...team recommends that Microsoft develop the software for non-gaming set-top boxes and partner with a hardware company. This option is likely to produce the greatest ROI for Microsoft because Microsoft’s core competency is developing operating software and this option carries the least amount of risk. Background The consumer demand for the ability to seamlessly integrate and connect devices and data that they use in their daily life is growing rapidly. The ability to connect mobile phones, television sets, tablets, and personal computers has provided consumers with an unparalleled opportunity to the access to information (I), communication (C), and entertainment (E), collectively known as ICE. The struggle amongst Microsoft and archrivals like Apple and Google is to develop the “must-have” product that would redefine the way content is consumed in the living rooms around the world. While streaming content via game consoles has been on the rise, the introduction of streaming content via non-gaming set-top boxes has become increasingly popular. Microsoft must choose how to position itself in this rapidly changing market so that it does not render itself irrelevant and so that it can capitalize on this shift in the way that content is being consumed. Ultimately Microsoft can make one of four choices. Microsoft can: (1) keep the status quo, (2) develop the software for non-gaming set-top boxes and partner with a hardware company, (3) develop a Microsoft branded non-gaming set-top...
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...leadership for 2 consecutive console generations. However, in recent times, the ecosystem has changed to include a larger audience and usability has trumped technological superiority as a key metric in generating buyer interest. In 2008, Nintendo’s Wii had 2 times the market share that Sony’s offering, the Play Station 3, had. I feel Sony should assess the following options. (1) Focus on catering to its niche advance game segment and focus on leveraging its progress form the previous 2 generations. (2) Respond to Wii onslaught by developing its previous generation console to include a low end offering that directly competes with Wii. (3) Partner with Nintendo and others to strengthen offerings in the gaming console space, eliminating Microsoft and creating a “co-opetition” I recommend a combination of (1) and (3) to ensure sustained dominance in the gaming console market. I would not look to option (2) since it undermines SCEI’s position as a focused differentiator (Exhibit 1 in appendix) and also because this would be a knee jerk reaction forcing Sony to play on Nintendo’s terms. Analysis As evident from Porters five forces analysis (Exhibit 2) the console market is not very attractive for new entrants. . However, there is a huge growth opportunity for established players since there is only moderate buyer bargaining power and few substitutes. To substantiate the Five Forces analysis, this paper will detail a strategy that could enable SCEI to create a sustained unique...
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...XBOX & MICROSOFT’S BATTLE FOR THE LIVING ROOM Teaching Note Case Overview Microsoft, a renowned software company found in 1975, is one of the largest corporations in the world. Since its inception, Microsoft not only established itself as a leader in the software industry, but also succeeded in diversifying into various software related businesses. Today, Microsoft is an eminent name in computer applications, multimedia, Internet service, and movie products. At the turn of the century, Microsoft decided to enter a new market – the videogame industry, and introduced its videogame console – the Xbox. The Xbox business venture presents several challenges to Microsoft. First, Microsoft needs to sell enough units of consoles and videogames to consumers to make its videogames division profitable. Second, as with most its other businesses, Microsoft hopes to attain leadership position in videogames industry. Despite the fact that videogames are a primary form of modern entertainment, hence, presents significant business opportunities, only very few vendors have had the chances of achieving dominance in the industry. Third, through Xbox, Microsoft wishes to evolve from a PC software company into a home entertainment company. The Xbox is an intermediary for Microsoft to sell its thousands of entertainment products and services through both direct and indirect methods. For Microsoft, the battle for the living room is not just a war over a console; it is a war of Microsoft’s...
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...Disruptive technology/ strategy is breaking the law of traditional industrial pattern and introducing a new arrangement focused on unserved and seemingly insignificant customers. When conventional business is focused on pushing limit of the existing technology’s performance to serve the mainstream market, disruptive technology focuses on different performance attributes and provides a product/ service beyond the market expectation. Disruptive technology is not necessarily technologically advance than the existing technology but it is an innovative approach to serve existing unattended and anticipated emerging market. It might not outperform the established technology but it will outperform market in long run. Disruptive product brings customer value proposition. Along with Wii, Apple I- tunes radio and atomic bomb are additional example of disruptive technology use. The first principle of disruptive technology is to spot the opportunity for new product but not to analyse it through traditional customers and marketing expert’s lenses. It is imperative to divert focus from existing market and focus on foreseen emerging market. Disruptive technology might have comparatively lower cost structure, hence lower expected revenues and profit margins. The last yet equally important principle is not to compare the performance of disruptive product with existing market demand or sustainable product. As a disruptive technology can change the whole game of business, while determining whether...
