As I'm sure most are all aware of, Steve Jobs has taken a medical leave of absence for an unknown period of time and for unknown reasons. Here is the email Steve sent to all of Apple's employees:
Team,
At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company.
I have asked Tim Cook to be responsible for all of Apple’s day to day operations. I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011.
I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy.
-Steve
(http://www.businessinsider.com/breaking-steve-jobs-medical-leave-of-absence-2011-1#ixzz1CNJy2TJQ)
The strategic timing of this email is very interesting. On the day that Jobs announced his medical leave of absence, was on January 17th, otherwise known as Martin Luther King Jr. Day. This was very strategic because the U.S. stock markets were not opened on this holiday and to add to the suspense, the very next day Apple reported its first quarterly earnings, which was the highest ever at Apple. This definitely counteracted the mayhem that could have potentially occurred.
"Apple today announced financial results for its first fiscal quarter of 2011, corresponding to the fourth calendar quarter of 2010. For the quarter, Apple posted revenue of $26.74 billion and net quarterly profit of $6 billion, or $6.43 per diluted share, compared to revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, in the year-ago quarter. Gross margin was 38.5 percent, compared to 40.9 percent in the year-ago quarter, and international sales accounted for 62 percent of the quarter's revenue. Apple's quarterly profit and revenue were both company records."
(http://www.macrumors.com/2011/01/18/apple-reports-record-1q-2011-6-billion-profit-on-26-74-billion-in-revenue/)
Nonetheless, most people think that Steve Jobs is Apple, and him leaving means that Apple will not be able to succeed without his leadership. This has been demonstrated when Steve Jobs left the company back in 1985. Not until 1997, when he came back as CEO, did Apple begin to turn into what it is today. Jobs retained Apple's image and with the advent of the iPod, iTouch, iPhone, and MacBooks, it was clear that without his return, Apple would have headed towards disaster.
Now the question remains, is Apple in a position where it can sustain itself and reproduce successful results? In Jim Collin's book, "Good To Great", one of the distinguishing factors that make a company Great as opposed to just Good is the fact that they had Level 5 Leaders. One major characteristic described for a Level 5 Leader was being able to set up successors for success. Hopefully Steve Jobs has learned and has been able to select a successor just as capable and as innovative and bold as Steve Jobs. As of now, Apple's COO, Tim Cook has some hope since he did lead the company's day-to-day operations when Steve Jobs took a medical leave two years ago. Of course Steve Jobs says he will still be "involved in major strategic decisions for the company", but once Steve Jobs finally retires or is in a position where he can't be involved, can Apple succeed?
Friday, January 28, 2011
Friday, January 21, 2011
Movies
I recall one of my friends asking for a suggestion for what movie to watch in regards to one of his class assignments. I mentioned one that I had recently seen, "Sherlock Holmes". He asked if he could borrow it, and I said in return that I actually didn't own the movie but told him that he could rentit at Redbox. He responded back, and said "what's a Redbox?" This was last year back in November 2010. I totally forgot that he barely got back from an LDS mission in August.
As I attempted to describe this Redbox phenomena, I said that it was a big machine that looked like a red box and was filled with DVDs that you could pay $1/night to rent a DVD. Usually you can see these Redboxes in most grocery stores and outside of gas stations and fast food restaurants. His response was very amusing, he was amazed and thought we were beginning to live a high-tech futuristic world. To be honest actually, I was surprised that he hadn't used one yet. Anyways, the next day I took him to one of these and showed him. He was quite fascinated and liked the idea.
So how did Redbox gain momentum and enter the movie-renting business against Blockbuster and Netflix? I want to use a 5-step process to analyze this successful entry into the market.
First, identify the specific barriers to entry into the industry.
I would say two of the biggest barriers are access/location and price. Since at that time, Blockbuster and Netflix were very worldwide and had both implemented mail-in and online-enabled plans. People want to be able to very newly-released DVD's for a reasonably price.
Second, develop a strategy to overcome/eliminate each barrier to entry.
Redbox wanted to be extremely accessible and found everywhere. Through the innovation of having a little Redbox, they could essentially be placed anywhere and be accessed at ANY time. They also decided to be extremely low price. From my apartment, there is a Redbox literally within a minute of driving.
Third, leverage or assemble complementary assets (through alliance or acquisition).
Besides having the hugest asset of their idea of having a red box filled with DVDs enabled through technology, they also aligned themselves with grocery stores, gas stations, fast-food restaurants, basically places that can be found on every corner.
