Amazon was once viewed askance by cynics. They licked their chops over the firm’s failure to make money. They thus missed the financial significance of its ‘business model’.
The convenience, speed and pricing advantages of selling Amazon’s books online easily outweighed the traditional methods of marketing. Founder-CEO Jeff Bezos was convinced that the negatives – the gap between Amazon’s costs and its revenues – would be gradually closed as the marketing proposition, delivering higher value at a lower price, won more and more converts.
For quite some time, as the online models gathered strength, I used to attack businesspeople with the warning that they faced the most deadly of enemies. The old, time-honoured marketing choice lay between three propositions. First, a premium price yielding higher profits at higher costs than the competition; second, me-too prices that exploited greater efficiencies on the supply side; third, at the bottom, a cut-price platform that relies on inferior production and supply for its viability, but which is inherently weak.
The key words were best, same and worse. But business listeners now had to learn a new word, the most powerful of all – FREE.
Internet users in the new world had quickly discovered that their needs in many markets could be served at zero cost. That way, the new suppliers could swiftly build customer acceptance based entirely on the relative success of a literally priceless marketing platform.
The first Big Bang was delivered by an unknown start-up named Netscape. The browser innovators whose non-paying users enjoyed their services for free never found the answer to the problem of Priceless Profit except what can be called a final solution: Netscape was sold to AOL for .2 billion in 1999. The pioneers had been defeated by Bill Gates of Microsoft, whose bundling of its browser with other ‘FREE’ necessities pulled the carpet away from beneath Netscape’s feet.
That was easy though costly to do, even for a Bill Gates, whose strengths lay more in the basics of business than in high technology. Those business strengths, however, were fundamental, and still are. The richest man in the world, however, stayed that way by fully recognising the force of the simple process that created his wealth.
Every Midas faces the same difficulty; the success of the new idea inevitably attracts competitors, some new in every respect, others established in other market sectors. But history shows clearly that all good things come to an end, unless you can identify, exploit and lead the next stage of market change. The negative question is clear: What changes must we make to the business model to sustain the company and serve its markets [url=http://www.hx-crusher.com/dryer_machine.html]dryer machine[/url]? The positive question is much harder: How can we build a new company that will be devoted to the new markets and their opportunities?
The flood of new devices has its risks – Apple’s tablet computer has attracted much criticism. Nobody seemed very clear over where the market lay [url=http://www.crusher-machine.com/4.html]cone crusher[/url]. But Apple’s Steve Jobs has changed ‘the World As We Know It’ so radically already – not least with the brilliant iPhone – that he can be forgiven the odd false start. That sounds mildly patronising and somewhat careless, but remember – the world is no longer how we knew it.