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...*CASE STUDY 11* Competition in Video Game Consoles: The State of the Battle for Supremacy AUTHORS: Christian Kostadinov 29114042 Ivaylo Baldev 29114047 Sofia 2010 Competition in Video Game Consoles: The State of the Battle for Supremacy Objectives in front of the case study The main objective that stands in front of our project is to clarify the present situation on the market of video console games. To present the strategies of the three main rival firms-Sony, Nintendo and Microsoft, to see their advantages and disadvantages, to see what their mission statement is, to see who are their customers and in which market segments the companies are trying to penetrate or have already penetrated. At the end we are going to try to predict the future development of the battle. We are also going to compare them in the above mentioned spheres, with the help of a competitor analysis. Conclusions are going to be derived after every paragraph. In order to do that we are going to use different methods including- SWOT analyses, PEST analyses etc. There were two different variants how to structure the text- first to include the PEST and SWOT analysis in the text for every firm or second variant to add it after the analysis. The second way was chosen because we decided that using this method it will be easier to compare the firms. Additionally we are going to present the information in the most understandable way by a PowerPoint Presentation. Content: 1. Introduction...
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...leading companies , despite having followed all the right practices, still lost their top positions when confronted with disruptive changes in technology and market structure. – Failure to meet the technological demands of customers in the future – An innovation that used a “disruptive strategy’ rather than a “sustaining strategy” or revolutionary strategy KEY PLAYERS IN THE VIDEO GAME INDUSTRY Sony (Playstation), Nintendo (Wii) and Microsoft (Xbox) SONY – introduced Playstation (PS), attracted late teens and young adults with disposable income, offered more sophisticated and more violent games; backward compatibility (PS1, PS2 and PS3), can also play CDs and DVDs. Also launched Playstation Portable (PSP) 1. PS3 – a multimedia entertainment hub; allows users to chat online, listen to music, view HD animations 2. results were disappointing because of Supply problems and the high price tag SONY produced 40% of its components in-house. Massive costs of investing in the game console equipped with Blu-ray and Cell chip MICROSOFT – a diversification move, addressing a potential threat the video game market was posing in the PC market. 1. Xbox – compete directly with PS2 and Gamecube DISRUPTIVE STRATEGY: INNOVATIONS THAT CAPTURED NON-GAMERS/ REVOLUTIONIZED THE NAME OF THE GAME AND IMPACTED OTHER INDUSTRIES AS WELL Wii – a nifty machine that used a wand-like remote controller to...
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...exemplify the respective differences in competing structures concluding with a summary of how a conceptualized industry evolves through the four structures during its product life-cycle. Pure Monopoly Structure A pure monopoly company does not always fit the description of a company who has no competition or close substitute. The label of a monopolistic company often follows companies such as Microsoft, even when there are similar products in the market. Microsoft currently holds approximately 90% of market share, whereas competing firms like Macintosh and Linux are close in substitution. Although consumers have the option to purchase systems such as Linux and Macintosh, they seem to choose Microsoft. The article Microsoft's Aggressive New Pricing Strategy, describes an approach that Microsoft took recently in lowering their profit margin to satisfy their quest for new growth opportunity. In this article, Peter Burrows (2009), states that Microsoft’s idea to lower prices on software is a strategic plan to increase profit margins in the future. By lowering prices, Microsoft is taking advantage of their hierarchy in the market. Because they can afford to take a hit in profit,...
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...Executive Summary Apple Computer’s 30-year history is full of highs and lows, which is what we would expect in a highly innovative company. They evolved throughout the years into an organization that is very much a representation of its leader, Steven Jobs. Apple made several hugely successful product introductions over the years. They have also completely fallen on their face on several occasions. They struggled mightily while Jobs was not a part of the organization. Apple reached a point where many thought they would not survive. When asked in late 1997 what Jobs should do as head of Apple, Dell Inc.'s (DELL) then-CEO Michael S. Dell said at an investor conference: "I'd shut it down and give the money back to the shareholders.” (Burrows, Grover, and Green) Well, times changed. Less than 10 years later, BusinessWeek ranked Apple as the top performer in its 2006 BusinessWeek 50. Apple attributes their recent success to robust sales of iPod music players (32 million in 2005). They are optimistic about the economies of scope with media giants, such as Disney and Pixar. (BusinessWeek) Apple rarely introduces a new type of product. Thus, instead of being the pioneer, they are an expert “second mover” by refining existing products. Portable music players and notebook computers are examples. Apple increases the appeal of these products by making them stylish and more functional. They now appear poised to make significant strides in the home computer market and to creating a...
