Term Paper Proposal: Technological Warfare

In a generation categorized by the constant presence of and access to technology, it is safe to say that much of our economy centers around the world of digital media devices (computers, tablets, cell phones, etc.) and content consumed by those devices. Companies at the forefront of the consumer electronics industry like Amazon.com and Apple, Inc. are prime examples of how successful business models and effective marketing strategies can lead businesses through the maze of uncertainties in an industry characterized by its ever-changing nature.  In my paper, I will analyze the business strategies of Amazon.com and Apple, Inc. and show how they attribute to long-term success. As a subset of my broader argument, I will profile the tablet market, and show how these two companies' different approaches to tablet development and sales reflect their overall mission. By examining strategic plans, I will assess what makes or breaks a technology company and what practices can be utilized to secure a long-term footing in the industry.

Bibliography

Carmody, Tim. “Amazon’s Future Is So Much Bigger Than a Tablet.” Wired.com. Condé Nast Digital, 6 Sept. 2011. Web. 17 Nov. 2011.

Carmody focuses on the future of Amazon, discussing its tendency to charge full speed ahead, despite facing criticism from technical analysts. Following its perfection-with-time philosophy, Amazon continues to develop it’s Kindle line and the content pool to back it up, growing stronger and stronger, although not as rapidly as a company like Apple. Carmody predicts not only that the Kindle Fire will be a success, but that Amazon could have a healthy future with prolonged long-term success.

Grossman, Lev. "How Apple Does It. (Cover Story)." Time 166.17 (2005): 66-70. Academic Search Premier. Web. 17 Nov. 2011.

In this article, Grossman profiles Apple at a pivotal point in it’s history—just after the release of the first iPod with video-playing capabilities. The company’s innovation, Grossman writes, is partly a product of its vertical integration, a strategy that, according to Smithian economics, is often inefficient. Its success for Apple lies in the company’s focus on collaboration (everyone works on developing the same product at the same time) and control by the company’s management, which at the time was led by CEO Steve Jobs. Jobs was notorious for pushing the development of products that other people believed would not be successful in the market. Although it is a few years old, this article offers a valuable window into Apple’s central operating method and talks about the success of the iPod, which took Apple to new heights in the market and did for Apple what the Kindle did for Amazon – gave the company a place in history as being the first developer of a certain type of portable electronic device.

Streitfeld, David and Jenna Wortham. “Amazon’s Tablet Leads to Its Store.” NYTimes.com. The New York Times, 28 Sept. 2011. Web. 15 Nov. 2011.

This article has buried within it several pearls of wisdom about Amazon’s long-term development, hitting on more than just the Kindle Fire Appstore, as its title implies. Streitfeld and Wortham reveal that part of Amazon’s business approach is to develop its electronics as “services” with the ultimate goal of using them to sell more of something else – content. For this reason, Amazon can actually take a loss on their devices. This loss for the sake of the consumer aligns with one of the points of Amazon’s four-part strategy, outlined by Ted Treanor in one of my other sources. As a part of their conclusion, Stretfeld and Wortham write: “more than most companies, Amazon thinks in terms of years and decades rather than quarters.”

Topolsky, Joshua. “Nook Tablet, Amazon Kindle Fire ‘mini-tablets’ will shake up market.” WashingtonPost.com. The Washington Post, 9 Nov. 2011. Web. 10 Nov. 2011.

With the release of Amazon’s first tablet e-reader, the Kindle Fire, and the new Barnes & Noble Nook Tablet, Topolsky speculates that “mini-tablets” will have an affect on Apple’s position of dominance in the tablet sector. Topolsky writes that lower prices and better partnerships will result in a revolution of how users think about media content. This article offers an overview of the tablet market, which I will profile in my overall analysis of tech-company business strategies. It can sort of be viewed as a preface to another source, which discusses how Apple and Amazon differ in their company approaches to media content sales.

Treanor, Ted. "Amazon: Love Them? Hate Them? Let’s Follow The Money." Publishing Research Quarterly 26.2 (2010): 119-128. Academic Search Premier. Web. 16 Nov. 2011.

