2. Is search a winner-take-all business?
Like the article says, a winner-take-all (WTA) market is unforgiving. Most of the time, those who dare to compete with the winner inevitably face extinction. If search is a WTA business, then Google is on its way to becoming the big winner. Google’s win might be less intention and more the power of network effects. Unfortunately, Google does not register gains every month but according to Hitwise, an online measurement service, Google has surpassed the 70 percent market share benchmark. It estimates that Google has 72 percent of the United States total online search market, versus 17.9 percent for Yahoo and 5.4 percent belonging to Microsoft’s two search services, MSN and Live.com. Even better network effect numbers come from web site owners who track where their visitors come from report that Google’s search engine now refers 80 to 90 percent of their visitors. Competitors face extinction because of their unbelievably unprecedented network effects. As the article from this past weekend states, most people just use Google out of habit and we all know old habits die hard. Plus, one of Google’s ten rules states “It’s best to do one things, really, really well.” Google has one of the world’s largest research groups focused solely on solving search problems. Their tireless dedication to the search market has lead to new products such as Gmail, Gchat and Google maps which only to serve to spread their brand name even farther and increase their already strong network effects. Will there ever be anything better than Google? I don’t think so.
Wednesday, February 25, 2009
Tuesday, February 24, 2009
DoCoMo
1. Is DoCoMo wise to offer its existing mobile phone rivals access to FeliCa?
As stated in the case, DoCoMo could capture all contactless IC market share if they chose to offer FeliCa as an exclusive feature on their phones. On the other hand, DoCoMo managers were wise to recognize that, with strong network effects, FeliCa applications and reader locations would and could become the accepted form of technology a lot faster and more efficiently if DoCoMo’s rivals also adopted the FeliCa technology. I agree with this argument. This type of technology costs merchants much too much to cater to only one vendor or carrier. DoCoMo executives did not seek exclusive rights for FeliCa and consequently both KDDI and Vodafone quickly announced plans to adopt embedded contactless ICs like FeliCa on their phones. It is important, however, to note that DoCoMo will profit from rivals adopting FeliCa technology since it is a major shareholder of FeliCa Networks and therefore ulterior motives may exist.
As stated in the case, DoCoMo could capture all contactless IC market share if they chose to offer FeliCa as an exclusive feature on their phones. On the other hand, DoCoMo managers were wise to recognize that, with strong network effects, FeliCa applications and reader locations would and could become the accepted form of technology a lot faster and more efficiently if DoCoMo’s rivals also adopted the FeliCa technology. I agree with this argument. This type of technology costs merchants much too much to cater to only one vendor or carrier. DoCoMo executives did not seek exclusive rights for FeliCa and consequently both KDDI and Vodafone quickly announced plans to adopt embedded contactless ICs like FeliCa on their phones. It is important, however, to note that DoCoMo will profit from rivals adopting FeliCa technology since it is a major shareholder of FeliCa Networks and therefore ulterior motives may exist.
Thursday, February 19, 2009
Online Gaming
Since the writing of the Electronic Arts Case the Sony PlayStation 3 and the Nintendo Wii have been released and both have online gaming capabilities. What’s your assessment of the current online gaming market?
I don’t play video games and I couldn’t even begin tell you what console we have in our home. PS2 maybe? It belongs to my husband. I definitely had to do some research on this one but the timing is perfect since my parents have requested a Wii for the 30th Anniversary- although I am sure they will not be playing online. I know Wii was popular when it came out because it was cheaper than PS3, offered wand-like controls that captured your motions, but offered a less in terms of graphics for serious gamers. I know the Wii console can connect to the internet and access the Nintendo Wi-Fi connection service for free for up to 32 players. The online function is there but Nintendo seems more focused on targeting a different market, reaching a broader demographic and making more profit per console than developing their online gaming capabilities.
For example, how did my parents even learn about the Wii? Great marketing, according to a study published by the Nielsen Company, has attracted a broader audience and more female consumers to Wii than Xbox 360 or PlayStation 3. While the brand name might carry weight and reach a larger audience, the system is also used the least compared to its rival consoles. The Wii is reaching an audience that wants to play video games but wants to play siginificantly less than the 8 hours per week stated in the case.
