Schwab Case Summary

In 1995-96, the internet primarily represented a disruptive technology to Schwab, threatening their commission revenues, and competitive edge within the discount brokerage industry.
In 1993 Schwab was utilizing the internet with its “Equalizer and StreetSmart Software”, providing their customers with the convenience of online trading of stocks, bonds and mutual funds. Schwab was focused on their customer needs, like any successful corporation, providing them with innovative tools to access their accounts and trade online, utilizing technology, reducing costs and passing those savings back to their customers.
However, while Schwab focused on their current customer needs with online advancements such as “StreetSmart”, they overlooked the broader impact of the internet, failing to have identified earlier in 1993 the internet as a disruptive technology, and the rapid change that would occur within their industry as a primarily result of the Internet. Schwab identified the

Schwab had initially failed to identify that the typical online broker was similar to the typical Schwab customer. Their initial implementation caused a dual price structure that frustrated their customers, which Schwab quickly removed at a later date allowing every Schwab customer access to the web-trading service. Schwab realized for this disruptive technology to thrive within their customer base they would have to make it available for all their customers and not complete with current established products. The internet was a disruptive technology that Schwab would house as a now primary service within their corporation for all customers to access, this allowed the technology to thrive within Schwab not having it compete with but rather complement the already well established broad variety of products and services already offered by