Performance Oversupply¶
Definition¶
Technology suppliers, competing to out-perform each other, routinely "overshoot" their market — they give customers more of a given attribute than those customers need or will pay extra for. Christensen calls this performance oversupply, and treats it as the mechanism, not just a symptom, behind shifts in the product life cycle: once a market's demand for one attribute is satiated, "the criteria used by customers to choose one product over another changes to attributes for which market demands are not yet satisfied," typically moving in sequence from functionality to reliability to convenience to price.
In the Book¶
Chapter 9's central example tracks disk drive capacity: by 1988 the average 3.5-inch drive matched what the desktop PC market demanded, while the 5.25-inch drive had overshot it by nearly 300%. Given a real choice between two adequately-performing drives, the market switched decisively to the smaller, costlier 3.5-inch format — computer makers paid a 20% premium per megabyte to get it — because size, not capacity, was now the unsatisfied attribute. Christensen quantifies the shift using hedonic regression: the 1986 price premium for shrinking a drive by one cubic inch was $4.72; once desktop machines were redesigned around the smaller drive, that premium collapsed to $0.06 by 1989, at which point the basis of competition moved again, this time to reliability (mean time between failure). The same overshoot-then-reprice pattern is traced in the book in accounting software and diabetes-care (insulin) markets.
Why It Matters¶
Performance oversupply gives a measurable early-warning signal — a shrinking price premium for the attribute you compete on — that a market is about to redefine what "better" means, opening room for a competitor who is worse on the old metric but better on the next one. It generalizes to any competitive system where suppliers race each other along one axis of improvement: the race itself, if it outpaces what users need, creates the vacuum that a differently-optimized challenger will fill.