strategy

Jeff Bezos tried to be like Steve Jobs and failed

Fast Company has a fascinating article on Jeff Bezos and the Amazon Fire. It’s a great piece and worth the long length. Check it out and then come back here.

For those who don’t need the nuance, here’s the story’s bottom line: the Amazon Fire was Jeff Bezos’ baby. He micromanaged it like Steve Jobs, and made decisions unpopular with his team but which he pushed through anyway. One example is Dynamic Perspective, the feature that enabled the phone’s 3D effect, came at great cost and which customers didn’t end up appreciating.

The story is fascinating because it gets to the heart of intuition vs. data. Are great products born out of intuition and personal genius? Or out of market research, data analysis and testing? Microsoft is traditionally about the latter, and the one time they tried the former — Steven Sinofsky and Windows 8 — it wasn’t successful.

It appears that Amazon too tried to make that leap.

Read Full Article

Hey Evan, relax! If the strategy is good, won’t matter if everyone knows

My strategy professor from business school once said that if you left your company’s strategic plan on the bus and a competitor discovered it…and you were then screwed, it was a bad strategic plan. I completely agree.

A great strategy is one that’s unique to your company. For Apple, it’s a commitment to simple designs that cater to the every-person, and to deliver integrated, vertical experiences even if that means basic feature sets. Everyone knows this, but only Apple can be Apple. Only Apple has a large, loyal fan base that absolutely trusts Apple’s product taste and are willing to always pay for it. Only Apple can attract the best talent without needing to pay top dollar for them. Apple’s war chest means they’re able to tightly control their supply chain so competitors have a hard time matching its product quality and profit margins.

Elements of Snapchat’s strategic plan were leaked in the recent hack of Sony Pictures, and so I was surprised to read a very emotional reply from the CEO of Snapchat, Evan Spiegel.

Read Full Article

Windows’ business model is changing, from monopoly to minority

In a recent conference keynote, Microsoft COO Kevin Turner said the following:

We’ve got to monetize [Windows] differently. And there are services involved. There are additional opportunities for us to bring additional services to the product and do it in a creative way. And through the course of the summer and spring we’ll be announcing what that business model looks like. At the same time it’s wonderful to see these nine-inch and below devices explode, because that was an area, candidly, I was blocked out and I had no share of what was getting built. So it’s a very fascinating transition for us. And finding new ways to monetize the lifetime of that customer on those devices, again, I would tell you we’re learning, we’re growing, and we’re smarter and wiser every day.

The key language is “finding new ways to monetize the lifetime of that customer,” which is another way of saying that they’re shifting from a product-centric view to a customer-centric one. It doesn’t have to be Windows per se necessarily.

Many have interpreted that to mean the base OS might be free, and that Microsoft will earn via subscription or freemium. While the Redmond company will likely continue to charge enterprises and computer manufacturers, Windows and all its updates should absolutely be free to consumers. It probably will.

Although it may not look like it, Microsoft has actually been dealing with monetization questions for a long time. Back when Windows was a monopoly, it was difficult for Microsoft to add features to Windows without incurring anti-monopoly wrath. Security was one such example – the likes of Norton and McAfee lobbied hard behind the scenes to keep built-in security out of Windows.

Read Full Article

To win, Xbox Japan needs to fight like David not Goliath

Xbox’s Japan chief resigned recently due to lackluster sales of the Xbox One in Japan. Only 39,000 units were sold to date; 24,000 of which at launch. That’s horrible.

When it comes to console games in Japan, Microsoft needs to realize it is David not Goliath. Microsoft can’t fight Sony head-to-head, sword-to-sword in Japan. It needs to go guerilla warfare and use a slingshot.

Here’s what I would do if I was chief of Xbox Japan:

Scale back operations. Forget the huge office, the army of people, the national distribution networks. Xbox Japan should think like a start-up and go lean. This will allow them to shift resources to initiatives that actually work, instead of pouring money into hopeless battles.

Embrace the outsider identity. Position Xbox as anti-establishment. Make fun of regular Japanese people who only play regular Japanese games. Paint the Playstation 4 as conformist — you probably wear a suit and bow a lot if you have the Playstation 4. The Xbox One, on the other hand, is about being free. About giving the middle finger to the rigidity of society; basically, American values. 🙂

Read Full Article

Facebook at Work can work, but only if Facebook actually uses its marketing muscle

I had dinner with a friend a few months ago. He is the head of a 500-person company, and he was telling me how he wished there was an off-the-shelf mobile app they can use as an internal directory for his company, given the company was at a size where not everyone knew everyone. So that he could walk into a meeting and his phone would tell him who everyone is, what they do and how he can reach them later.

I told him Yammer was probably that product. He had never heard of Yammer. A few weeks later I followed up to see whether he had installed Yammer and he said no, he was too busy to get around to it.

