Rockmelt.com was started by the founder of Netscape about a 1 year ago. This website allows users to do social browsing. Is this the next level of social media growth? I’ve provided some links for you to read and review to become familiar. I’d love to read your thoughts and exchange dialogue.
Do you think Rockmelt could be disruptive to yahoo.com, google.com and Bing.com?
In launching Amazon Web Services (AWS), Amazon was a first-mover in providing a platform for “cloud” services,” and introduced a new value proposition that reshaped the traditional large storage market. AWS provided reliable, scalable, inexpensive storage and or computing capabilities. It also allowed companies to get to market faster than they otherwise would because they were not delayed by infrastructure development and implementation. The significant benefit of AWS was that it is very easy to use and provided instant capacity. In addition, usage of AWS considerably reduced costs for the client because it eliminated the upfront capital expenditures on servers and datacenters. This savings in costs permitted companies to invest their capital on the features and personnel that differentiates their product or services rather than on their information system. These were all benefits that the traditional storage market could not provide. Therefore, AWS was, in essence, a disruptive innovation for the traditional large storage industry.
The large storage market was highly competitive and dominated by several incumbents such as Network Appliance, Inc., EMC Corporation, IBM, HP, Sun and Dell Computer Corporation. However, very few of these large corporations provided the type of pay-as-you-go online storage service provided by Amazon. Developers were attracted to the pay-as-you-go pricing model because it provided customized flexibility without considerable costs. This served as a significant competitive advantage for Amazon, as other companies providing substitutes for Amazon’s web-based services did not have as attractive pricing models as Amazon had developed.
There was also significant value in Amazon’s ability to deliver its services well. Amazon had invested heavily in developing the software required to run its traditional consumer business, and therefore had the unique skill set be a leader in providing web-based technology services to businesses. Amazon translated its software competency and created a new business opportunity by using its existing infrastructure built for its traditional consumer business to support AWS requirements. This allowed the company to provide web-based services quickly, efficiently, and at a low cost.
The catalyst for Amazon to create a broader developer business was the positive response to its release of product data in a developer-friendly format that could be manipulated directly by Amazon’s third-party affiliates. It saw the opportunity to lead the movement toward “‘cloud computing’ – the provision of Internet-based information technology services.” While other major technology companies were beginning to develop similar technologies, Amazon was essentially dictating the future of the computing environment. It had “technological competence, [the] ability to operate reliable and scalable services cost-effectively, first-mover advantage in this nascent space, and [the] ability to execute quickly positioned AWS well.” As such, “Amazon was at the front end of a broader move by other Internet giants – including Google, eBay, Inc., Yahoo!, and Microsoft – to host Web-based services for consumers and businesses and remain omnipresent during the next wave of the Web’s development.” In doing so, Amazon pushed the frontier in the technological space.
Therefore, while AWS was very different from Amazon’s traditional consumer business, the company’s launch of infrastructure web-based services was significant in the shift toward open-source technology. The company is changing the traditional market storage industry landscape and dictating the future of the computing environment.
While Amazon’s strategy ultimately ended up being disruptive, it doesn’t appear as if the company set out in that direction. Amazon was primarily focused on building the best possible infrastructure for its online retail service so that it could provide a high-quality experience to consumers and expand the scale of its offerings to third-party affiliates to increase Amazon’s sales. The company’s strategy focused on fast and sustainable long-term growth, even at the expense of profitability. As a result, the company made hefty investments in technology that enabled it to provide services that met its business growth criteria of providing scalable, highly differentiated offerings that addressed an underserved market while generating significant returns. The technological infrastructure coupled with Amazon’s first-mover advantage earned the company a leadership position in cloud computing.
Amazon organically grew and established itself as a technology company by identifying its own internal challenges, building sustainable and scalable solutions, and having the ingenuity to package those solutions to others on a massive scale, at an inexpensive rate. Upon the realization that many other companies were also spending a significant amount of time and money to build their own infrastructure, Amazon saw an opportunity to capitalize on the significant technological investments and expertise it developed and began to offer clients storage, computing and web-based technology services, while sticking to its brand commitment of offering services at reasonable prices. By involving developers in the process and allowing them to customize their individual offerings, the company unwittingly created a network of resources that provided feedback, guidance and the skills to implement innovative offerings that Amazon could then share with other partners. Amazon’s partners were building commercial applications from scratch, and the company was able to then offer these applications to other clients, creating a superior end-user experience.