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...as “Coffeehouses” the real “sell” is the image they confer on those who patronage their stores. The “Starbucks’ experience” can be identified as genuine service and an inviting atmosphere where customers are invited to spend time socializing and collaborating with others of like mind. The “free” web hotspots allow customers to work, study, or play. The purchase of a $5 cup of coffee is soon forgotten as customers sit in soft living-room type furniture. Starbuck’s has come to distinguish itself through its high-end atmosphere and standardization. It’s quick service and good reputation for being environmentally friendly and for treating its employees well has won the battle for customer loyalty. It’s green logo and paper-bag brown colors has come to mean clean environmentally ethically friendly. Their image that this is “your store” “your private club” has contributed to its branding. II. Success Factors Starbucks Corporation was founded in Seattle, Washington a community known for its thriving economic strengths and home of Boeing, Microsoft, and Amazon. Seattle is a world center for coffee roasting and coffee supply chain management. Related to this, many Seattle-area people are coffee enthusiasts and they maintain a coffee culture in Seattle's many coffeehouses. People in Seattle consume more coffee than in any other American city; one study stated that there are 35 coffee shops per 100,000 residents and that Seattle people spend an average of...
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...07-046 Rev: December 8, 2011 Sony's Battle for Video Game Supremacy John Sterman, Khan Jekarl, Cate Reavis As Sir Howard Stringer, CEO of Sony Corporation, settled in for his flight back to Japan from New York, a number of pressing issues occupied his mind about Sony’s future. At the forefront, Sony’s next generation video game console, the PlayStation 3 (PS3), was set to launch worldwide on November 17, 2006, a mere week away. Despite PlayStation 2’s (PS2) dominance in the last generation of gaming consoles, Stringer understood that past successes were no guarantee of future success in the intensely competitive game industry. Microsoft had launched the first volley in the last console war by releasing the Xbox 360 in the fall of 2005. Within one year, almost 4 million Xbox 360s had been sold worldwide, giving Microsoft a significant head-start in the race for market dominance. Meanwhile, Nintendo, a competitor thought to be dead due to the lackluster sales of its previous console, the Nintendo Gamecube, had generated significant “buzz” around its new entry, the Nintendo Wii (pronounced “we”). Targeting more of a mainstream audience than Sony and Microsoft, the Wii, scheduled to launch just two days after the PS3, posed a serious threat to Sony’s market share, particularly due to its $249.99 retail price, half the price of the PS3. Stringer also knew that there was much more at stake than winning the console war. The next generation of the DVD market was at stake as well...
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...9-508-076 REV: APRIL 14, 2008 ELIE OFEK Sony PlayStation 3: Game Over? [W]hen you look at the history of the video game industry since the PlayStation was launched back in 1995, we were able to take the leadership position very quickly with the PlayStation. With PlayStation 2 we have more than 110 million gamers and consumers enjoying the PlayStation 2 on a worldwide basis. And I think we have a very loyal following for the PlayStation family of products. So with the PlayStation 3, I believe that we are going to be able to quickly take the leadership position once again and maintain that position for a very long time. — Kaz Hirai, President and CEO, Sony Computer Entertainment of America, November 17 20061 It was a picture that was reminiscent of the launch of the original PlayStation nearly a dozen years before. Some eager customers had arrived as early as 6am and from as far as New Jersey to a video game store in Manhattan with the hope of purchasing one of the newest and most sought after video game consoles. By 9am, the number of customers waiting for entrance to the store exceeded 100 and the line extended down the block. One customer in line had been searching stores across the region for two weeks in order to find a console for her brother’s twenty-fifth birthday. A twelve-year-old and his grandmother were visiting their third store in search of the new console. “I just hate what you have to do just to get one,” the boy said.2 In one sense, long...