Fourth, create niche markets with differentiated products (minor product innovation).
DVD's are able to be returned to ANY Redbox location, which is not the case for Blockbuster (if you rent it at 3300 s. 2300 e. you have to return it there otherwise the system can't track it). Another innovation was a barcode engraved on the DVD which allowed for quick and automated transaction.
Fifth, reconfigure value chain activities (process innovation).
They also used technology to accomplish this, by having no employees, no physical store, etc. People self-serve themselves and use a credit card to track and manage transactions.
One thing that Redbox has to deal with now, is the new problem of 28 days delay in new releases.
As one critic said in commentary to an article posted on the WSJ,
"One of the key drivers for RedBox success was the immediacy of new feature films coupled with price and convenience, which increased frequency and loyalty of viewers. Movie lovers want to watch as many movies as they want at an accessible price during a short period of the release. 28 days late is like arriving to a party when everyone has left the building. No wonder, I was feeling frustrated. Movie studios should learn from the music industry and Apple. They should listen to the market; RedBox and NetFlix success are the target audience shouting out loud that something is not working and that their needs are not met. I wonder if $5 video-on-demand will satisfy this crowd, when before they could want 5 movies for the same price instead of one. Time Warner's Warner Bros should embrace a new business model and partner with RedBox or similar channel to satisfy customer needs. Video-on-demand and DVD rental are not exclusive, they are complementary." -Javier von-Westphalen
What should or can Redbox do to overcome this obstacle that is very much hurting their profitability?
As I attempted to describe this Redbox phenomena, I said that it was a big machine that looked like a red box and was filled with DVDs that you could pay $1/night to rent a DVD. Usually you can see these Redboxes in most grocery stores and outside of gas stations and fast food restaurants. His response was very amusing, he was amazed and thought we were beginning to live a high-tech futuristic world. To be honest actually, I was surprised that he hadn't used one yet. Anyways, the next day I took him to one of these and showed him. He was quite fascinated and liked the idea.
So how did Redbox gain momentum and enter the movie-renting business against Blockbuster and Netflix? I want to use a 5-step process to analyze this successful entry into the market.
First, identify the specific barriers to entry into the industry.
I would say two of the biggest barriers are access/location and price. Since at that time, Blockbuster and Netflix were very worldwide and had both implemented mail-in and online-enabled plans. People want to be able to very newly-released DVD's for a reasonably price.
Second, develop a strategy to overcome/eliminate each barrier to entry.
Redbox wanted to be extremely accessible and found everywhere. Through the innovation of having a little Redbox, they could essentially be placed anywhere and be accessed at ANY time. They also decided to be extremely low price. From my apartment, there is a Redbox literally within a minute of driving.
Third, leverage or assemble complementary assets (through alliance or acquisition).
Besides having the hugest asset of their idea of having a red box filled with DVDs enabled through technology, they also aligned themselves with grocery stores, gas stations, fast-food restaurants, basically places that can be found on every corner.
Fourth, create niche markets with differentiated products (minor product innovation).
DVD's are able to be returned to ANY Redbox location, which is not the case for Blockbuster (if you rent it at 3300 s. 2300 e. you have to return it there otherwise the system can't track it). Another innovation was a barcode engraved on the DVD which allowed for quick and automated transaction.
Fifth, reconfigure value chain activities (process innovation).
They also used technology to accomplish this, by having no employees, no physical store, etc. People self-serve themselves and use a credit card to track and manage transactions.
One thing that Redbox has to deal with now, is the new problem of 28 days delay in new releases.
As one critic said in commentary to an article posted on the WSJ,
"One of the key drivers for RedBox success was the immediacy of new feature films coupled with price and convenience, which increased frequency and loyalty of viewers. Movie lovers want to watch as many movies as they want at an accessible price during a short period of the release. 28 days late is like arriving to a party when everyone has left the building. No wonder, I was feeling frustrated. Movie studios should learn from the music industry and Apple. They should listen to the market; RedBox and NetFlix success are the target audience shouting out loud that something is not working and that their needs are not met. I wonder if $5 video-on-demand will satisfy this crowd, when before they could want 5 movies for the same price instead of one. Time Warner's Warner Bros should embrace a new business model and partner with RedBox or similar channel to satisfy customer needs. Video-on-demand and DVD rental are not exclusive, they are complementary." -Javier von-Westphalen
What should or can Redbox do to overcome this obstacle that is very much hurting their profitability?
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