According to the same study, Nintendo's Wii was used by more women age 35+ than either Xbox 360 or PlayStation 3. Nielsen explained this phenomenon as the result of titles such as Wii Fit, Guitar Hero, and Rock Band having "engaged an older female gamer like never before." The image of my Mom playing Guitar Hero is not one I want to dwell on but this still doesn’t answer the question regarding each system’s online gaming capabilities or who has the most market share.
The 2006 release of PS3 was Sony’s attempt to regain the brand trust of online gamers who used Microsoft’s Xbox 360 released in 2005 as their console. The PS3 quickly distinguished itself from its predecessors and competitors by offering a unified online gaming service called the PlayStation Network. This contrasted with Sony's former policy of relying on game developers for online play as stated in the case. The console also included robust multimedia capabilities, connectivity with the PlayStation Portable, and Blu-ray capability. As of January 8, 2008, there were over 17 million active registered PlayStation Network accounts worldwide and users made 330 million downloads. As of May 2008, Xbox 360 reported over 12 million subscribers to Xbox Live so it appears PS3 is gaining market share.
So in the end, it looks like Microsoft's XBox 360 and PS3 are direct competitors, while Nintendo's Wii is more of a first-time user or casual video gamer who would like the latest console but is not interested in online gaming.
I don’t play video games and I couldn’t even begin tell you what console we have in our home. PS2 maybe? It belongs to my husband. I definitely had to do some research on this one but the timing is perfect since my parents have requested a Wii for the 30th Anniversary- although I am sure they will not be playing online. I know Wii was popular when it came out because it was cheaper than PS3, offered wand-like controls that captured your motions, but offered a less in terms of graphics for serious gamers. I know the Wii console can connect to the internet and access the Nintendo Wi-Fi connection service for free for up to 32 players. The online function is there but Nintendo seems more focused on targeting a different market, reaching a broader demographic and making more profit per console than developing their online gaming capabilities.
For example, how did my parents even learn about the Wii? Great marketing, according to a study published by the Nielsen Company, has attracted a broader audience and more female consumers to Wii than Xbox 360 or PlayStation 3. While the brand name might carry weight and reach a larger audience, the system is also used the least compared to its rival consoles. The Wii is reaching an audience that wants to play video games but wants to play siginificantly less than the 8 hours per week stated in the case.
According to the same study, Nintendo's Wii was used by more women age 35+ than either Xbox 360 or PlayStation 3. Nielsen explained this phenomenon as the result of titles such as Wii Fit, Guitar Hero, and Rock Band having "engaged an older female gamer like never before." The image of my Mom playing Guitar Hero is not one I want to dwell on but this still doesn’t answer the question regarding each system’s online gaming capabilities or who has the most market share.
The 2006 release of PS3 was Sony’s attempt to regain the brand trust of online gamers who used Microsoft’s Xbox 360 released in 2005 as their console. The PS3 quickly distinguished itself from its predecessors and competitors by offering a unified online gaming service called the PlayStation Network. This contrasted with Sony's former policy of relying on game developers for online play as stated in the case. The console also included robust multimedia capabilities, connectivity with the PlayStation Portable, and Blu-ray capability. As of January 8, 2008, there were over 17 million active registered PlayStation Network accounts worldwide and users made 330 million downloads. As of May 2008, Xbox 360 reported over 12 million subscribers to Xbox Live so it appears PS3 is gaining market share.
So in the end, it looks like Microsoft's XBox 360 and PS3 are direct competitors, while Nintendo's Wii is more of a first-time user or casual video gamer who would like the latest console but is not interested in online gaming.
Thursday, February 12, 2009
Netflix
Since the publishing of this case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?
