Competing with Apple: ‘Great products may not even be necessary’
A Dartmouth strategy professor on why Amazon may succeed and the Androids could fail
“The innovation game is changing,” writes Dartmouth’s Ron Adner in the Harvard Business Review. “Delivering great products is no longer sufficient for success. And as the [Amazon’s Kindle] Fire’s limited memory, ho-hum processor, and lack of camera demonstrate, great products may not even be necessary. Rather, what matters is delivering great solutions.”
The key to success in consumer electronics these days, Adner maintains, is building and maintaining relationships — with consumers and with partners. This is something Apple AAPL and Amazon AMZN understand. The companies turning out Android devices may not.
“In the rush to match the pieces,” he writes, “most of Apple’s rivals have missed the critical connections that draw the entire ecosystem together into a coherent whole.”
Amazon’s business model, of course, is the mirror image of Apple’s, as Adner notes:
Amazon is differentiating itself from Apple in terms of both its footprint and its profit model. Apple captures the bulk of its profits the moment an iPad is sold, while its partners capture value over time as users consume services. In contrast, Amazon’s profits accrue over the lifetime of the customer with every on-platform purchase In this regard, Amazon’s incentives seem more aligned with those of its media partners (“we win together over time”) than Apple’s with its partners (“I win first; you later…maybe”).