In this article, Ted Treanor examines Amazon.com’s success in becoming an e-commerce industry giant, focusing mainly on the company’s book/media sector, which had an overall profit of $5.96 billion in 2009 (two years after the release of the company’s first Kindle e-reader). He specifically reviews Amazon’s series of acquisitions (18 in book-related fields alone) and how they contribute to Amazon’s push to deliver the best customer-desired content at the lowest prices across the board. Furthermore, Treanor outlines Amazon founder Jeff Bezos’ four-part strategy for the company: customer obsession, inventiveness, long-term thinking, and treating each day as a chance to “start all over again.” Treanor attributes Amazon’s long-term success to its philosophy of customer first, product second and its willingness to sacrifice short-term profit for long-term return.

Wingfield, Nick. “Once Wary, Apple Warms Up to Business Market.” NYTimes.com. The New York Times, 15 Nov. 2011. Web. 17 Nov. 2011.

Steve Jobs, the late chief executive of Apple, Inc. did not have a keen interest in catering his company’s products and services to the business world. However, Wingfield reports, the advent of the iPad and the iPhone have made Apple more of a business-friendly company, with 92 percent of Fortune 500 companies buying and distributing iPads and 93 percent doing the same with iPhones. Wingfield attributes some of this success to consumerization, a pattern in which companies are becoming more receptive to the use of “consumer technology like social media.” Wingfield’s analysis suggests that Apple’s long-term strategy may be shifting somewhat. It is uncertain what the outcome of this shift will be, but it will have an affect on Apple’s future market share.

Growing Up Technological: The Economy of Electronics Markets

I have a confession to make: I am one of those stereotypical suckers for new technologically-advanced portable devices. Despite the fact that I try my hardest not to be allured by Apple's latest iPod or iPad release or Amazon's newest Kindle design, I am inevitably intrigued by the "latest and greatest" tablet or e-reader every single time. Guilty, I know. But, having grown up in the generation of technology, where the Internet is an entitlement and having a cell phone by age 7 is the norm, can you really blame me?

I read a couple of really interesting articles in The Washington Post this morning about the most recent wave of tablet releases and their effect on the national "electronics market."  They got me thinking about how truly fascinating the economics of the electronics industry is and I started asking myself:

• To what extent does competition help or hurt the electronics industry?
• What does it take to change the dynamic within the electronics industry?
• What keeps consumers going back for more?

Competition is the name of the game in a free market economy; it is desired in nearly every market to bring prices down and provide consumers with more options. Case in point: the entire point of airline deregulation (which I researched for my second essay) was to minimize barriers to entry so that more competitors could be introduced into the market and drive fares down. On the surface, it would appear that competition would be both desirable and helpful (as it is in most markets) in the electronics market; however, when you consider that Apple has held a predominant advantage in the tablet market, despite the fact that the industry is overflowing with other tablets produced by a plethora of other companies, you have to wonder if competition is having its usual effect. Why do people consistently buy more iPads than tablets produced by Apple's competitors? Apple is an incredibly trendy company well-known for the innovativeness, quality, and high-performance of its products and, yes, this must play a big factor in people's decisions about who to buy from. But Apple should not be defying competition's "invisible hand" and it appears to be doing exactly that. My theory is that, to some extent, competition hurts electronic markets, because the more choices that are introduced and the more similar they are to one another, the more people are inclined to "just go" with the one made by the most "popular" company. Sort of a "well, if they all do the same thing, then it doesn't matter where I buy mine from" mentality that a dominant company like Apple benefits from greatly.

That could be changing, though, and this brings me to my second question. The articles I read this morning postulate that the emerging key to shaking things up on the tablet scene is the introduction of the so-called "mini-tablets," like Amazon's new Kindle Fire and Barnes & Noble's Nook Tablet. According to one article, these devices are capable of doing about 80% of what the iPad is capable of for roughly 50% of the cost, offering lower-spending tablet cravers a more viable option. Suddenly, the devices being pitted against each other aren't so alike (certainly the differences in hardware and operating systems differ greatly between a device like the Kindle Fire and the iPad). This makes the choice for consumers more difficult and puts price at the forefront once again, reestablishing some competitive balance to the market. It takes something revolutionary, yet still directly competitive with existing products to change the dynamic. Technology writers are predicting that Amazon may have just the revolutionary product needed.

