“Building a successful business is hard. Many try, few succeed and those that do tend not to thrive for long. So success in business… should be respected,” Horace Dediu writes for Asymco. “Especially in highly competitive industries like technology. The fragility of success however should also give one pause to think about how delicate a business model is.”
“The presumption that companies can shift business models at will is usually false. Businesses are balanced on a knife’s edge of dependency on multiple variables. Almost all resources are expended on preserving this balance,” Horace Dediu writes for Asymco. “This being my observation, I take issue with assumptions that large companies can ‘pivot’ on a dime or that they can change their business models ‘when conditions are right.'”
Dediu writes, “The premise that Amazon can, on a whim, change its business model from selling other people’s products at a razor thin margin while investing in capital-intensive distribution to selling other people’s products at a large margin while not investing in capital-intesive distribution is not credible.”
Read more in the full article – recommended – here.
MacDailyNews Take: Personally, we can’t wait until The Washington Post reviews the next Kindle.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
This is a great article. Really interesting stuff.
Horace Deidu seems like a moron. The article is so full of false assumptions, that it is probably aimed at the people who don’t know better than to get information on this topic from him.
You’re a moron
I thought it was a dumb article, as well. Mostly mental gymnastics twisted so as to support his hypothesis. I suspect Pundit Deidu is narcissistic enough to think he’s clever and insightful. I’ll bet he really enjoys reading his own stuff.
Amazon’s Anti-Apple Antietam.
heh, great take MDN…I’m sure it will be bezos as usual at the Washington Compost.
It’ll be interesting to see what he does – specifically whether he utilizes Apple’s Newstand or will he hold a grudge and shoot himself in the foot.
Buying the WP proves to me that he would sit at a table with Obama so far to Obama’s LEFT, they couldn’t even converse with each other. And anyone more to the left of His Grace would fall into Hell.
This guy is a fool.
“Consider Microsoft’s dilemma. They have all the resources in the world and yet they could not pivot to take advantage of a change so mundane as a low power microprocessor (which enabled a mobile computer and hence a new ecosystem and profit model for software.)”
As “mundane as a low power processor”? How idiotic can you be? Even when it was one of the core founders of the PowerPC architecture, Apple took several years from the initial decision to move all its systems to that platform. Apple had the Star Trek project running for several years in order to tweak its OS for the Intel platform before moving there (or did people really think it took just over a year?). Apple had been working hand in glove with ARM since before 1992 and still took over 13 years to bring out a great phone and even longer to bring out a great tablet.
Microsoft’s problem was that it expected to do the move — and do it well — in under two years. The other idiotic position is that lots and lots of tech pundits — like this fool — link that such a move can be done in that time frame too.
That’s not reality as fully witnessed by Microsoft’s Windows RT tablets’ almost utter failure.
Add on top of this lunacy such non-sentences as: “It [Nokia] could not pivot to allow into an ecosystem and had all its advantages disappear.” Allow *what* into an ecosystem.
I couldn’t even finish the article.
While I agree that “mundane” isn’t the best word choice, I think the main message is valid – Microsoft didn’t see the trend towards mobile computing, and more eggregiously, they couldn’t write an OS for Windows tablets that didn’t suck @$$.
FYI – it was called the Marklar project – named after Warf’s evil twin.
Nerd correction: “Marklar” is a South Park reference. A race of aliens in an episode used the word “marklar” as their only proper noun, referring to all people, places, and things as “marklar”. Thus, “marklar” was very adaptable, the perfect codeword for adapting OS X to a new chip.
——RM
This marklar is correct. Listen to his marklar, and your marklar will improve. And a better marklar makes all marklars happy.
http://en.wikipedia.org/wiki/Marklar_project#Apple.E2.80.93Intel_transition
First, the Star Trek project was classic macos, and had nothing to do whatsoever with the eventual shift to intel. That also has nothing to do with low power processors, which would be ARM platform.
Second, connecting anything from before 1996 and CEO Steve with the iphone project is an insane leap. The arm wing of apple was spun off long before Steve returned. Apple’s utilization of ARM wasn’t delayed, it was not even pursued during those years.
MDN “recommended” an article that said this?
Presumably iTunes could also some day “flip the switch” and become profitable …
“Become” profitable? Wasn’t there recent news estimating that iTunes is already ridiculously profitable?
This article is filled with other laughable bullsh*t, but that stood out.
MDN, please don’t recommend an article just because it criticizes an Apple competitor, without reading it to see if it also says stupid things about Apple.
——RM
The person writing this article (Horace Dediu) was the one who has talked the most about iTunes profitability.
I think you are missing the point. iTunes is becoming mildly profitable for Apple, and they are getting better at services, yet this is not getting priced in to the stock. (Service-based stocks like Goog and Amzn trade at higher valuations).
If anything, this article just goes to show that the premise of Amazon’s value is arbitrary and not applied to all businesses.
It my mind it confirms that Amazon is propped up by the institutions.
Fine. “Mildly profitable” is still profitable. The article implied iTunes wasn’t profitable.
——RM
How is iTunes seen as ridiculously profitable? THAT premise certainly doesn’t show up in Apple’s valuations. I almost laughed and cried when I heard iTunes streaming slightly edged out Netflix. Netflix’s valuations are sky-high whereas Apple’s iTunes valuation doesn’t amount to a pimple on a rat’s ass.
I know that Dediu has said whatever numbers Apple puts out isn’t reflected in its share price and probably never will be, but I get tired of reading Dediu’s articles because I don’t understand who his articles would help if it doesn’t help investors. His site seems mainly geared for people who just like to exercise their minds with the math of things and like looking at pretty graphs. I’m always looking at these graphs of Dediu’s of how Apple should be leading in so many categories, yet a company like Amazon or Netflix or Google is just blowing Apple away in shareholder value. I’m sure the hedge funds are making it that way, so what good are Dediu’s spreadsheets and graphs.
When the hedge fund managers simply come out and say they’re dumping Apple because they see little value in the stock because they don’t feel comfortable with it, then Apple shareholders are basically screwed despite all those fancy spreadsheets and graphs Dediu has so meticulously laid out.
I believe iTunes “edged out” Netflix in customer satisfaction. Not streaming.
I have read and enjoyed Horace’s articles in the past, but this one is completely off the wall, as LordRobin said. Apple can’t pivot? What about 68k to PowerPC? PowerPC to Intel? Intel to ARM/A5? OS 9 to OS X? iPod? iPhone?
This is reminiscent of all those “Apple is dying, they haven’t completely revolutionized an industry in a few years now” articles. Do people even realize how rare a revolution/pivot is? Apple has done about six “pivots” in the last 15 years, which apparently makes some people think it is easy. It isn’t. Most companies go decades without a single one.