Once again, by following the company’s core business strategy, Amazon was introduced to a new concept – how can the company apply the knowledge and experience it gained on a broader scale at a reasonable price to customers? In 2003, the company began its pursuit of using the Internet as an operating system. Less than ten years later, Blue Chip companies such as IBM, Dell and Microsoft are finding themselves in a position of being pressured to offer differentiated cloud computing services, which can potentially cannibalize their traditional operating system businesses, in order to compete with “newcomers” in this space, such as Amazon.
Amazon’s sophisticated infrastructure and demonstrated scalability resulted from the company’s commitment to building a quality foundation that would enable it to offer a superior customer service experience. The company also recognized that by giving its partners flexibility and creative license, the company was reaping the benefits of vast technical experience that was well beyond its own capability. By remaining committed to its core strategy and exercising great flexibility, Amazon organically grew into a massive disrupter.
The four major web services described in the case study offered by Azazom.com were Amazon Simple Storage Services (Amazon S3), Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Database (Amazon SimpleDB), and Amazon Simple Queue Services (Azamon SQS). All four services were designed to be used by software engineers working in companies of all sizes.
Amazon Simple Storage Service is a storage system for the Internet. It was designed to make web-scale computing easier for software developers. The web service provides a basic interface that can be used to store and retrieve data from anywhere on the web. S3 allows software developers the ability to access the same infrastructure Amazon uses to run their global network of web sites.
Amazon Elastic Compute Cloud is a web service that offers resizable computing capacity in the cloud. EC2 was created to make web-scale computing simple for software developers. The interface allows developers the ability to obtain and configure capacity with minimal friction. EC2 offers full control of computing resources to run on Amazon’s proven network. Amazon Elastic Compute Cloud minimizes the time it takes to obtain and boot new server, allowing efficient capacity, as the computing requirements change. EC2 changed the financial side of computing by letting developers pay for what they use. It gives developers the resources they need to build software that have few mistakes. With EC2, there is a high chance of latency.
Amazon Simple Database is a web service that provides real-time look up and querying of controlled data. Software developers can store and query data items via web services requests. SimpleDB works with S3 and ECS2. Programmers can focus on application development without worrying about software maintenance and infrastructure provisioning.
Amazon Simple Queue Service offers a reliable hosted queue for storing messages as they travel between applications. By using Amazon SQS, software developers can transfer data between distributed components of their applications that perform different tasks, without losing data. Amazon SQS makes it easy to build workflows, working in close conjunction with EC2 and the other AWS infrastructure web services. Applications using SQS can run independently, and do not need to be on the same network, running at the same time, or developed with the same technologies.
Amazon Web Services offers companies an infrastructure web services platform in the cloud. Software developers have the flexibility to select whichever development platform or programming model makes the most sense for hard problems to be solved. With AWS, there are no up-front fees or long-term commitments. AWS is the most cost-effective way to deliver applications. It allows programmers the advantage of Amazon.com’s global computing infrastructure that is the backbone of Amazon.com’s retail business and transactional enterprise. AWS has the skills to continue their leadership position in cloud computing while developing a cash flow for Amazon.
Amazon unveiled their entry into the electronic reader market in November of 2007 and caught several industry players by surprise. Their entry into this market impacted several industries.
The publishing industry has been impacted by the Kindle and other e-readers. The Penguin Group, which was made up of three major businesses, Pearson Education (the world’s leading educational publishing company), the FT Group (publishers of financial resources) and the Penguin Group (publishers of fiction, nonfiction and reference) generated 95% of its revenues from the sale of hardcover and paperback books in 2007. However, John Mackinson their CEO noted that e-readers have become mainstream and are a product consumers truly desire. All new Penguin titles are being published in both print and electronic form and the publisher was also digitizing its backlist so as to stay competitive. Other publishing houses will also need to follow this format if they want to remain a player.
Another industry impacted by e-readers is the traditional bookstores or as the case study refers to them as the “brick-and-mortar” book retailers. The case study does point out that Barnes and Noble has continued to grow and remain profitable; other retailers have not been so lucky. Small book shops cannot compete with the large retailers and the success Amazon.com has had in the book market. Large chains have had trouble competing. Borders bookstore has filed for bankruptcy protection and has closed many of their stores.
Two remaining industries that Kindle impacted were existing e-readers and free e-content. At the time of this case, the Sony e-reader was the leader in market share for e-readers. The introduction of the Kindle immediately impacted Sony’s status. The case notes that within a few months of its release, Kindle was ahead of Sony (60% versus 40%) in device sales. Apple and other stereo devices were not impacted by the introduction of Kindle because the devices were designed for music not books.
