Microsoft changing value chain

I think part of Microsoft DNA is running after Apple in the consumer arena. After copying the window User Interface of the Mac computers 25 years ago, they are currently copying its value chain. I mean Apple integrated value chain. If you think of Microsoft as a software company, you are wrong. It is now a service and device company.

Microsoft value chain

Microsoft value chain

As Apple did they want to control every step of their value chain from content and services to devices.

They have services like skype, skydrive. They aggregate content and provide platforms both software and hardware. And since it is a device maker with Xbox, Surface PCs and tablets, and Mobiles with the recent Nokia acquisition.

What they still miss is some retail presence like apple stores. The danger here for Microsoft is to upset its long standing partnership with PC manufacturers. But can they fight back at Microsoft move in their backyard? The answer seems no. Linux isn’t an alternative in the mass market, neither is Chrome OS from Google or Android. Microsoft has been upset at their tablet attempts with Android. Now PC makers have a few years before Microsoft gets the lead in the PC consumer market. Some are trying to reinvent themselves like Dell who wants to focus on the business segment.

The missing part for Microsoft is Distribution and Retail. Will Microsoft open some flagship store or some corner within existing stores like Darty, Fnac, Saturn, Currys, or PC world ? I bet they will.

Vertical integration seems to be the unstoppable business model, every IT giant is running after including Google and Amazon. Until someone finds a smart and disruptive new business model.


PSP GO is dead (as expected)

I was mentioning 18 months ago my doubts on the PSP Go Strategy.

I thought it was upsetting both retailers and consumers. Retailers couldn’t get the games revenue and the consumer couldn’t buy second hand games.

Sony officially announced the end of the PSP Go’s manufacturing.

Apparently, my analysis was right. Resistance to change was too strong with too few incentives.

Apple next potential acquisitions

As I was describing in a previous post, Apple approach is to build a fully integrated business model from the chip to the application distribution on your device.

If we imagine Apple pursuing this approach in 2011 and beyond what could their next move? With a $50B treasure chest it opens up some nice opportunities.

If they want to move up stream in the value chain, Arm might be the right target. They would then control the microcode and the design of their A4 chips as well as most of the chips outside of Intel x86 architecture. This acquisition would create a real electroshock in the mobile industry to say the least.

If they want to move downstream TomTom might be another right target. They would enter the PND market maybe not the most flourishing one, but still a large one. By buying TomTom they would grab TeleAtlas one of the 2 providers of maps to the industry. The other one, NavTeq beeing the property of Nokia. This would give them a competitive advantage for the iPhone. They would be able to give away a nice navigation service and a bundle it with their obile app engine.

Let’s keep tuned, Apple is due to swallow a big fish in the coming months.

Sony still struggling to push PSP GO ?

Sony seems still to struggle with the sales of its PSP GO. Sony is now offering 10 free games to download for every PSP GO sold. The games offered are not casual games but big franchises like Assasin’s creed, FIFA football, etc.

> the PSP GO promotion

PSP GO promotion
As I was mentioning in an earlier post, this is really difficult to change a business model which has been successful. Second hand games and (unfortunately) piracy are the biggest block stoppers for this change to happen.

Sony should have double thought this evolution by imagining a less aggressive change. One could imagine to be able to transfer one game from one console to the other or to a kiosk that would enable retailers to sell at their own price ‘second hand game licence’. It would have been a smoother transition path and would have helped to keep retailers in the loop as retailers are the main console prescribers.

The connected TV war has started

Some have thought the next TV battle  will be on 3D, but the impact of connected TV is far greater as it is a game changer. 3D wont impact the value chain, as there will still be a content provider, a content aggregator (the channel) a broadcaster and a manufacturer. But this is not the case with connected TVs as I was mentioning this in a previous post.

Sony just launched an ad campaign for its latest Bravia TV set. Bravia tellies feature a browser and access to some selected websites like Flickr, YouTube and DailyMotion.

Samsung launched its Medi@ 2.0 series with twitter, games, etc:

One can expect other TV manufacturers to reply with their own flavour of connected TV and massive communication plans.

Today only the high end TVs are connected. How quick this feature will enter mid range and then entry level TV sets? Most of the value lays there: in the friendly way to connect your grand-parents to the internet and share with them your latest holidays pictures.