Chapter 11
Malleable: Business Model Innovation
“DOA (Dead on Arrival)!” exclaimed Jonny Evans in Computerworld about tablet competition as Apple announced version two of its iPad.1 Jason Perlow ran a blog on ZDNet a few weeks later with a picture of the HP TouchPad with the same acronym “DOA” in bold and red.
Perlow said, “The only way the iOS tablet ecosystem can be disrupted by a competitor is to come in substantially cheaper. I've said this as well about Android tablets—without a comparable ecosystem, you have to come in as more value-priced.”2
He was prophetic. Just a few weeks later HP announced it was killing the product and announced a fire sale with some versions going at $99. Later in 2011, Amazon announced its tablet, Fire, at $199. Definitely value-priced!
Samsung and other tablet vendors may disagree—indeed, they should be offended with the DOA designation, but as we have described in other chapters, Apple's efficiency in manufacturing and logistics allows it to compete ruthlessly on price while continuing to be extremely profitable.
It was fascinating to watch, in contrast, when the iPad was introduced, Apple actually managed to convince book publishers to increase e-book pricing beyond the market standard being set by Amazon.
In technology circles, we look for competitive advantage via form/factor and feature/function. Mark Johnson of the consulting firm Innosight (which he co-founded with Clayton Christensen, well known for his work on disruptive technologies) says, ...
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