Throughout the company’s history, Netflix CEO Reed Hastings has repeatedly assured critics that the purpose of Netflix was not to provide DVD rentals through the internet but instead to provide the best home video viewing experience for its customers. Video on demand (VOD) at Netflix was first launched as a free streaming feature at no additional cost to existing online DVD subscribers. Hastings was correct to leverage Netflix’s existing brand and market share as a way to differentiate his company from other VOD competitors because Netflix announced yesterday that their subscription had reached a symbolic milestone obtaining 10 million subscribers. This number was achieved after adding about 600,000 new users in the month and a half since the start of 2009 and is growing faster than the 26% increase in users this past fall when, according to www.electronista.com, the movie rental firm added about 718,000 new regular users. Netflix expects to add between 100,000 and 300,000 more by the end of March. The company attributes this jump to the company’s online efforts which allow most existing subscribers to monthly physical DVD rentals as well as a subset of the Netflix catalog either on the web or on a supporting media hub. Netflix has been working tirelessly to obtain and maintain strategic partnerships with companies that will increase their power as a VOD distributor and as a brand.
The company again leveraged its brand when it significantly added to its video on demand options in late 2008. In November 2008, Microsoft and Netflix announced a milestone in their efforts to bring home movies to users of the Xbox 360. Since November over 1 million Xbox live users have downloaded and activated software that lets them access Netflix' library of movies and TV shows. Netflix for TiVo allows owners of Series 3, TiVo HD and TiVo HD XL DVRs that also maintain active Netflix subscriptions stream movies and TV shows from their Instant Queues. Titles can play in HD whenever the content is available, and the TiVo's own remote can be used both for navigating the movie as well as rating movies or checking descriptions before starting. The feature is free to customers of both Netflix and TiVo.
Netflix has also worked to gain support and exposure on newer LG and Samsung Blu-ray players who will allow for the streaming of videos on their players, as well as web support for Macs in addition to previous Windows-only support. Netflix is smart to realize that demand is increasing. The economy is struggling, people are staying in more than going out, and they want immediate access to movies and television.
Throughout the company’s history, Netflix CEO Reed Hastings has repeatedly assured critics that the purpose of Netflix was not to provide DVD rentals through the internet but instead to provide the best home video viewing experience for its customers. Video on demand (VOD) at Netflix was first launched as a free streaming feature at no additional cost to existing online DVD subscribers. Hastings was correct to leverage Netflix’s existing brand and market share as a way to differentiate his company from other VOD competitors because Netflix announced yesterday that their subscription had reached a symbolic milestone obtaining 10 million subscribers. This number was achieved after adding about 600,000 new users in the month and a half since the start of 2009 and is growing faster than the 26% increase in users this past fall when, according to www.electronista.com, the movie rental firm added about 718,000 new regular users. Netflix expects to add between 100,000 and 300,000 more by the end of March. The company attributes this jump to the company’s online efforts which allow most existing subscribers to monthly physical DVD rentals as well as a subset of the Netflix catalog either on the web or on a supporting media hub. Netflix has been working tirelessly to obtain and maintain strategic partnerships with companies that will increase their power as a VOD distributor and as a brand.
The company again leveraged its brand when it significantly added to its video on demand options in late 2008. In November 2008, Microsoft and Netflix announced a milestone in their efforts to bring home movies to users of the Xbox 360. Since November over 1 million Xbox live users have downloaded and activated software that lets them access Netflix' library of movies and TV shows. Netflix for TiVo allows owners of Series 3, TiVo HD and TiVo HD XL DVRs that also maintain active Netflix subscriptions stream movies and TV shows from their Instant Queues. Titles can play in HD whenever the content is available, and the TiVo's own remote can be used both for navigating the movie as well as rating movies or checking descriptions before starting. The feature is free to customers of both Netflix and TiVo.
Netflix has also worked to gain support and exposure on newer LG and Samsung Blu-ray players who will allow for the streaming of videos on their players, as well as web support for Macs in addition to previous Windows-only support. Netflix is smart to realize that demand is increasing. The economy is struggling, people are staying in more than going out, and they want immediate access to movies and television.
Thursday, February 5, 2009
P2P File Sharing and the Market for Digital Information Goods
1. Who will win the competitive battle between P2P file sharing networks and iTunes over the long run and why?
I think the critic in the last paragraph of this case made the best argument about the competitive battle between P2P and iTunes when he said: “in terms of stopping file sharing, any edict, even one the highest court in the land, is about as effective as a mop in a monsoon” and “iTunes isn’t about selling songs; it’s about selling more iPods.” P2P file sharing networks and iTunes are not competitors or rivals.
