels, which wasn’t much faster than the best dialup modems of the day, but by golly basic ISDN had two of them, so you could have voice and data at the same time, or tie them together and get an awesome 128Kbps of Internet speed!
But then the first broadband over cable pilot in North America happened right in this area, and soon after, broadband over cable exploded all over, initially offering speeds in the multiple-megabit range and getting faster as time went on.
And whaddaya know, almost immediately, it was suddenly possible for the telcos to offer ADSL services with exactly the same speeds at exactly the same prices! And within the limitations of DSL technology they’ve kept pace ever since, and as the cable operators upgraded their infrastructure, so did the telcos, eventually laying fiber right to the home in many areas.
One suspects that had it not been for cable broadband, we’d have been stuck with dialup modems – or low-speed digital services – for a very long time.
The auto makers are not afraid of competition from itsy bitsy Tesla.
What they are afraid of in Europe is huge the fines for fixing the emissions tests, the VW dieselgate scandal rocked the auto business. Diesel is the biggest seller in Europe, but no longer. Public anxiety over clean air as health hazard has led to a raft of laws in the pipeline restricting the use of diesel and petrol powered vehicles in cities. Governments in the big markets of Europe and China have made it quite clear where they are going with this and the big auto makers have responded by making huge investments to develop electric vehicles.
I expect the US companies will follow the same path, it seems to be a worldwide trend.
Googles foray into fibre is mainly for their own purposes. They have a lot of datacentres and they want to be in control of the bandwidth between them, they want to own the fibres. That makes sense. All telcos use fibre for the backbone of their networks, it is a very long established technology. In most developed ecomomies its is recognised that the next step is to run fibre to the home. Some countries have made big advances towards this goal, with encouragement from the government. It is a huge long tern investment. The telco business in the US is not as competitive as it should be at a local level. But Google does not show any indication of wanting the dig up the roads and string fibres to every home across the US. The numbers probably don’t add up.
A better example might be selling of prescription drugs in the US. If the regulatory protections that maintain a monopoly by the drug companies are changed to allow imports from Canada or any other country, the market would open up and the prices would fall. But the drug companies will fight very hard to preserve their cash cow.
There are many markets like this. So much easier to make money when you have a monopoly. But it takes innovation at a government level to unblock markets and force them to be competitive. Some companies try to force change in regulation by legal challenges. I expect Uber have quite a formidable legal team.
Most “new” products are often the second or third iteration of the trend, Apple did not make the first smart phone, Google not the first search engine, Tesla is not the first electric car etc etc.
What Apple, Google and to a lesser extent Tesla did was to change the market.
I know that lots of students just download ebooks from the internet rather than buy the books. I would assume this would affect the market because if they keep jacking up the prices, there is no incentive to actually buy the books.
But then they’ll probably create a captive market by connecting various worksheets to the physical book that you can’t get from the ebook.
Regulatory capture is probably what is holding back our health care system. If we had true international competition, that would force domestic providers to increase their quality and decrease prices. But as it stands, they’ve passed laws that prohibit genuine competition. If people could legally and easily buy daraprim for $0.10 from India and get open heart surgery for $2000 in the Caribbean, people wouldn’t pay US prices for these things.
Same with broadband. My understanding is the big providers will endlessly tie a new provider up in court, and they have passed laws on the state and local level preventing any kind of public broadband to compete with the private carriers.
I think healthcare. Amazon is primed to sell prescription drugs online. Imagine if Walmart decides to open small clinics in their stores: routine physicals, bloodwork, immunization, urgent care (vs emergency) for cuts and bruises, etc. You could be anywhere in the country and have your medical records available at the nearest Walmart. They are already partway there with their pharmacy and optical services.
True, but what the US really needs in the form of competition is probably things like.
Legalization of buying drugs overseas.
Being able to easily go overseas for surgery
Being able to easily go overseas for long term care
A strong public option tied to medicare to compete with insurance.
Things like that would probably whip the health care system into shape pretty fast.
The problem with healthcare and healthcare insurance are the massive amounts of government regulation surrounding them. Without changes in them it is hard to see what any business could do to make a big impact in those areas.
I also think healthcare problems are too tied to our structure of health care for an individual actor to move the needle.
Although, Amazon same day delivery of medication at lower prices than my neighborhood pharmacy may seriously disrupt the Pharmacy Industry, even if it’s a small impact on health care as a whole. I don’t think Amazon would inherently get better pricing on drugs than ExpressScripts or Caremark. The only thing there is that my local pharmacy isn’t really a problem to be solved.