Emerging Industry: What Makes It Big?

Emerging industry means two things: new and potential for growth. To evaluate the future success of an emerging industry, we need some insight as to whether the newness can gain traction, how big is the potential market, and what is the environment that sustains its growth.

Newness does not mean entirely new. Many industries spring up from recycling old ideas. Religion is one example. In recent years, we’ve seen the rise of evangelical Christian churches in the US, South Korea and some other countries around the world. Their activities extend beyond religious worship to social and political areas. Fashion is another example. Every few years or so, a dead fashion idea is resurrected and catches fire. Organic produce is a third example. Their recent popularity is due to public consciousness about food contamination and chemical additives. Health products are a fourth example. Look at the great variety of stuff out there that claim to enhance your immunity, energy, skin, and sexual potency.

The above examples show that emerging industries are driven by the same old instinctive needs as traditional industries that should not be ignored. What are those needs? They are: the need to know, to dream, to pursue pleasure/happiness, to believe, to discover, to share, to communicate, to defend, to survive, to improve, and to get rich quick. Besides those needs, there exist the fear of bad health, of losing one’s material wealth, and of falling behind one’s competitors.

Due to the advance of technology, many new ideas and products are created everyday. Some will explode into big industries. Some will die after a short time. The rest will languish waiting for the right time to emerge. It all depends on the confluence of a number of important factors as I try to analyze below with some past examples:

The US space industry emerged in the early 1960’s because of three important factors. First, the world’s first satellite, Sputnik, launched by the Soviet Union in late 1957 created the fear that the US might lag behind in missile technology at the height of the Cold War. Second, the US was experiencing an economic boom that made heavy government investment in space science feasible. Third, President Kennedy eloquently articulated his vision and inspired the whole country to support putting a man on the moon within ten years. Thus the US space industry took off as a result of heavy government funding. The investment in space science has also fueled many related industries such as jet propulsion, aircraft materials, satellite communication, and computers, of which we are still reaping the benefits today. Despite sharply reduced government funding nowadays, the space industry is able to sustain itself with private investment in launching commercial satellites for the booming global communications business.

The personal computer emerged in the 1970’s to satisfy the individuals’ need to do independent work efficiently without reliance on the mainframe. The continued advance in circuit technology has achieved two things: falling prices and increasing computing power at the same time. This is a very powerful combination that has created a global mass market. It makes the goal of one personal computer for every household achievable. This industry is born of private enterprise and requires no funding from government at all.

The Internet first started out as an idea to connect different mainframes together. It took off in the 1990’s by providing a network platform where personal computers can access and communicate with one another. Once the network has been firmly established, the Internet and the personal computer grow together and enhance each other. The Internet is a phenomenal industry born of an earlier emerging industry that is the personal computer. In turn, the Internet spawns other big emerging industries such as the search engine, social networking, and music/video/movie download. The mobile phone, despite being a descendant of telephony, owes its dynamic growth to the Internet and the computer chip to the extent that the three become inseparable. Thus the Internet has become a powerful enabling technology as well for many other new industries.

In summary, the future success of an emerging industry depends on a new (or recycled) idea coupled with the advance of technology that delivers the satisfaction of basic human needs. Some may require government funding to get started. On the other hand, most emerging industries are able to attract private funding because the popular demand is already there. For an emerging industry that produces the powerful combination of lower price and higher efficiency, an explosive growth can easily materialize because lower price attracts the mass market quickly. Even after the industry matures, the mass market will be able to sustain its continued survival in the future.

(April 2012)

This entry was posted in 21st Century, Business/Investment, Game Changer. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s