Economist Joseph Schumpeter has been credited with popularizing the term "creative destruction," which was his way to describe capitalism and the manner in which a new idea or technology will replace an established or existing one. The technology industry has proven this concept repeatedly, with products continually facing extinction as newer and more innovative rivals take their places. Below are four more recent examples of products that face the threat of extinction from technology shifts.

For more information, check out "Who are Apple's (AAPL) main competitors in the tech industry?"

GPS Devices
The GPS device, which consumers have widely adopted as a standalone gadget to be installed on the dashboard of a vehicle has quickly given way to GPS software that comes preloaded on a smartphone or tablet computer. The wide availability of wireless data services also means that directions and traffic can be downloaded in real time, which has made the pre-loaded functionality of earlier GPS devices almost completely obsolete. Regulation that is making the use of mobile phones while driving illegal could help keep standalone GPS devices from becoming completely extinct, but demand has fallen sharply as the latest software is largely available for free for many consumers.

Watching Movies
Technologies that allow consumers to watch movies at home have evolved constantly over the past three decades. The advent of Beta and VHS movies and related playing devices in the 1980s eventually shifted to digital video discs, or DVDs in the 1990s. More recent developments have seen the introduction of high definition DVDs, with the Blu-ray disc technology having been adopted as the standard. This has given way over the past couple of years to streaming technologies that allow consumers to watch films online by either paying a subscription for a library of titles, or paying to watch a single movie over a set period of time. With increasing bandwidth of wireless data services, the DVD could soon face its own extinction.

Listening to Music
The manner in which consumers access and listen to music has followed a similar path to the manner in which they watch movies. Cassette players quickly gave way to compact discs (CDs), which just as quickly gave way to the iPod and ability to store and retrieve music from a digital library. The shift to streaming is currently taking place where consumers have the option of paying an annual or monthly subscription for the right to access a library of music. Free subscription options also exist for consumers willing to listen to commercials instead of paying a fee. CDs are quickly going extinct, as is traditional radio, where consumers have little ability to customize what music they listen to. (To learn more about music, see Facing The Music: The Recording Industry's Power Struggle.)

Using Software
The traditional software business model has consisted of the creation of a full software system that is purchased by a consumer or business through either a digital download or download from a physical disc that resembles a DVD. Then, every few years, the software developer would release a newer version that the user would have to purchase again, if he or she wanted to obtain the new functionality.

Over the past couple of years, more innovative software programmers have offered cloud-based computing that users access over the Internet. Instead of being stored on a user's hard drive, the software is instead located on a centralized server where updates can continually be added by the developer. The shift could create subscription-based software models and make the traditional business model obsolete.

The Bottom Line
For consumers and related users of technology, the extinction of products and newer, better alternatives is a welcome form of creative destruction. For the underlying firms creating and selling the older technologies, it can mean extinction. For this reason, firms do their best to evolve or offer a diversified mix of goods and services that can help them survive. Those that are able to adapt to a quickly evolving system of creative destruction can end up making quite a bit of money for their owners. (For related reading, check out Why You Shouldn't Buy New Tech Toys.)

Related Articles
  1. Stock Analysis

    Is the Apple Watch a Real Threat to Fitbit?

    Examine the potential for marketplace competition between Fitbit and the Apple Watch in the rapidly growing consumer wearables industry.
  2. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
  3. Stock Analysis

    3 Stocks to Protect Your Portfolio from Inflation

    Discover three stocks to protect portfolios against inflation. The best companies to protect against inflation are those with pricing power.
  4. Chart Advisor

    Invest In Consumer Staples With This ETF

    The consumer staples sector is showing signs of strength in a weak market. We'll take a look at a couple ways to make a trade.
  5. Stock Analysis

    J.C. Penney: Identity Crisis or Buy Opportunity?

    With so many recent leadership changes, J.C. Penney might be suffering from an identity crisis. Here's why and what you need to know.
  6. Stock Analysis

    How Nike (NKE) Continues to 'Do It'

    Other than style, do sneakers from any maker really differ that much? That's debatable. But this is certain: Nike sets the standard for selling an image.
  7. Economics

    What's a Stock Keeping Unit (SKU)?

    A SKU, or bar code, is a unique identification code that retail and wholesale sellers use to track their inventory of products and services.
  8. Economics

    Explaining Consumer Discretionary

    Consumer discretionary is a term from economics that refers to the sector of the economy that produces goods and services that are nonessential.
  9. Economics

    Explaining Aggregate Supply

    Aggregate supply is the total supply of goods and services an economy produces in a given time period.
  10. Professionals

    Are These the 10 Best Stocks in the World?

    Most of the top 10 stocks in the world have performed exceptionally well over the past several years. Here's a look at their future prospects.
RELATED TERMS
  1. Duty Free

    Goods that international travelers can purchase without paying ...
  2. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
  3. Virtual Good

    A good or product traded in the non-physical realm, typically ...
  4. Buyer's Option

    In commercial contracts, an agreement between a vendor and a ...
  5. Underinsured Motorist Coverage ...

    One of the two triggers that can be specified by an insured party ...
  6. Lemon Laws

    Regulations that attempt to protect consumers in the event that ...
RELATED FAQS
  1. What is Apple's current mission statement and how does it differ from Steve Job's ...

    Apple's current mission statement is "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, ... Read Full Answer >>
  2. What companies will be hurt the most by Apple's latest product plans?

    As of 2015, Apple's latest product plans pose a challenge to rivals across several industries. These competitors include ... Read Full Answer >>
  3. How did Tim Cook become head of Apple?

    Tim Cook became the chief executive officer of Apple in August of 2011 after the death of founder and CEO Steve Jobs. His ... Read Full Answer >>
  4. How does Tim Cook's vision for Apple differ from that of the late Steve Jobs?

    Before his death in 2011, billionaire tycoon Steve Jobs handed over control of Apple to Tim Cook, then the company's Chief ... Read Full Answer >>
  5. Who are Apple's (AAPL) main competitors in the tech industry?

    The range of products and services offered by Apple Inc. (AAPL) is broad, and the company is a fierce competitor in several ... Read Full Answer >>
  6. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!