Google provided free access to uncopyrighted books and scanned a million books into a database to make them accessible for anyone to read. However Google was sued for massive copyright infringement and the Google Library project was brought to a halt. Ultimately Google was responsible for not making an impact in the e-reader market not the Kindle.
Amazon took advantage of its technology and its market share in books in launching the Kindle. The Kindle is the leader of e-readers. It is light weight, compact, user friendly and competitively priced. Amazon will undoubtedly continue to use their expertise in technology to improve upon the Kindle and keep it as the leader in market shares of e-readers.
With the times progressing, the technology is getting faster, cheaper, and adds greater value to our everyday lives. Due to this change, people are reading less and less. Therefore, the sales of books has been on a decline. Amazon noticed this trend, and decided to transform it, by creating Kindle, which is disruptive technology. During one of the interviews, the founder of Amazon was quoted regarding how the Kindle impacts the company’s strategy “This is the most important thing we’ve ever done. It’s so ambitious to take something as highly evolved as the book and improve on it”.
According to the Wikipedia, definition of disruptive change is “innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.” Amazon was able to successfully create a device where the concept wasn’t brand new since earlier E-Readers were available on the market. However, they were able to utilize the new technology to greatly improve the functionality and the overall value- add to the consumer.
The initial E-Reader entered the marketplace in 1998, and was produced by Rocket. However, this E-Reader was not customer friendly, and was very difficult to locate books for this technology since the options were limited. The second wave of E-Readers followed with the introduction of Sony’s device. It was more attractive, then the Rocket, lighter, and had a much greater selection of titles to choose from. However, the functionality of it was still flawed because users had to first download the books onto their PCs, and then transfer them onto Sony’s unit, thus needing an intermediary device.
Amazon has a keen eye for new marketplace. Amazon was founded in 1994 as an online book retailer, but gradually expanded their product lines and services as the company grew. Amazon strategically drove to keep their prices low, and accomplished that by driving very hard bargains with their vendors. They punished publishers by removing some of the titles as new books, and this would create pressure on the publishers, and most of the time resulted in them giving in to Amazon’s demand.
When the Kindle was created by Amazon, it was capitalized on the recent technological innovations, by making the object small, simple to use, and cost efficient. The device also had a build in wireless technology, thus making it simple to purchase books, periodicals, and other products for the unit. Amazon saw that if they were able to offer a more user friendly device to the public, the demand will increase for the product. However, even they were surprised of the demand requested by the consumers. Because of the advanced wireless technology, and the buying power of Amazon, the company was able to create a product to revolutionize the industry and far exceed the earlier competitors.
In the case study “We Googled You”, the hiring manager must take a pragmatic approach to the situation. The reality is that it is not difficult to uncover online information that could call a candidate into question. Fred needs to sit down with the HR professional, gaining agreement to bring Mimi back into the office to discuss the situation. This is a solid first step to understanding Mimi’s current position, and will give Fred the benefit of seeing how Mimi handles a difficult situation. If Mimi’s position hasn’t changed, then Fred must consider this in assessing her viability as a candidate for the position. If her views have changed and Fred feels she is a finalist candidate for the position, Mimi will have the opportunity to update her position in online forums, to avoid negative press that may arise if she is named to the position. There are very likely many other well-qualified candidates for the position; Fred needs to consider them as well – even if only as a point of reference for assessing Mimi’s candidacy. Fred needs to tap HR for support in vetting those candidates and bringing them in for interviews. If Hathaway Jones wants to meet with success in their flagship store in China, Fred needs to offer the position to most qualified candidate, instead of ‘settling’ for the candidate with the best connections.
John Palfrey, Jr.
There is no reason to fear bringing Mimi in based on the results of a Google search based on the legal advice of Palfrey. An issue would arise only if Hathaway Jones unfairly discriminated against Mimi. I agree with Palfrey’s thoughts – hiring standards may have to be reassessed; otherwise, companies may lose out on strong candidates by focusing too much on an individual’s online presence, without checks and balances. Bringing Mimi in to offer her perspective is the right first step in assessing the situation and its impact on her candidacy. It is important not to rushing to judgment.
Joerres brings up several highly relevant points – although most of them do not relate to the online information found by the HR VP. To me, the two most concerning are 1) the point relating to Mimi’s ability to work within the Chinese culture effectively and 2) that former employers describe her as brash and opinionated. As a hiring manager, both would cause concern. Joerres’ suggestion that potential candidates do their own online search is a relevant recommendation appropriate to any situation.
