Nobody Likes a Bully – Strategic Implications of the Amazon-Hachette e-Book Pricing Dispute

Nobody Likes a Bully – Strategic Implications of the Amazon-Hachette e-Book Pricing Dispute

No doubt there’s more than meets the eye in the current stare-down between Amazon and book publisher Hachette over e-book pricing. The entire book industry, including all the major publishers, is watching with bated breath to see which side will win because any deal is likely to become the model for e-book pricing going forward. Both sides have their point of view – for example, Amazon is still smarting from having to adopt the Apple-inspired 2012 e-book pricing deal and thus sell some titles at a loss. Now that the company is under serious pressure from Wall Street to finally start generating real profits, CEO Jeff Bezos may refuse to bend and be willing to risk the ire of publishers, authors, and even customers to get his way. Because of its dominant market share, Amazon is running a serious risk of incurring the wrath of the Justice Department for monopolistic practices, and it seems to have forfeited public sympathy to this point. This article studies the specific topic of power – how abuse of it can impact the dynamics of an entire industry, and the strategic and tactical choices facing Amazon today.

Playing the Power Game – The Route to Sustained Success in Tech

Playing the Power Game – The Route to Sustained Success in Tech

Why have companies like Apple, Google, Amazon, Microsoft, IBM, Cisco, Oracle, SAP, Salesforce.com, or VMware been so envied by competitors and partners over the years? And how have they come to command the lion’s share of customers’ business in their main categories? Part of the answer lies in their pursuit of Power balanced with a suitable focus on Performance, the essential corollary to Power as a lever for sustained success. In essence, companies like these have built a powerful franchise in at least one major product category where they dominate, which gives them “gorilla” power. Most companies can only dream of this type of success, largely because most entrepreneurs, CEOs, and management teams find themselves over-stretched by the demands of Performance – managing existing commitments – and thus unable to play for Power. Applying just one of these two levers is not sufficient – it is critical to play for both. Whenever companies neglect one over the other, they are quickly penalized by customers, investors, and/or partners, as we’ll see in this post.

We’re Not Gonna Take It! No to a Comcast Monopoly and Yes to Net Neutrality

We’re Not Gonna Take It! No to a Comcast Monopoly and Yes to Net Neutrality

Two far-reaching and inter-locking decisions are pending in Washington: Approval of the proposed Comcast/Time Warner cable/broadband merger, and a decision on whether or not to maintain the policy of net neutrality. With the stark exception of Netflix whose CEO, Reed Hastings, who has spoken out against the merger, traditional media companies like Disney, Viacom, HBO and Univision and video streaming services like Amazon, Netflix, YouTube, and Hulu have remained disconcertingly silent, apparently intimidated by Comcast’s bullying tactics. As for net neutrality, it is looking increasingly likely that despite attempts by the FCC to soothe consumer concerns, internet broadband will be separated into fast and slow lanes based on differentiated pricing of what has hitherto been a public utility. Where will these controversial issues end up? Will businesses of all sizes as well as consumers have equal access to internet broadband? Or will cable and broadband become the sandbox of one dominant corporation?

The New Tech Bubble – How Ugly Could It Become?

The New Tech Bubble – How Ugly Could It Become?

In light of the recent market correction and increasing chatter about a new tech bubble, how likely are we to suffer a meltdown on the scale of, say, the 2000 dotcom bust? Despite some frothy if not downright gassy valuations, as well as some stubbornly profit-free strategies at notable private and publicly-traded companies, I believe the situation is quite different this time around.

A number of potent and probably irreversible megatrends are underpinning continued growth of consumer and enterprise tech for some years ahead. Nonetheless, while we continue to see some entrepreneurs, VCs, investment bankers, and investors bidding up valuations to laughable levels, or giving some companies a pass on delivering actual ROI in financial terms, we shall not be entirely free from risk.

The Tornado in SaaS B2B – Experiencing the Agony and the Ecstasy

The Tornado in SaaS B2B – Experiencing the Agony and the Ecstasy

Today Tornado winds seem to blowing in SaaS business applications, where Salesforce dominates today, and companies like Workday and NetSuite are also growing rapidly. However, in the past month or so these companies and others like them have been shorted by investors unhappy with their lack of profitability. Interestingly, the Tornado is the one stage of adoption where a growth-at-all-costs landgrab economics approach actually make sense – to a degree. However, CEOs and management teams must demonstrate better commitment to profitability, and communicate their strategies to achieve it much more effectively than they are doing today.

LandGrab Economics: Making Sense of the Facebook-WhatsApp Deal

LandGrab Economics: Making Sense of the Facebook-WhatsApp Deal

The price paid by Facebook for WhatsApp caused widespread puzzlement and criticism from analysts and investors who wondered how on earth the company could conceivably offer $19bn for a company with 450m users but virtually no paying customers. This article describes the “landgrab economics” mindset that caused Mark Zuckerberg to take this step, and leaves readers to judge based on many pros and cons.