P2P file sharing networks will continue to pop-up, evolve into authorized pay-for models or get shut down, etc. I used Napster in college. My brother (five years younger than me) used Kazaa. The next kid will use whatever is the latest, greatest, and most importantly, free file sharing network that exists when they need it. When lawsuits started popping up about Napster after I graduate from college, I changed my free-loading user ways, felt like it was “cooler” to respect copyright laws and stopped downloading pirated music on my personal computer and/or laptop. I have been an iPod owner since they first came out but I have purchased less than $500 in songs and I am guessing this is more than many iTunes users. If I want the music, I go out and spend $9.99 on the actual CD and then load it into my library. Then I went home to Boston a couple of weeks ago, visited my brother, and then loaded his pirated music from his laptop into my library. I am a copyright violator once again. I am willing to pay $0.99 for a song or a $1.99 for a TV episode in case my husband accidently erased it from our DVR, but I also still routinely download the free iTune of the week- not because I like them all, but because it’s free so why not?
I am not sure the record labels will ever win this battle due to the fact that it is too difficult to prosecute and collect on this kind of copyright infringement. Suing grandmothers who have never touched a personal computer or high school cheerleaders turned internet celebrities does not help their cause either. I like Courtney Love’s solution about tipping artists for their music since a lot of the music I download happens to be more of the emerging, independent artists than big names like U2 or Beyonce. I heard on the radio this morning that Beyonce’s latest album that has more songs if you buy it in the store, but less if you download? From a marketing standpoint, that is a great way to encourage fans to go out and buy the actual CD rather than just downloading- especially for someone as popular as Beyonce.
So while P2P file sharing networks will continue to battle each other, the record companies the RIAA, iTunes will continue to be iTunes and I will continue my dependence on my iPod which I am quite certain I will never manage to fill.
I think the critic in the last paragraph of this case made the best argument about the competitive battle between P2P and iTunes when he said: “in terms of stopping file sharing, any edict, even one the highest court in the land, is about as effective as a mop in a monsoon” and “iTunes isn’t about selling songs; it’s about selling more iPods.” P2P file sharing networks and iTunes are not competitors or rivals.
P2P file sharing networks will continue to pop-up, evolve into authorized pay-for models or get shut down, etc. I used Napster in college. My brother (five years younger than me) used Kazaa. The next kid will use whatever is the latest, greatest, and most importantly, free file sharing network that exists when they need it. When lawsuits started popping up about Napster after I graduate from college, I changed my free-loading user ways, felt like it was “cooler” to respect copyright laws and stopped downloading pirated music on my personal computer and/or laptop. I have been an iPod owner since they first came out but I have purchased less than $500 in songs and I am guessing this is more than many iTunes users. If I want the music, I go out and spend $9.99 on the actual CD and then load it into my library. Then I went home to Boston a couple of weeks ago, visited my brother, and then loaded his pirated music from his laptop into my library. I am a copyright violator once again. I am willing to pay $0.99 for a song or a $1.99 for a TV episode in case my husband accidently erased it from our DVR, but I also still routinely download the free iTune of the week- not because I like them all, but because it’s free so why not?
I am not sure the record labels will ever win this battle due to the fact that it is too difficult to prosecute and collect on this kind of copyright infringement. Suing grandmothers who have never touched a personal computer or high school cheerleaders turned internet celebrities does not help their cause either. I like Courtney Love’s solution about tipping artists for their music since a lot of the music I download happens to be more of the emerging, independent artists than big names like U2 or Beyonce. I heard on the radio this morning that Beyonce’s latest album that has more songs if you buy it in the store, but less if you download? From a marketing standpoint, that is a great way to encourage fans to go out and buy the actual CD rather than just downloading- especially for someone as popular as Beyonce.
So while P2P file sharing networks will continue to battle each other, the record companies the RIAA, iTunes will continue to be iTunes and I will continue my dependence on my iPod which I am quite certain I will never manage to fill.
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