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...Fight At The Investment Club It started with a fight over Big Macs. The members of the Golden Years Investment Club rarely disagreed with each other about where to put their money. In fact, most times they left the final decision to Lenn Width, the septuagenarian leader of the group, whose 34-year track record with Golden Years had led Business Week to call him "a dazzling role model" for individual investors in a cover story last May. But on this crisp October evening in 1992, one of the newest members -- David Korn, a young architect who had joined the 26-member club a year earlier -- decided it was time to dump one of the group's longtime holdings. "We should sell McDonald's," Korn announced. "It's a stagnant company." Width was taken aback. He'd been a loyal McDonald's shareholder for years, and had no intention of bailing out now. "It's a growth company," he countered angrily. "Brinker International and Buffets -- those are growth companies," Korn shot back in a voice that now carried an unmistakable tone of condescension. "They're growing at 20, 30 percent a year." The other members sat in shocked silence; no one ever talked to Width this way. "They're too speculative," Width said, his voice rising. Finally, Korn couldn't take it any longer. "I despise McDonald's," he practically shouted. "The bathrooms are filthy, and the food isn't that great." This is not the sort of exchange that you normally read about in the press coverage of investment...
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...……………………………………………………………. 8 Supplier Power ……….………….…………....………………………………………………………………… 8 Buyer Power ………………………...……..………………………………………….…………….…………… 9 Degree of Rivalry ……………………….………..……………………………………………………………. 10 Threat of New Entrants ……….………....……….……………………………………………………….. 10 Threat of Substitutes …………….……….……………………………………….………………………… 11 Conclusion ....……. ………………..………………………………………………………………………………………….. 12 Problems and Solutions …………………………………………………………………………………………… 12 Works Cited ………………………………………...…………………………………………………………………………... 14 Introduction Gabe Newell, a Harvard drop out, began working for Microsoft in 1983. Newell spent thirteen years at Microsoft and emerged as a “Microsoft Millionaire.” Newell and his co-worker Mike Harrington left Microsoft in 1996 to begin their own company. The inspiration came from another former Microsoft employee named Michael Abrash. Abrash departed Microsoft to assist in creating the video game Quake at ID Software. In 1996, Newell and Harrington signed an LLC contract and founded the private company, Valve Corporation. Valve started off as purely a video game development company. By 1998, Valve had completed their first game titled Half-Life. Half-Life won over 50 game of the year awards and is considered one of...
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...To fully understand the importance of video games you need to take a look at all angles. Video games have been around for years and have impacted us more than you can imagine. From the very first prototype, to the futuristic simulations we have today, video games have changed the world as we know it. The video game industry is at an all time high. Video games are no longer a form of entertainment for few, but a world-wide phenomenon for people of all ages joining in on the fun. Consoles have a very long history; from the very start passionate people have been hard at work to make the industry what it is today. There are also guidelines that all video game companies must abide by as well, so it’s not all fun and games. A video game is defined as a game that involves direct input from a user to generate visual feedback on a device. The systems used to play video games are commonly known as platforms. These devices range from home consoles such as the PlayStation 3, Xbox 360, Wii to the personal computer, and all the way to the arcade system, where the video game was born. Video games were first made as a form of entertainment but have since evolved into a worldwide cult following. They are now used for entertainment, learning tools, and even training. The video game industry was first introduced as a commercial entertainment medium in 1971. This is where it all started. After the collapse of video games in 1983, there was a rebirth 2 years later which set in motion the events...
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...months or so, a journalist reports on impending trouble for Apple Computer. Part of the reason for this negative press is that its main competitor has a 95% market share and billions more in cash. By any other standards, Apple would be judged to be an astonishing success, but a bigger question remains: Why is the Apple market share so small when it has a superior product? Blaming Microsoft for the 'ills' of Apple really misses the point. Both companies were formed early in the computer age, both had product, innovation and opportunity at a critical time, but their history is vastly different. Apple's small market share must be the result of its business model. While the business model has failed the aspirations of the Macintosh Revolution, there is a New Revolution. The Macintosh has given birth to OS X and the Digital Age. Structure of Current Business Model The current Apple business model follows three broad industry categories: Software Engineering, Hardware Manufacturing, and Retail. In essence, Apple is a conglomeration of three successful but completely different company types: Microsoft, Dell and The Gap. It is...
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