It never ceases to amaze me how many companies have tried and failed to beat Apple, Intel and HP, wasting millions of dollars running head on at these now dominant firms. But every company has a weakness. Often you just have to figure out either where that firm’s blind spot is, or where they are simply unwilling to go. AMD, Dell, and Kodak have all learned the hard way that running head on at a dominant company doesn’t work, and all three have recently demonstrated strategies that flank their unbeatable competitors. Success still isn’t certain, but the odds are vastly better than they ever have been that these firms could now make gains that have eluded them before. Let’s cover each strategy.
AMD has only historically beaten Intel when the Santa Clara company stumbled, and it has never stumbled long enough for AMD to sustain a significant lead. This is because Intel is larger, more deeply entrenched, and AMD simply isn’t strong enough to fully displace the company in any major account. For years, AMD had tried to do what Intel does best better, and that never worked. However, this week AMD launched its Llano A Series Fusion processor, which goes where Intel has struggled: graphics performance. Intel’s weakness here has presented an increasing problem for both battery life in notebooks, and visual application performance.
AMD took a huge bet in buying ATI to make this work, and got pounded for making it, but the end result is now a processor ideal for attractively priced laptops with 10-hour battery life and strong graphics performance. Eventually it will make its way into desktops with similar advantages, that position well against Intel PCs for specific high-performance workloads. Suddenly AMD is in the game again. Coupled with a strong line of products from HP, the Sunnyvale underdog has a shot at making a sustained run against Intel. The lesson AMD learned and now exemplifies is attacking the weaknesses rather than the strengths of a dominant competitor. In Intel’s case, that weakness was graphics.
How Dell is outflanking Apple
Dell’s last big run at Apple was with its MP3 player in the US market, and Apple kicked Dell’s butt. But while Apple is unbeatable in the US market, it is far weaker in Europe and Asia (I’m told this is largely because their distributors aren’t very effective and the geographic distances involved limit Apple ability to correct this problem). Part of this weakness is also that Apple designs for the US market, and doesn’t do geography-specific products that may other countries require. Regardless of the cause, it would be silly to bring out an iPad competitor in the US where the company is strong, and we’ve seen a number of Android, and RIM tablets fail in this market.
Dell instead pushed its latest iPad-like tablet into the Chinese market first, and loaded it with software that was specific to China. The company essentially did what Toyota finally learned to do when it moved effectively against Ford and GM in the US market. Dell built a tablet specifically for China. This is a flanking move away from Apple’s core strength, and against two known weaknesses that Apple has. The end result should be far better than if Dell had run against Apple in the US.
How Kodak is cherry picking HP’s customers
HP is nearly as dominant with printers as Apple is with the iPod. A fierce competitor, HP has an unmatched ecosystem for paper and ink and massive retail presence. Companies like Kodak, Lexmark, Xerox, and even IBM have broken on the shores of HP’s dominance, making it the most capable division in what is arguably the most powerful company in the world. Kodak couldn’t run at HP directly, but recognizing that the printer market was a razor-blade-type market where the printers were largely subsidized by the relative high cost of supplies, Kodak moved to break the model and tightly target its offering.
Kodak charges more for its printers, but then sharply discounts their ink and supplies so that power printers find substantial savings by using Kodak products. The firm is reporting strong market-share gains in the most lucrative, high-volume segments as a result, because supplies are what make the money. HP can’t effectively counter without destroying its own revenue model. This is called “cherry picking,” or focusing your effort on the part of the market you want (Apple kind of does this with premium PC buyers against Microsoft). The end result is that Kodak is having some of the greatest success in printers it has ever enjoyed, just by thinking through where HP was most vulnerable and exploiting that vulnerability.
Each of these companies has taken on a very powerful company not known for making mistakes. But by attacking where the company is weak, flanking the company, or cherry picking them, each is (in theory) moving vastly better competitively than they ever have before. There is a lesson here for anyone competing on anything. Learn your opponents’ weaknesses and exploit them, because if they are dominant, attacking them where they are strong is a losing proposition.
The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.