Boyd brings the youthful perspective to the case, with the idea that companies will lose out on the brightest minds of the generation unless they are willing to take risks in hiring individuals with well-publicized online personalities. While this may be true to an extent, that idea should be taken with a measure of perspective. Given two similarly qualified candidates in a challenging job market, the job will go to the candidate without the questionable online background. It is important to bring up ques-tionable online background information available, proactively addressing it with a potential employer.
The fact that the online articles found in newspapers are difficult to ‘remove’ from the internet is cause for concern, according to Fertik. In this situation, best bet is to handle the situation in online forums, as recommended by Fertik.
In concert with most businesses, banks require IT just to stay competitive. Eschewing the functionalities and efficiencies that it makes possible would render them incapable of offering the sine qua non of customer service, not to mention the competent performance of their other financial dealings. However, as essential at IT is to their operation, it is not their core business but the back room infrastructure on which it functions. The capital expenditure required to purchase and maintain the hardware and software necessary for a bank’s purposes, not to mention the employees to staff this department, is significant. Furthermore, since IT has generally raised the bar for all businesses, it does not in itself create a competitive advantage for any one company. However, until Amazon and others offered “cloud service”, a business had no choice but to bite the bullet and open its wallet to remain in the game.
Amazon’s EC2 and S3 services effectively enable an operation to buy as much, an only as much, computing and storage facilities as it needs. This removes the need for large capital expenditure investments and the haggling and hand wringing which usually precedes them. They make it possible for the financial benefits resulting from the competent use of these tools to roll in and offset their cost in a fraction of the time it would have taken had the hardware been purchased by the bank. With Amazon’s no-upfront cost structure, the bank would only pay for usage, effectively offsetting some of the business risk resulting from a downturn in the company performance versus its projection.
The API (application program interface) is another advantage of this company in that it makes it possible for the bank’s internal developer to get started right away. In addition, the availability of Amazon’s Premium Support program reduces the risk of getting bogged down in technicalities and not meeting completion timeline goals.
Another not inconsequential advantage of the reduction in startup cost is that it makes it possible to go after underserved or less traditional markets. IT generally reduces the marginal cost of doing business but by reducing the upfront cost of implementing the IT functionalities, Amazon’s cloud service reduces the risk of targeting these overshot customers who found banking fees to be onerous given the relative value of their funds. This significant reduction in financial risk opens the way to potentially new and innovative business venues. Given that the US banking market is mature, opening up a novel segment represents a distinct competitive advantage.
On the other side of the equation, security concerns need to be examined. The bank’s proprietary information must be protected, not to mention our customers’ information. There is significant business risk attached to any breach in the integrity of our security. In addition, legislative mandates, such as Sarbanes-Oxley, that govern the storage and confidentiality of our customers’ information need to be addressed. Amazon’s ability to safeguard our stored data will need to be assessed by technical and legal reviewers. In addition, given the bank’s dependence on the functionality of the IT infrastructure, any downtime would be highly detrimental to our business. In this regard, Amazon has an advantage over competitors in this market in that they were first to market and have had more experience and time to work out the kinks. Their 99% uptime guarantee for the S3 service is a testament to the fact that they have experience issues in the past and have learned from them to the point of being able to offer the guarantee.
The other consideration is that some established players have and are entering this market. Some, such as Microsoft and Google, have a greater affinity to the technology field. However, this does not automatically give them an advantage as this is a new service. Furthermore, Amazon has leaned the imperatives and modalities of implementing and maintaining a network out of their business need and may as a consequence have better insight in what is required and the flexibility needed for real world situations. They are likely less enamored with the “science” and more attached with the banal functionality and reliability.
Given the above it is advisable to outsource these essential but non core functions to an outside source. Doing so would leave enough resources to staff a small and very competent and agile internal IT department. This staff could concentrate its energy, time, and acumen on working with the upper management and members of functional areas to find and implement strategic ways of using technology to not just keep up with competition but create competitive advantages for the company.
The Amazon Kindle debuted in November of 2007 to a market ready for a leader to take charge. The rapid adoption rate by the public caused substantial disruption in several industries. Amazon quickly assumed a leadership position in the eReader market, and maintains that position today.
The most immediate industry affected by Amazon’s entrance was the existing eReader market. Companies such as Sony and Apple were immediately impacted by the disruptive entrance of a consumer-friendly competitor. Sony, who had the market leading eReader product at the time, immediately lost market share. Apple, whose products, at the time, were not direct eReader competitors, but rather smaller devices optimized for music, was impacted to a lesser extent.
