LCD technology was pioneered by companies like RCA in the 1960s and 1970s but they failed to commercialize it, instead sharing their knowledge with Japanese companies, who then developed and commercialized LCD for applications like calculators and watches before disrupting the CRT TV market with thinner, lighter LCD TVs in the 2000s. RCA's dominance in the profitable CRT technology prevented them from recognizing and investing in the disruptive potential of LCD.

1. LCD TV
- A Disruptive Technology

2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.

3. Over the last years, our TVs
have been on a remarkably
successful diet...

5. Remember what they used to look like?

6. Big…

7. Clumsy…

8. Heavy…

11. That’s part of the past… What happened?

12. Well, a technological
shift occurred…

13. … LCD has been one of the technologies that
disrupted the old Cathod Ray Tube (CRT)
technology.

14. Let’s take a look at how this shift happened…

15. This is what the
old CRT TV
looked like.

17. In 1888, the
Austrian
physicist
Friedrich
Reinitzer
discovered a
substance
that he called
Liquid
Crystal.

18. After that, not much happened until Richard
Williams at the American company RCA
discovered that Liquid Crystals had some
very interesting opto-electronic
properties.
It turned out that if a small current is added
to a thin layer of Liquid Crystal, it could
display various patterns.

19. Further discoveries were made
by George H. Heilmeier at
RCA in 1962-64.
Thus, RCA hade developed an
extensive knowledge about
this new technology in those
early days.

20. Though RCA pioneered LCD, it was
one of the dominant players in the
dominant CRT technology.

21. In 1968, the company
held a conference in
New York where they
proclaimed that a new
TV was going to be
developed, using
LCD. It would be very
light, require less
energy and be very
thin.
George Heilmeier at
RCA was in charge of
this project at RCA
and he had a vision
about a flat TV.

22. He wanted to
commercialize LCD
and tried to persuade
top management to do
so, but failed.
Later on, Heilmeier left
RCA and the industry.

23. According to Heilmeier, top management did not want to
distract RCA from its core business, CRT-TV.

24. By that time, RCA made fantastic profits
on this technology. In 1953, RCA’s
technology had become the national
standard for colour-TV in the United
States.
Thereby, it also became the national
standard in most of the western world,
and thus the profits were tremendous.

25. A british scientist, George McFartane tried to
persuade the UK Minister of State for
Technology that the UK should try to
develop the LCD technology.
McFartane had the following reason for this:
the UK paid more in royalties to RCA than
it had cost to develop the Concorde
airplane!

26. The British project turned out to be
successful and the LCD technology
was developed much further.
Some displays were delivered to Japan
and the spin-outs from this venture
were later on sold to Philips.

27. At RCA, more research was done in
the LCD area, up until 1971.
At this point, a scientist approached
the corporate lawyers with a
breakthrough and wanted the
company to apply for a patent on
this discovery.
However, the corporate lawyers did
not show any interest since the
value of this discovery was
deemed to be lower than the
cost for patenting!

28. In the late 60s and early
70’s, RCA was
frequently visited by
Japanese
companies who
showed great interest
in the new technology.
Once RCA had decided
not to commercialize
LCD, they were very
generous and shared
much of the
knowledge with the
Japanese
delegations.

29. Among other things, this resulted in the success of
Seiko in the watch industry, where LCD turned out
to be the perfect technology for digital watches.

30. The LCD screen became part of the dominant
design in digital watches in the late 1970s. The
LCD was a low power consumption device,
could display the time continuously, and was
extremely inexpensive to manufacture.

31. LCD Screens also became part of the
dominant design for digital calculators,
another area where the Japanese firms
disrupted old, stable Western industries…

34. After a while, it turned out that static small
screens in black and white were not so
different from displaying moving objects
in colour on a bigger screen.
The technology was essentially the same
and now it was just a matter of many,
many incremental improvements…

35. In the following decades, LCD screens were
used in many different applications.
Those usually had a few things in common –
the applications did not demand a high
picture resolution, but required low
weight and low energy use.

