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Top 10 Disruptors Empowering Consumers

Top Ten Disruptors Empowering Consumers

Photo: John Lund | Blend Images | Getty Images

Every now and then, a product or business comes along that manages to shift a paradigm, completely changing the way consumers interact with goods and services. Such disruption, though, often comes at the expense of established businesses — and even entire industries.

Apple, AAPL,is arguably the leader in disruption, having completely reshaped the music world with the iPod, led the consumer transition to smartphones with the iPhone and dinged the laptop computer industry with the iPad.

Amazon, AMZN,is a close second, altering people's views about online shopping and upending the retail landscape. Even Facebook, FB,has earned a spot in the hall of fame, as it has changed the way people communicate and reconnect.

Those three companies are hardly alone, though. Here are 10 other businesses that made people's lives easier, but upended industries in the process — sometimes at the expense of the disruptor.

By Chris Morris,
Special to CNBC.com


Published 18 Oct. 2012

Craigslist

Photo: Getty Images

Before Craigslist, people hoping to sell an item, advertise an apartment for rent or find a blind date had to pay for an ad in the local newspaper or some specialized publication, and often write in a series of indiscernible abbreviations to keep the cost low. Potential customers, meanwhile, had to navigate a Dewey Decimal system-like labyrinth to find what they were looking for.

This Internet site took the best of the classified ad business, simplified it and significantly lowered the cost. Consumers flocked to it, while newspapers saw the once lucrative field of classified advertising dry up, costing big players tens of millions of dollars per year.

Today, the site posts 80 million classified advertisements each month, including 2 million job listings, most of them for free.

Eastman Kodak

Photo: Emmanuel Dunand | AFP | Getty Images

Eastman Kodak, EKDKQ,is perhaps the most ironic of all the major disruptors to come along.

In 1975, the film giant developed the first digital camera, but opted to shelve it for fear it would harm the company's photographic film business. Those fears proved true, but the company's failure to anticipate the demand for digital cameras (and the fast growth trajectory of the market) ultimately drove Kodak to Chapter 11 bankruptcy protection, from which it's still trying to escape.

For consumers, though, digital cameras not only provided a chance to instantly see (and, if necessary, reshoot) the picture they'd just taken; they eventually became a method of communication.

Today, thanks to further advancements in the technology, millions of people carry a camera with them at all times, via their smartphone. Meanwhile, camera makers have largely dropped their film-based camera lines — and the era of dropping off your film and waiting up to a week to see the pictures is quickly being forgotten.

Netflix

Photo: Getty Images

Netflix, NFLX,actually pulled off a one-two punch in the world of disruption, first changing the home DVD rental market (which ultimately resulted in companies like Hollywood Video going out of business and Blockbuster being forced into bankruptcy court), then leading the charge in home video streaming (forcing competitors to once again adapt).

At its prime, Netflix boasted a stock price of $305 a share. That tumbled when the company hiked fees 60 percent last year and some customers abandoned ship.

Netflix still boasts a base of roughly 24 million subscribers, though. And Dish Network DISH,which now owns Blockbuster, has given up on its efforts to compete with the company. Apple, Hulu and Amazon remain competitors, but not one is particularly close at this point. In June, IHS Screen Digest estimated Netflix’s share of online movie distribution dollars at 44 percent. (Apple held just 32 percent, the others didn't make the list.)

Pandora

Photo: Victor J. Blue | Bloomberg | Getty Images

The days of listening to radio to find new artists started to sunset in 2000. The automated music recommendation service of Pandora,P,let people explore beyond the playlists of Clear Channel, CCO,and other conglomerates and find artists they might not otherwise know about. That quickly led to similar companies, such as Spotify and Rhapsody. Today, the service has nearly 55 million users and boasts a market capitalization of some $1.6 billion.

"Pandora was among the first companies to usher in this free streaming music craze and hasten the decline of the full priced package record or CD product. The sheer convenience and genius of the software and its ability to provide high quality content and predict the songs and artists listeners wanted to hear helped make it a household and mobile stable," said Scott Steinberg, tech futurist and author of "Becoming Official."