Providers of free e-content were also affected by the Kindle’s launch. Google, for example, had a business model that relied on visits to its websites (and associated eMarketing sales) as opposed to sales of eBooks. Its ambitious Google Library project has been mired in legal issues for years. If it is ultimately successful, it could cause severe disruption in the market again (it very recently hit yet another legal hurdle). Meanwhile, Kindle’s sales continued to rise as the market for immediate access to electronic books grew.
Educational publishers, such as Penguin, whose traditional business model relied on sales of hardcover and paperback books, have had to deal with a changing marketplace. While not yet (at the time of the case) heavily disrupted by the advancing eReader market, it is certain to have a long-term and permanent effect on the way these traditional publishers approach the market. As the case study points out “All new Penguin titles were being published in both print and electronic form and the publisher was also digitizing its backlist.” Other publishers would do well to follow this trend if they have not already begun doing so.
Undoubtedly the most heavily impacted industry has been, and will continue to be, the “brick-and-mortar” book retailers. Large chains such as Barnes & Noble may be able to adapt and continue to grow and remain profitable. In order to do so, they will have to compete directly with Amazon and other eReader players. While the case makes note of Barnes & Noble’s increasing revenue, it does not specifically mention its concurrently declining margins. The bookseller’s Operating Income and Net Income both declined as Revenue increased. Similarly, small retailers and independent bookstores have been heavily impacted by the growth of the eReader market. These smaller organizations do not have the ability to compete in the eReader business. While bibliophiles (like myself) will continue to frequent these establishments, they will find continually declining revenue and profitability as the eReader market continues its growth and mainstream acceptance.
The Harvard Business School case study on Amazon Web Services (AWS) by Huckman, Pisano, and Kind, outlines Amazon’s expansion into selling “cloud” services. In 2002, 8 years after Amazon appeared as an online retail bookstore, the company started exposing product data in a “developer-friendly” format to its affiliates via an application program interface (API). The resulting positive response exceeded expectations and led Amazon executives to recognize a market for renting their highly reliable and scalable technical infrastructure to developers in the form of pay-as-you-go web services. By 2008, Amazon had introduced 12 services, including four core offerings described as “Infrastructure Web Services”: Elastic Compute Cloud (EC2), Simple Storage Service (S3), Simple DB, and Simple Queue Service (SQS). While the move into cloud computing was an unexpected and bold step by Amazon that surprised the application hosting industry, was AWS a disruptive strategy or a new business model?
Clayton Christensen describes a disruptive technology as “changes that toppled industry’s leaders.” While the idea of leveraging existing assets to create a new business opportunity and gain a competitive advantage was a unique concept and industry differentiator for Amazon, it was not disruptive by definition. Incumbent leaders on the server and computing side like IBM, Sun, and HP all had sophisticated back-ends and application frameworks similar to Amazon and each were starting to develop initiatives to provide infrastructure and software solutions in the cloud. In addition, many large corporations such as Network Appliance, EMC, and Dell already offered online storage capabilities comparable to S3, albeit few provided a similar pay-as-you-go model. AWS was also in front of the other Internet giants, but not by much as each major player already had a mature web hosting business and was starting to develop web service offerings. Microsoft introduced two families of web services in 2005: Windows Live, a suite of consumer software services, and Office Live, a similar range of services targeted to small business. Salesforce.com established force.com in 2007, a platform for developers to create business applications, and Google introduced App Engine in 2008, which was expected to evolve and compete directly with AWS.
Amazon first considered creating a broader developer-oriented business when the company realized it was spending “…70 percent of its time building and maintaining the back-end technology ‘muck’ that did not differentiate Amazon from its competitors.” The company brilliantly identified the right new business model at the right time and Andy Jassy’s foresight and vision gained Amazon the first-mover advantage in the developer business. The company, however, did not redefine the back-end infrastructure technology supporting their services nor did they introduce a pioneering approach to data center management that significantly reduced overhead costs and destabilized competition. Amazon’s strategy introduced nothing that neither “toppled” the industry leaders nor prevented them from responding relatively quickly in offering their technology in the same manner as Amazon.
While Amazon‘s cloud computing and web services offering is rich, encompassing, and ahead of its competition, AWS is a new business model positioned to reduce costs and increase free cash flows through better asset utilization. It will be interesting to see the impact true technology companies like IBM, Google, and Microsoft have on AWS as their web services solutions mature. What if AWS cannot maintain the volumes needed to offset their costs? Does Amazon’s move away from their core business and heavy investment in technology leave them inflexible and vulnerable to the strategy of a new online bookstore that utilizes cloud computing in a disruptive way to reduce costs and sell books for less?