36. For instance…
Small video games…

37. Bigger video games…

40. MP3 players…

41. It’s remarkable to what extent the LCD
technology was explored in the Western
world but exploited by Japan.
Primarily British and American companies
pioneered the technology and developed it
further, but failed to commercialize it.

42. It seems that having a background in
the former technology was a great
disadvantage for the Western firms.
They had something to loose from the
new technology, whereas the
Japanese companies had no past
experience in screens.

43. The Japanese firm Sharp, for
instance, had never been
into CRT technology and
decided in the mid 1980s to
focus bigtime on LCD.

44. In 1988, Sharp presented the first 14 inch
colour LCD-TV for the world. The screen
was 1/13 as thick as a CRT and weighed
75% less!
This was the point when LCD became a
serious threat to the old technology, and
now it was just a matter of more time...

45. In the meantime, LCD kept prospering
in new applications…
… Digital Cameras…

47. Cell Phones…

49. The ”TV-like”
screens first started
to prosper within
notebooks.
Thin, low weight,
low energy use –
these properties
turned out to be
crucial for lap top
computers, due to
battery constraints
and demands on
mobility.

50. … Then LCD invaded the mainframe computer
screen market…

51. … At this point LCD had been used in a
fantastic amount of applications and finally,
the technology was ready to haunt the
industry where it was once born…

53. In the years 2003-2007
LCD invaded the TV
segment…
Both TV screens and the
profits of CRT-TV
companies were now on
a super-diet!

54. 2005 was the first year
when more LCD TVs
were sold than CRT TV.
The following year, only
25 percent of the
market was CRT.

55. And once the disruption happened, it was Sharp, LG,
Sony, Hitachi and Samsung who rapidly gained
markets shares with the new technology.
Most firms were thus either Japanese or Korean.

56. In the 3rd quarter
of 2007, sales of
LCD TVs in
Sweden
increased 83
percent from the
same quarter
2006!

57. Though the process of
disruption had been
going on for decades,
once the performance
is good enough it
happens at a furious
pace!

58. It’s amazing to see how RCA more or less
invented LCD, but never even bothered to
patent the technology and happily gave it away
to the Japanese companies. WHY?

59. One reason:
”Small markets do not serve
the growth needs of big
firms.”
// Christensen (1997)

60. Another reason:
There is no financial logic
in developing a
technology that a firm’s
mainstream customers
do not demand.

61. Another reason:
If a company has fantastic profits from
its core business, any technology
which does not initially generate
such profitability will be disregarded.
All these royalties, patents and sales
at RCA must have imposed very high
demands upon any alternative
investment, since the opportunity
cost was so high.

63. Another reason seems to be that the
business logic is different in digital
industries.
The CEO of Samsung, Mr. Yun said:
”In the analog era, it was difficult for a
latecomer to catch up.”
The same person has said about the digital
era that:
”If you are two months late, you are dead.”

64. Interestingly, Heilmeier got the Kyoto
Prize in 2005 for his discovery of
LCD in 1964.
The Kyoto Prize is like a Japanese
Nobel Prize, awarded annually for
great achivements in Technology,
Science and Philosophy.

65. So, what’s the main lesson from this story?
I think it’s a good illustration of how large, successful
firms miss out on disruptive opportunities simply
because they are so successful in the former
technology.
Moreover, it’s a nice story about a technology which has
attacked from below and invaded a lot of segments
over the years.

66. Sources
Gunnarsson, L., Mann, M., Thunström, F. (2008),
Strukturomvandling I ett historiskt perspektiv,
LCD-TV.
Christensen C.M. (1997): The innovator’s dilemma,
Harvard Business School Press, Cambridge,
Massachusetts.
http://www.nyteknik.se/nyheter/it_telekom/article54
832.ece
http://en.wikipedia.org/wiki/Lcd
http://www2.cloznet.com/idcfm/issues/2007/03/art4
/art4.pdf
http://www.eetimes.eu/scandinavia/173602233

67. Photos taken at:
The Radio Museum in Jönköping:
http://www.radiomuseet.com/
Thanks!

68. Image Attributions
Thanks!

69. Find out more:
www.christiansandstrom.org