The Financial Times is now reporting that Facebook is testing a Facebook at Work product. Or, basically, another Yammer; a closed social network for companies. The reason why I think it can work is the reason my friend hasn’t heard of Yammer — everyone knows Facebook and is already on it.

Read Full Article

Xiaomi claims it’s a services company, but it’s really not

As Stratechery pointed out, it’s conventional wisdom that Xiaomi is an Internet services company. That selling smartphones at break-even prices is merely a gateway for selling profitable services. Except this might all just be a marketing ploy, because Xiaomi does make money from hardware, and quite a lot of it.

As much as 92% of Xiaomi’s 3.46 billion yuan profit (or $566 million US dollars) is from hardware. That’s profit, not revenue.

Let’s start with how Xiaomi’s CEO, Lei Jun, describes the company:

We’re actually an Internet company. We’ve already got a business in mobile phone hardware and we want to add to that an Internet platform. We can earn money from that, once it’s established. People just don’t get it. The mobile phone itself is only the carrier. Microsoft used to sell Windows in a box with a CD in it. Does that make Microsoft a paper box company? The box and the CD are only the carrier. If people don’t understand this, they can’t understand [Xiaomi].

Wouldn’t Microsoft be a paper box company if paper boxes actually generated 92% of its profit? If people cared more about the paper box than whatever’s inside?

An Internet company might be what Lei Jun wants Xiaomi to be one day, but right now it’s squarely a smartphone company.

Read Full Article

Xbox One’s struggles traceable to just one bad decision

Microsoft made two important announcements recently. The first is about Office 365 being a game changer, which I covered yesterday. Today I’m talking about the $50 price drop for the Xbox One. Starting from November 2 to January 2, you can get any Xbox One SKU for $50 off, which makes the entry level version $350. That’s cheaper than the Playstation 4 at $400.

Microsoft is marketing this as a temporary promotion for the holidays, but that’s just marketing. I have a hard time believing the Xbox One will go back up to $400.

The price drop is long overdue. The Playstation 4 is outselling the Xbox One by a significant margin — Ars Technica estimated by at least 40% — and the entire gap can be traced to one crucial decision. That’s how thin the line is between success and failure is in the console market. You can have a fantastic brand, recruit third party support, obtain exclusives, introduce innovations, ensure wide distribution, spend a lot of money on marketing…and still fail because of one bad decision.

Can you guess which? It wasn’t bundling the Kinect, though that was quite bad because of the $100 price premium. It wasn’t the DRM policies or the always online requirement. No, Microsoft was able to reverse out of those decisions early enough.

Read Full Article

Microsoft wants Office 365 to be the next Windows

A few weeks ago, Satya Nadella called Office 365 the most strategic API for Microsoft. This was echoed by Bill Gates, who in an interview said that getting Office to the next level is a major strategic imperative. They weren’t kidding.

Microsoft made two game changing announcements recently for Office 365:

  1. Office 365 as a platform for third party developers
  2. Unlimited OneDrive storage with every Office 365 subscription

Opening up Office 365 can only add value to consumers and simultaneously keep Microsoft relevant with developers. This is an urgent priority in a mobile world where Windows is a minority; Office 365 on the other hand cuts across all operating systems and devices.

Unlimited OneDrive storage makes Office 365 more attractive than ever; it addresses the competition in both cloud storage and free office programs.

For Microsoft, keeping Office a productivity standard is the next best thing to a Windows monopoly.

Read Full Article

Macs will take more share from Windows

The extraordinary thing about Macs is its ability to convert sales into profit — no other computer manufacturer does it as well as Apple. For every $100 worth of computer that Apple sells, Apple makes $19 of profit whereas competitors are lucky to make $4. That’s more than 4x the margin, which is amazing.

PC makers feel the sting, but Macs still comprise less than 7% market share so Microsoft hasn’t felt the same kind of pressure. The Redmond company soon will, however. In Apple’s latest quarterly report, Macs grew 21% compared to the previous year’s quarter, over a time when the overall PC market is flat. Apple hasn’t done as well since 1995.

Apple has traditionally focused on the high end market; but more and more, Apple has been willing to compete in the middle. That’s why Apple is still selling the the non-retina MacBook Pro, the original iPad mini and the iPhone 5C, even though those products aren’t likely to garner the same high customer satisfaction scores that Tim Cook often brags about.

While Mac units shipped grew 21%, revenue only grew 18% — evidence that the average selling price of Macs sold has declined. This is a signal that Apple intends to grab market share.

Read Full Article

Great design doesn’t differentiate Apple

Didn’t know what to write today, and then @nilanp came to save the day:

My answer to that is great design is everywhere. Lots of tech companies have great design. The problem is not everyone cares.

Read Full Article