Tag Archives: Microsoft

Cloud, Sofas & Economies of Scale

gotcouchAdobe recently announced its moving all its “boxed” software to the cloud under a subscription service. Some analysts claim that this is due to changing customer tastes. However, there is a stronger underlying reason. It’s to exploit economies of scale via the cloud, reduce costs and increase direct margins from product delivery. The decision might seem risky but it makes absolute sense. The only other facet of concern might be when reporting revenues. GAAP rules mean that Adobe will have to change from transaction based revenue – i.e. one time revenues need to be booked gradually. This deference in revenues will mean depressed earnings when the switchover happens.
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Judo Business Strategy

judoI’ve been exposed to various business strategies employed by big businesses. They range from head-on battles like price wars to buy outs and hiring the competitors’ management teams. While these strategies might work for incumbents, a new player entering an established market cannot opt for any of the battles mentioned above – quite simply they just don’t have the financial clout to do so. However, there is a way the smaller players can make a dent and create market share for themselves – by employing the Judo strategy.

What is the Judo strategy? In a nutshell it uses the incumbents’ size and position against itself to carve out a niche for itself. This can be done by creating a new value curve, finding a blue ocean all while being nimble and agile.  By operating “under the radar” you can quite easily go unnoticed, lap up market share before the behemoths of the industry realize what happened. So how does it work?
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