Porter’s 5 forces accelerate modular instruments

Last November I wrote about the recently released Frost and Sullivan report that predicted PXI to disrupt the automated test market going forward. Frost and Sullivan predicts PXI to grow at an aggregate growth rate of more than 17%, achieving $1.75B in annual sales by 2020. This is significantly more than the 3% secular growth rate of the test and measurement market. In fact, my arithmetic at the end of the column concludes that all the growth of automated test over the next several years is coming from PXI.

In that article, I stated that this matches my own estimates. In particular, if you combine Porter’s 5 forces with Nobel Laureate John Forbes Nash’s game theory mathematics, you can see the patterns that are igniting this disruptive change.

I’ve written about game theory in our sister publication EETimes. Give it a read to see how game theory explains industry structures. While game theory explains the actions of major players, Porter’s 5 forces explain the context of the industry, essentially the rules of the game. Today, I’m going to review the five forces, and how they collude to accelerate the modular disruption.

Michael Porter developed his five-force model to explain why different industries had different levels of competitiveness. It is a staple of any MBA curriculum. The five forces are:

• Competitors
• New entrants
• Substitute products
• Suppliers
• Customers

To read about Porter’s 5 forces, and specifically why they are colluding to cause the modular disruption, read the entire article here.

By Larry DJ

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