Is search a winner-take-all business?
At this point, 2009, past the date of this case, it would appear that search is a winner-take-all business. However, the industry has a lot of big names (Microsoft, Yahoo, and AOL) that are most likely not going to take a backseat while Google takes over the market. Competing with Google as a search engine, is not an easy task, but technology and computer engineering maintain continuous growth. I obviously would not now what the next "algorithm" or similar program could be to compete with Google's search engine. There are high barriers to entry in the market, but once a competitively successful framework for search is developed, there are low switching costs to consumers since search engines are free.
On the other hand, Google and the "search" market may end up like the web browser market. Internet Explorer took over the market, it's a free service and the is bundled with Microsoft's operating systems. Now that Google has Google Desktop, Gmail, Blogger, etc. it is easy to become completely dependent on Google as your one and ONLY search engine. It's right at your fingertips for any search you want. The major difference is that search engines are very profitable from their advertising. Web browsers would not attract a lot of competition. It's not a profitable industry (?), but search engines are profitable, so rivals can be expected in the future.
Wednesday, February 25, 2009
NTT DoCoMo, Inc.: Mobile FeliCa
1. Is DoCoMo wise to offer its existing mobile phone rivals access to FeliCa?
DoCoMo offering FeliCa to its mobile phone rivals will create a network effect of users and encourage merchants as well as other possible e-money merchants to adopt the necessary technology to accept FeliCa. The more users there are of FeliCa the more likely merchants and others will be to adopt the necessary technology needed to accept Felica eMoney payments. Credit card processing fees are a major expense for many vendors and decreasing this percentage fee per transaction is a good incentive to adopt FeliCa eMoney payments; and the larger the network of FeliCa users the more enticing the adoption of eMoney FeliCa technology becomes.
If FeliCa can gain a first-mover advantage and have all retail, vendor and other necessary parties adopt to their framework the harder it will be for a competitor to come in and take market share. The grocery store discounts of using FeliCa is a good example of the first mover advantage because the grocery store chain will not likely offer the same deal to a FeliCa competitor. The more partnerships DoCoMo can build similar to the grocery store, the more embedded they will become and the threat of new entrants will decrease. DoCoMo phones will still have the competitive advantage as they are built and designed with the FeliCa capabilities in mind.
With the launch of FeliCa, DoCoMo must be sure to be clear regarding the security risks of using eMoney. They must educate consumers as to the risk and dissimilarities that exist between eMoney and credit cards. This will help consumers to realize the importance of reporting a lost or stolen phone immediately. Consumers can sometimes be lax about a missing credit card because they know they are protected against fraudulent transactions.
Lastly, DoCoMo/Sony may want to consider hiring or building a team of credit analysts as they are entering a market of unknown territory. DoCoMo/Sony must create a supporting back-end to their technologically savvy eMoney application.
DoCoMo offering FeliCa to its mobile phone rivals will create a network effect of users and encourage merchants as well as other possible e-money merchants to adopt the necessary technology to accept FeliCa. The more users there are of FeliCa the more likely merchants and others will be to adopt the necessary technology needed to accept Felica eMoney payments. Credit card processing fees are a major expense for many vendors and decreasing this percentage fee per transaction is a good incentive to adopt FeliCa eMoney payments; and the larger the network of FeliCa users the more enticing the adoption of eMoney FeliCa technology becomes.
If FeliCa can gain a first-mover advantage and have all retail, vendor and other necessary parties adopt to their framework the harder it will be for a competitor to come in and take market share. The grocery store discounts of using FeliCa is a good example of the first mover advantage because the grocery store chain will not likely offer the same deal to a FeliCa competitor. The more partnerships DoCoMo can build similar to the grocery store, the more embedded they will become and the threat of new entrants will decrease. DoCoMo phones will still have the competitive advantage as they are built and designed with the FeliCa capabilities in mind.
With the launch of FeliCa, DoCoMo must be sure to be clear regarding the security risks of using eMoney. They must educate consumers as to the risk and dissimilarities that exist between eMoney and credit cards. This will help consumers to realize the importance of reporting a lost or stolen phone immediately. Consumers can sometimes be lax about a missing credit card because they know they are protected against fraudulent transactions.
Lastly, DoCoMo/Sony may want to consider hiring or building a team of credit analysts as they are entering a market of unknown territory. DoCoMo/Sony must create a supporting back-end to their technologically savvy eMoney application.
Wednesday, February 18, 2009
Electronic Arts in 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?
It appears that online gaming has really taken over the video game world. Not only with the consoles, but on PC's too. In addition, simply playing or competing online using the consoles is only one of the attributes. Wii's and PS3 can also be used to watch video on demand. I also know with the Wii you can simply browse the news online using your handheld device.
I have a Wii, but never use it and I can only imagine what other online attributes are offered. I also can't imagine what the consoles will be used for in the future. Consoles are now online and there is no going back. I thought it was interesting that you can actually talk to the people that you play against. I was curious to know if kids do this and if there are any "predator-type" situations that have occurred, similar to other online predators? It would seem like a hotbed for predator activity.
