Tuesday, January 19, 2010

Everyone has a plan 'till they get punched in the mouth- Mike Tyson

Much has been made of the upcoming war brewing over market share for the real personal computer; the one you wear, put in your pocket, where you store your most intimate photos and videos. Yes, the device formerly known as your phone is the latest step in a continual line of cheaper, smaller, more 'personal' devices that date back to, at least the 1975 introduction of the Apple 1. As of now, it seems as if the latest battlefield will be seriously joined by, at least 6 mega-vendors coming from 3 directions:

The computing field: Microsoft and Apple (sort of sad that IBM has abdicated its computing relevance for the mainstream consumer and will sit this one out, while DELL continues to plan and test their market entry)
The web: Google
The phone: Nokia, RIM and Motorola

The platform shift from desktop to mobile, or for some vendors from phone to the 'new' personal computer, is as titanic (threat/opportunity) to these vendors as the shift from mainframes to mini's then to micro computers was to IBM, DEC, DG, Motorola, and the BUNCH. Most of these now forlorn Princes faced extinction with little grace when they were unable to navigate the shifting landscape. The impact of new distribution, pricing, business models, digesting dynamic market needs and an accelerated pace of innovation stress the culture of incumbents to the breaking point.

In this light, Apple's transition from a desktop centric vendor in 2006, to one where the Mac line accounts for only 38% of revenue and less than 14% of unit shipments (in '10 they should break 100mm shipments of 'stuff'...Nokia ships >450mm units), while not missing a beat, is a staggering achievement. I would bet their acquisition of Quattro wireless portends another evolution of their business model, one that prepares it to do battle with folk who 'give away' their IP, in return for harnessing and directing attention.

When navigating new waters, I think company culture and communication of a meaningful strategy plays a large part of a firm's success potential. Therefore, I dug up SEC filings for these titans to revisit what they share with shareholders/employees about their strategic directions. It makes for good reading and should help you in handicapping the race:

Apple business strategy (per their '09 10k):

The Company is committed to bringing the best personal computing, mobile communication and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings.

Google business strategy (per their 10k)

Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion.

Microsoft's business strategy (per their 10k)

Our mission is to enable people and businesses throughout the world to realize their full potential. Since the company was founded in 1975, we have worked to achieve this mission by creating technology that transforms the way people work, play, and communicate. We develop and market software, services, hardware, and solutions that we believe deliver new opportunities, greater convenience, and enhanced value to people’s lives.

Motorola's business strategy, (per their 10k)

Motorola seeks to be a leading supplier of wireless handsets and mobile experiences to customers globally. To
accomplish this objective, our strategy is focused on simplifying product platforms, enhancing our mid- and
high-tier product portfolio, and strengthening our position in priority markets.

Nokia's business strategy (per their form 20-F)

Our mobile device market share is driven by our ability to have a competitive product portfolio with
attractive aesthetics, design and combination of valueadding
functionalities and services for all major
consumer segments and price points. Market share is also impacted by our brand, manufacturing and
logistics, distribution, competitive cost structure, pricing and how we differentiate our products from
those of our competitors. We believe that product differentiation will be based increasingly on service
innovations and how these services are integrated with devices to improve the user experience.

Research in Motion (Annual report)

RIM helps users all over the globe connect to the specific people, information and
media that makes their worlds go round. The success of BlackBerry products
and services is driven by passionate employees, outstanding partnerships,
distinctive technological expertise, a commitment to quality and a culture that
embraces innovation, customer service and operational excellence.

And for your viewing pleasure, a Rocky take-off:

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