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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Peter Sherman who wrote (7903)	10/8/1999 6:56:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 54805

Xerox was a "Marketing" driven machine. Their products were mediocre @ best. Ruffian

To: Peter Sherman who wrote (7903)	10/8/1999 8:36:00 PM
From: LindyBill	Read Replies (1) \| Respond to of 54805

They only had the US rights. The world rights were sold, in the '40's, to raise money. They were sued by the DOJ and forced to license the product to all who wanted it, and show them how to build it! They also missed the desk top copier and got creamed by Japan.

To: Peter Sherman who wrote (7903)	10/8/1999 9:49:00 PM
From: James Sinclair	Read Replies (3) \| Respond to of 54805

could anyone take a shot at this? - it is 1939 in Astoria, Queens - everyone is using carbon paper to make copies, but Chester Carlsen has an idea and ends up with the Haloid corp which begets XRX - do a G and K analysis -- what went wrong?? -- wasn't the early XRX a gorilla? - any implications for 1999 ?? Here's one explanation from a book I'm currently reading: As another example, Xerox, up through the mid-1970s, enjoyed a virtual monopoly on plain paper copiers. Xerox did not sell its machines, it leased them and earned revenues on every copy made on these machines. Sales and profits from leasing machines, and those of supporting items like paper and toner, were large and growing. But customers, apart from concern about high copying costs, for which no ready alternative was available, were disgruntled about the high breakdown rates and malfunctions of these expensive machines. Rather than redesign the machines so that they would break down less frequently, Xerox executives saw an opportunity to enhance their financial results even further. They permitted direct purchase of their machines, and then established an extensive field service force as a separate profit center, to repair broken machines at customer locations. Given the demand for its services, this division soon was a substantial contributor to Xerox's profit growth. Furthermore, since no output could be produced while waiting for the service person, companies bought additional machines as backups, so sales and profits grew even higher. Thus, all the financial indicators - sales and profit growth, return on investment - were signaling a highly successful strategy. But customers were still unhappy and surly. They did not want their supplier to excel at having a superb field service force. They wanted cost-efficient machines that did not break down. When Japanese and American entrants were eventually able to offer machines that produced comparable or even better quality copies, that did not break down, and that were lower priced, they were embraced by Xerox's dissatisified and disloyal customers. Xerox, one of the most successful U.S. companies from 1955 to 1975 almost failed. -- The Balanced Scorecard, R.S. Kaplan and D.P. Norten, pg. 23. Sounds to me as though Xerox's gorilla status allowed them to stay successful for a long time even though they weren't really addressing the needs of their customers. When their proprietary advantages finally ran out, their customers couldn't wait to jump to the new alternative. So I guess the question for 1999 then becomes are there any current gorillas that are viewed so negatively by their customers that the customers will welcome an alternate choice if one were available?

To: Peter Sherman who wrote (7903)	10/10/1999 8:37:00 AM
From: John Stichnoth	Respond to of 54805

Re: it is 1939 in Astoria, Queens - everyone is using carbon paper to make copies Xerox was absolutely a gorilla--dominant market position with a discontinuous innovation supported by intellectual property patents. Several GG thoughts: 1. They got fat, dumb and happy: Even gorillas have to be paranoid to survive. They've got room to mess around and make more mistakes than non-gorillas, but they can't do that forever. 2. Intellectual property: They failed to build on their early advantage. Partly by sluggishness, and partly from a more aggressive anti-trust section in the DOJ, they did not protect and build on their early patents. The Japanese competitors were allowed in. Interestingly, however, note that Xerox remains in charge (although not exclusively) of their original key market--larger copiers. They just failed to extend it to the desktop, etc. 3. The Value Chain (aka Network effect)--Xerox failed to create one. (In the 70's of course, this was not recognized as being valuable.) There was not a chaine of interested parties, eg., suppliers or customers, who felt a vested interest in Xerox's technology. The copier didn't interact with other machines. Contrast this with HWP's printers, for instance. HWP made sure that there printers worked with msft, and once hwp had established their preeminence, msft has always made sure that later windows releases wouldn't screw up hwp machines that were out there. 4. Discontinuous innovation--They've been end-run by the desktop printer business. And that will happen further with multi-purpose machines getting cheaper and faster. (QUESTION: Who makes the chip that will enable this discontinuous innovation? Anyone?) Best, JS