It appears that online gaming has really taken over the video game world. Not only with the consoles, but on PC's too. In addition, simply playing or competing online using the consoles is only one of the attributes. Wii's and PS3 can also be used to watch video on demand. I also know with the Wii you can simply browse the news online using your handheld device.
I have a Wii, but never use it and I can only imagine what other online attributes are offered. I also can't imagine what the consoles will be used for in the future. Consoles are now online and there is no going back. I thought it was interesting that you can actually talk to the people that you play against. I was curious to know if kids do this and if there are any "predator-type" situations that have occurred, similar to other online predators? It would seem like a hotbed for predator activity.
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?
Netflix obviously had to enter the video on demand market. As with any industry, new technology can cause drastic change in an industry and unless companies are willing to embrace change, they will often times be "left behind." Netfilx realized early that the video on demand market would emerge and have been contemplating and saving $ since 2001. From what I have gathered, Netflix is now offering unlimited on-line viewing for all of it's paid subscribers. I'm not sure what the usage of this service is for Netflix viewers, but it will presumably increase and at somepoint take over the mail-order business.
One of Netflix core assets is its recommendation system. This asset can be highly utilized in the VOD market as it has been in the mail order video market. As long as the pricing they have established is profitable, they are aligning themselves for success.
The key componenet that is going to drive consumers to use VOD will be the capability and ease in which they can connect thier internet to their TV. I know I would not attempt this, but my husband seemed to do it with ease. Thus, as this connection becomes more mainstream (I obviously don't know how), the VOD market will boom. Netflix needs to align themselves with the leader of this technology. Netfilx partnered with the makers of DVD's when it was a new phenomenon. They need to do the same thing with the next best technology of linking computers to TV's. I'm assuming you will not always need to connect your laptop to the back of the television. I might be missing an already existing technology?, but from what I know this would be a good move for Netflix.
Netflix obviously had to enter the video on demand market. As with any industry, new technology can cause drastic change in an industry and unless companies are willing to embrace change, they will often times be "left behind." Netfilx realized early that the video on demand market would emerge and have been contemplating and saving $ since 2001. From what I have gathered, Netflix is now offering unlimited on-line viewing for all of it's paid subscribers. I'm not sure what the usage of this service is for Netflix viewers, but it will presumably increase and at somepoint take over the mail-order business.
One of Netflix core assets is its recommendation system. This asset can be highly utilized in the VOD market as it has been in the mail order video market. As long as the pricing they have established is profitable, they are aligning themselves for success.
The key componenet that is going to drive consumers to use VOD will be the capability and ease in which they can connect thier internet to their TV. I know I would not attempt this, but my husband seemed to do it with ease. Thus, as this connection becomes more mainstream (I obviously don't know how), the VOD market will boom. Netflix needs to align themselves with the leader of this technology. Netfilx partnered with the makers of DVD's when it was a new phenomenon. They need to do the same thing with the next best technology of linking computers to TV's. I'm assuming you will not always need to connect your laptop to the back of the television. I might be missing an already existing technology?, but from what I know this would be a good move for Netflix.
Thursday, February 5, 2009
Peer-to-Peer File Sharing and the Market for Digital Information Goods
Who will win the competitive battle between P2P file sharing networks and iTunes over the long run and why?
According to this case, it seems P2P file sharing networks will take over the market of music "sales." It's understandable that record labels and musicians do not want file sharing at $14.99 a month (as of 2005) for unlimited songs as the most expensive offer. Overall revenue from music sales will and are suffering due to file sharing. However, as with any industry, change is certain.
In this case buyers are creating a stronghold on the industry. Buyers know what is out there as far as services for downloading music and can make an educated decision as to the best option. Since there is most likely not much differentiation between the various music files, buyers will choose the lowest cost option, which is not iTunes or buying a physical CD. The music file sharing sites are withing government regulations at this time so unless this changes, which is a threat to the P2P file sharing industry, they will win the majority of this market.
The competition within this P2P industry will most likely increase and prices will fall even further because barriers to entry appear low (I don't know the start-up details). Unless there is some legal intervention into this industry, P2P file sharing is the future of music downloads.
According to this case, it seems P2P file sharing networks will take over the market of music "sales." It's understandable that record labels and musicians do not want file sharing at $14.99 a month (as of 2005) for unlimited songs as the most expensive offer. Overall revenue from music sales will and are suffering due to file sharing. However, as with any industry, change is certain.
In this case buyers are creating a stronghold on the industry. Buyers know what is out there as far as services for downloading music and can make an educated decision as to the best option. Since there is most likely not much differentiation between the various music files, buyers will choose the lowest cost option, which is not iTunes or buying a physical CD. The music file sharing sites are withing government regulations at this time so unless this changes, which is a threat to the P2P file sharing industry, they will win the majority of this market.
The competition within this P2P industry will most likely increase and prices will fall even further because barriers to entry appear low (I don't know the start-up details). Unless there is some legal intervention into this industry, P2P file sharing is the future of music downloads.
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