Skype

Photo: Denis Doyle | Bloomberg | Getty Images

Skype didn't invent the voice-over Internet Protocol, VoIP, technology but it was the first company to make it easy for the average person to use. Skype also opened up the world of teleconferencing to the masses by offering it cheaply and easily to anyone with a decent Internet connection.

That led to new pricing plans among the phone companies — and ultimately opened the door for new telephony providers, such as Vonage, VG,as well as many cable companies, such as Comcast, CMCSA,(parent of CNBC). It also put a crimp in the business of high-end video conferencing systems, which offered a very similar service for a much higher price.

Skype, acquired by Microsoft, MSFT,last year has more than 660 million registered users.

TiVo

Photo: Getty Images

The demise of the VCR wasn't entirely the fault of the DVD player. TiVo's introduction of the digital video recorder to home users offered a newer, smoother way to record their favorite shows — without the headaches that came with scheduling a VCR recording. The DVR also proved to be a thorn in the side of the adverting industry, by letting consumers skip through commercials in 30-second intervals.

TiVo, TIVO,came with a premium pricing model, though, which slowed its expansion and prevented even temporary dominance, giving other set top box manufacturers time to began incorporating DVR technology into their specifications. Thus, TiVo was a victim of its own innovation.

DVR adoption went from 1.2 percent of all U.S. households in January 2006 to 42.2 percent of all viewers in February 2011, according to ACNielsen.

"TiVo is a classic case where an innovator arrives on the scene and causes disruption only to see its own business disrupted a few years later," said Steinberg. "Had it partnered with other companies like the telecoms, it would have been able to scale much more rapidly and much more quickly and entrench itself in homes across America."

Travelocity

Source: Travelocity

A telephone call or visit to a travel agent used to be the only way to search for a cheap airfare, but the rise of the Internet quickly put an end to that.

Travelocity, created in 1996, was the vanguard among travel comparison sites —and those traveling for both personal and business reasons flocked to it.

(Competitors, such as Orbitz, OWW,Priceline, PCLN,and Kayak,KYAK,quickly popped up, and many of them are still around today.)

This "Travel 2.0" has not only forced many travel agencies out of business, it has forced airlines, hotels and car rental companies to frequently adjust rates to remain competitive in a fiercely competitive industry.

Travelocity may have been first but it is not foremost: It is the nation's sixth largest travel agency and the second largest online one, according to Sabre Holdings, which also happens to be its owner.

Wikipedia

Source: Wikipedia.com

Generations of children pulling out a World Book Encyclopedia or Encyclopaedia Britannica came to an end once this open-source online reference took off. Launched in 2001, Wikipedia now has 23 million articles and is the sixth most popular destination on the Internet. Traffic averages nearly 3 billion page views per month.

Encyclopaedia Britannica, meanwhile, put an end to its print publishing business this year, after sales of the 32 volume set (priced at $1,395) fell to just 10 percent of its 1990 peak levels.

Wikipedia's accuracy isn't always on target — something World Book and Britannica have pointed out regularly — but that hasn't stopped users from making Wiki the go-to spot for a quick fact check.

Zipcar

Photo: Getty Images

While people in suburban and rural areas will likely never be big Zipcar, ZIP,users, those in high-density urban populations, like New York, Boston and San Francisco, swear by it.

This car-sharing service lets people who only need vehicles sporadically always have one on standby — without having to deal with the hassle of extensive paperwork or fluctuating fees. That has forced traditional car rental companies like Avis Budget, CAR,and Hertz, HTZ,to offer similar services to remain competitive.

Zipcar, which has 730,000 members, or users, and offers 11,000 vehicles throughout the United States, Canada, the United Kingdom, Spain and Austria, went public in 2011. It recently expanded its service to 300 colleges and universities in North America.

Zynga

Photo: Getty Images

The social and online gaming company might be down on its luck these days, but no one can dispute the effect Zynga, ZNGA,has had on the video game business.

Nintendo, NTDOF,might have wooed new players to the world of console games, but Zynga stole them away and opened up Facebook as a legitimate gaming platform. It also spawned an empire with its "With Friends" games (more than 13 million people play each month, according to AppData.com).

Zynga's offerings in the social and mobile space let people play games whenever they wanted to, whether by themselves or with friends. And that success forced companies like Electronic Arts, EA,and Nintendo to reassess their business models.