Finally, what keeps consumers going back for more? It is that tantalizing draw that I confessed to being a magnet for at the beginning of my post. The nature of the electronics market is that it is in a state of constant evolution; each new product has only a fleeting moment in the spotlight before it is out-shined by a newer, even better model. The industry benefits greatly from a media advertising culture that tells us we have to own the best or else we are behind the times. To upgrade your products is the only way to stay ahead. That's the true for the developers of these products; why shouldn't it be true for consumers as well?

Wow, this post ended up being longer than I intended, so I'll wrap it up. But I think it would be really interesting to look more into the electronic market phenomenon by examining some numbers from economists. How obsessed are we? What percentage of our economy is dependent upon the success of these sales? What effect does the introduction of new products have on the behind-the scenes folks, such as software writers? All interesting questions that would be fun to answer at a later date. For now, I think I will go check out the Kindle Fire...

Here are the two WP articles. This one is about mini-tablets shaking up the market:

http://www.washingtonpost.com/business/technology/nook-tablet-amazon-kindle-fire-mini-tablets-will-shake-up-market/2011/11/09/gIQAjK5d6M_story.html?hpid=z5

And this one is more of a profile on the Kindle Fire, to give you some perspective on how it will compete with iPad:

http://www.washingtonpost.com/business/economy/amazons-kindle-fire-sets-the-stage-for-major-disrpution-in-tablet-space/2011/09/28/gIQAgotC5K_story.html

Mow the Grass or Put Out the House Fire?

To make up for my struggle to complete everything I needed to at the end of last week (for those of you who didn't notice, I did not have my usual Thursday / Friday post), I decided to include a "bonus" post this week. Pretty much everything I have been following in the realm of economics over the past week and a half has had to do with budget deficits and national debt; for my third paper, I researched and wrote about the significance of budget deficits in determining the overall economic stability of the United States and, as all of you know, our recent class discussions have centered around the ongoing debt crisis in Greece.

Continuing in that vein and fresh off of my research endeavors, I thought some of you might be interested in what the actual significance of deficits in the US is. Additionally, you might be able to use some of the information to draw comparisons to Greece. So...a quick overview: there are two dominant sides in the budget deficit debate. One side, the more conservative, harps on large deficit statistics, strongly advocates for a balanced budget, and fears leaving a legacy of debt to the future (our) generation. The more liberal side views deficits as a secondary indicator of progress, claiming that they take a backseat to more pertinent economic issues, such as high unemployment, foreclosures, and elevated personal indebtedness. Dean Baker wrote that focusing on the deficit projections for the future is like fussing over the yard not being mown when the house is on fire.

What conclusions can we draw (and I know I only gave you a tiny bit of background, but I will link some articles you can read if you are interested)? Basically, the US can still afford to take on debt and not have its economic stability suffer. Deficits are not irrelevant and they shouldn't be left unchecked. But they should also not be viewed out of context. When you consider the broader economic needs we are still facing because of the 2008 crisis, I tend to side with the liberals and say "let's focus on fixing our economy, then worry about cutting down the deficit." Because a strong economy will enable us to do that more efficiently. A strong economy will benefit everyone!

For those of you have been intrigued by my ramblings and wish to read more, here is a great overview about the debt ceiling/deficit debate/debt issues, etc. from The New York Times:

http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?scp=1&sq=budget%20deficits&st=cse

And here is a great article from Dean Baker that I used for my paper (really fun read!):

http://www.huffingtonpost.com/dean-baker/budget-deficits-and-blow_b_179261.html

Happy reading! Feel free to comment and ask questions. I will follow-up in my post at the end of the week.