3Attack angle: Skimming (Type I disruptive Innovation) Focus: Returning R&D investment, Constrained production capacity, Limited demandPC Processors$DTime/QuantityCostLeaderFollowerAdvantageIBMEffectP III486Hong KongEffectNon-recurringCrossing the Chasm$DChasmCell Phone$DBeeperMatsushitaVHSOrangeSonyBetaCellcomSkimNicheNicheProductsAmpex$50KPelephoneSatelliteIridium`TimeSalesMassMarketDistributorsChasmHaaretz, Yuval dror, , G6: Typical processor launch price>$600. Nov P4 Launch $/1000 units: Last week: -58% (1.5Ghz more much more expensive. First Quiriat Gat then 2 plants in US. AMD of 9% vs. last year. Intel market share: 81.5%->77.1, AMD: 17.1%->22.2%. Q42001: Fab investment: $7.5B, R&D: $4.2B.Price of Ampex VCR>$50,000W.C. Kim and R. Mauborgne, “Knowing a winning business idea when you see one, HBR Sept-Oct 2000: “In 1998, motorola rolled out a product that was supposed to redefine the world of mobile telephony. The iridium, declared the company, would be the first mobile phone to provide uninterrupted wireless communication anywhere in the world, no matter what the terrain our country. …Heavy, needed a host of attachments, couldn’t be used in a car or building. Price: $3,000.KodakFortune, Power struggle. Intel: Pentium from ’93. Celeron vs. AMD, Cyrix. Xeon: modified Pentium II for servers&workstations. AMD K6 & K6-2 K6-3for sub$1,000 PCs: Compaq, HP, IBM, NEC. Cyrix MII (subsidiary of NAS). PowerSkeptics:TechnologySupporters:ProductSkeptics:MarketSupporters:CompanySpecialistsGeneralists
4Attack angle: Storming Focus: Maximizing revenues during patent duration; Rigid demandStormingPharmaceutical$DChasmStorming$DSensorExcel(+60%)Mach3+35%AtraStorming$D2.Follower: IBM effectOpen ArchitectureOutsourcing3.Me Too:No NameHong Kong Effect2.Generic1.EthicalViagraProzakCompaqDevoted Follower1.Leader: AppleClosed ArchitectureSelf sufficientTime1st50%Price2ndPatentUmbrellaPricingAffymetrix, microarray Gene Chip producer: quarterly report, Nov. 2000, 5 years after launch:The company may lose customers unless it improves its ability to manufacture its products and ensure their proper performanceResearchers: chips with spurious results, delivery months beyond scheduleNo real competitors to lose customers: 400 < ssued and pending patentsLicense agreements with 20 companies – restrict to arrays 1/10 affymetrix genetic probesCompetitors: Patents on own designs: Incyte Genomics: use robots to deposit up to 10,000 pre-synthesized genetic probes onto a glass slide. Motorola holds the probes inside a thin slab of gel.Nicholas Naclerio, head Motorola’s BioChip division: “if we want to make a medical diagnostic with 40 genes on it, and 20 companies hold patents on those genes, we may have a big problem”.Affymetrix: Sciam Feb2001p.24 “Patently Inefficient” by. WWGEuropeanPatent OfficeNanogenMotorolaOxford GeneTechnologyAppliedBiosystemsAffymetrixMultilyteProtogeneLaboratoriesIncyteGenomicsGen LogicSynteniHyseQ
5Attack angle: Flooding Focus: Market share leadership (Eyeballs, Hits); Lock-in+Oligopoly+Value addedCost of ownership - CoOFordLevittownDiners’ZaraIKEAMcDonaldsFlooding$DSony: $279+RealNetworksNintendo: DolphinIBM+3D by ArtXMS Xbox$299.99($125)Launch:800K games,$500M marketing budgetDumping$DSony1. ClientNavigatorLeveraged Dumping$D1. ServerNavigatorAcrobat2.ExplorerNTStage 1OpeningConsolidationvs. Death based on 25,000 companiesStage 2ScaleNew/deregulated/Privatized IndustryStage 3FocusStage 4Balance&Alliance0%20%40%60%80%100%RailwayTelecomServicesUtilitiesInsuranceBanksAirlinesChemicalsDrugsAutomotiveSuppliersPulp & PaperRestaurants&Fast foodBreweriesFoodSteel makersAutomotive OEMsRubber &Tire prod.ToysTruck buildersAerospace suppliersAircraft OEMsShipbuildingDistillersDefenseAutomatic controlsTobaccoShoesSoftDrinks25YearsCR3: Market share1.IBMWhite planesHybrid CarDumping$D2.ToyotaHondaMarket Consolidation: Graeme K. Deans, Fritz Kroeger and Stefan Zeisel, HBR, “The Consolidation Curve”, 2002 p. 20 based on A.T.Kearney’s Value-Building Growth database of 25,000 companiesAmdox problem with small carriers who grow: SAPHaaretz, , G8” War games: MS vs. Sony”, Xbox: Intel: 733MHz, 8GB Disk. Merrill: $-125/box. IDC: Sony will probably reduce price to $279. “how to charge money from kids?”: Monthly payment for game channel.MS: 200 developers, Sony:300 experienced.
6Attack angle: Piercing / Guerilla (Type II disruptive Innovation) Focus: Penetrating through niche, transforming non-entity into recognized brandToyota, Honda, NissanJapanese Guerilla$DOEMS.E. Asian Guerilla$DKomatsuKorean1.Shareware: fusionCopy Left: Gnu, AdaLinux Guerilla$DCHASMLexusAcuraInfinity2.Red HatSkinning the cat