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Monday, September 19, 2016

Technology Risk and Reward Started With The 787

A long time ago the Business class expressed the concept of risk and reward. The higher the risk the higher the reward. A great model is the 787 program. The myriad amount of technological implements on the 787 provided a breeding ground for risk from its technology. Its counterpart, Airbus, brought forward a lower risk A-350 than the 787. It did not have the Li-ion Battery nor did it replicates Boeing's core electrical technology. Who know how short Airbus came in duplicating the Boeing 787 risk model. Both are made of Carbon fiber and perhaps that is where the commonality ends when researching the technological advancements spawned by Boeing.

Back to the Risk and Reward model. Boeing has had a proportionally higher amount of risk by the exampled events such as the battery melt down, engine issues and "teething woes without a hull loss. Airbus on the other hand has had fairly respectable clear sailing with a less endowed technological machine thus side-stepping the expectation from risk  but having a significantly lower reward compared with the 787 since Boeing reaches towards 1,161 787 sold compared with Airbus' 810 sold as of 2016 sales notes. The 350 units lead Boeing has over Airbus is a significant number illustrating the risk and reward thesis.

The stage is risk reduction for Boeing ending with a superior Aircraft. Customers are inherently risk adverse so sales recently for both makers are slumping in 2016. However, Boeing's 787 seems to not have reached its full technological maturation. The measure of this stage will be signaled when all issues on advanced systems are validated by many service cycles, pealing back any design or innovative risks when implemented within its frame.

A perfected 787 will exceed the perfected A-350 from the customer point of view. This is occurring as each model is tweaking its technological bundle towards perfection. Since Boeing chose the very risky high ground it will end up on top while validating its risk within the reward model. Boeing took a chance on high risk technology knowing it would have severe teething woes with that same technology, but will end up far ahead of Airbus once it emerges out of the "Risk" period. The reward is coming in the next five years as Boeing expands its world footprint with its sound and advanced proven technology. Airbus has some work yet to do in the wide body arena.


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