The process through which new products, concepts, services, methods, or techniques are developed. Innovation, particularly technological innovation, can cause ‘discontinuities’ in a market that may lead the market to be radically different from one responding to a classic product life cycle. The major variables with innovations are the speed and scale of their adoption in the marketplace. The rate of early adoption of, say, the Internet was much faster than with electricity or the telephone, but had much more market to penetrate to catch up with these innovations.
The diffusion of innovations in communications and media has been much more accelerated than of those that drove the industrial economy of the 20th century. For example, it took almost 50 years for electricity to be widely used in households and factories; it took 40 years for radio to gain 50 million listeners; television took 15 years to reach 50 million viewers. In contrast, the Internet reached 50 million users in four years once it had been opened to the general public (1994). Usage of the Internet has been doubling every 100 days. If the current growth of ‘Internet Population’ continues, there will be 5 billion people connected to the Internet in 2015. The other interactive network—the global telephone network—is also growing. Usage grew from 4 billion minutes in 1975 to 100 billion minutes in 2001. Communications costs are collapsing; a transatlantic telephone call now costs 1.5% of what it would have cost 60 years ago. This trend, combined with increasing computing power available for lower prices, is a powerful dynamic. Personalization of communications is another important trend: there are more than 200 digital mobile communications networks, operating in 100 countries, with over 55 million users. As well as the Internet and the global fixed and mobile communications networks, there are now a plethora of satellite-based systems impacting the global communications market. Broadband multimedia services delivered by satellite were expected to reach 16% (50 million) of total users by 2010. See also diffusion of innovation; imitation effect.