Disruptive StrategiesAn analysis of successful innovations

By ErtiDhamoManagement of Information Systems

Fox School of Business, Temple UniversityPhiladelphia PA

Abstract

In this presentation you will see:

How Amazon.com was founded

The initial strategies towards success

The business rationale behind Amazon Web Services

Also:

Nintendo’s struggle with competition in the entertainment industry

Nintendo’s product development strategy

The positions of Nintendo’s products.

The “Walk”

Lets begin to analyze the strategic steps of each company

Foundation of Amazon.com

Originally founded by Jeffrey Bezos in 1995

Company Aim: “Become Earth’s biggest bookstore”

Innovative website

Personalization “One ClickCustomer Reviews

Financial Figures

1997

+ $42 Million Going Public

1997

$147.8 Million Sales

1996

$15.7 Million Sales

Current Value

As of 2009, Deutsche Bank estimated Amazon.com to be worth:

Business Strategy of Amazon

“Grow fast, even at expense of profitability”

Invested heavily in Technology

Web site Innovations, E-Commerce infrastructure

Entrepreneurial Culture

Small teams focusing on long term goals

Notable Expansions

Clothing, digital music, and of course The Kindle

Towards the “Cloud”

Andy Jassy

General idea: “More access to core functions, more revenue for Amazon”

The Associates

Large group of advertisers of Amazon products

Main function: Refer sales to Amazon in exchange for commissions

The Developers

Require more access to Amazon’s core features

Vision: The Internet as an Operating System

Establishment of Major Services

Amazon EC2

Amazon SS3

Amazon SimpleDB

Amazon SQS

• Web service

• Resizable computing

• Storing data

• Retrieving data

• Real time look-up

• Querying of data

• Scalable Computing

• Store messages

Nintendo: An overview

Originally founded in 1889 in Kyoto, Japan.

1991: First gaming platform – Super NES

1996: Launched Nintendo 64

2004: Launched Nintendo DS

November 2006: Launched the highly successful Nintendo Wii

Incentives toward change

Dramatic Social and

Technological changes

Information Technology

Media

Entertainment

Telecommunications

Simple Strategies

Reach out to non-gamers in order to create a bigger market

No boundaries

Age, gender, or gaming experience

Easier games to play

Easy-to-play controller

Real life game scenarios rather than fantasies

Introduction of the Wii

Disruptive Strategies of Nintendo

Development of game titles was done in-house

No third party delays

Development of software in conjunction with hardware requirements and vice versa

“Exergaming” – Physical Exercise along with gaming

Recommended by doctors to patients

WiiWare – Established network where freelance developers can sell their own game titles

Disruptive Innovation: Getting The Point

What consists a disruptive innovation?

Production/Usage costs

Opening of new markets

Ease of manufacturing

Types of disruptive innovations

Low End disruptions

Low cost innovations that benefits low budget customers

New Market disruptions

Introduction of a product that is not used by a large market share

Amazon and Nintendo: Back-to-Back comparison of disruption strategies

Amazon AWS

Low End Disruption

Transition of web hosting into virtual “cloud”

Low cost charges

Instant support when needed

Elasticity of host systems to fit consumer needs

Nintendo Wii

New Market Disruption

Increasing market share

Low cost of manufacturing

Simplicity of use

Incentives for little start-up developers