4 partners who must work together: A number of insightful books have been written on the broad topic of business ecosystems. They offer compelling arguments about the importance of considering interdependence. This book complements their insights by offering new structure and tools for addressing ecosystem strategy challenges. Titles include James Moore’s The Death of Competition (New York: HarperBusiness, 1996); Adam Brandenburger and Barry Nalebuff’s Co-opetition (New York: Currency Doubleday, 1996); Marco Iansiti and Roy Levien’s The Keystone Advantage (Boston: Harvard Business School Press, 2004); Annabelle Gawer and Michael Cusumano’s Platform Leadership (Boston: Harvard Business School Press, 2002); and Henry Chesbrough’s Open Innovation: The New Imperative for Creating and Profiting from Technology (Boston: Harvard Business School Press, 2005). An early version of the arguments presented in this book appeared in Ron Adner, “Match Your Innovation Strategy to Your Innovation Ecosystem,” Harvard Business Review 84, no. 4 (April 2006): 98–107.
5 45 percent fail to meet: The PDMA data is reported in Abbie Griffin, “PDMA Research on New Product Development Practices: Updating Trends and Benchmarking Best Practices,” Journal of Product Innovation Management 14 (1997): 429–58. These values are consistent with more recent surveys as reviewed, for example, in Robert G. Cooper’s Winning at New Products: Creating Value Through Innovation (New York: Basic Books, 2011).
5 72 percent of senior executives: Boston Consulting Group report, “Innovation 2010.”
5 two schools of thought: All great management books consider multiple facets of the problem but focus on different aspects. Insightful exemplars within the customer-focus school are Clayton Christensen’s The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston: Harvard Business School Press, 1997); W. Chan Kim and Renée Mauborgne’s Blue Ocean Strategy (Boston: Harvard Business School Press, 2004); Geoffrey Moore’s Crossing the Chasm (New York: HarperBusiness, 1991); George Day’s Market Driven Strategy: Processes for Creating Value (New York: Free Press, 1999); and J. C. Larachee’s The Momentum Effect (Upper Saddle River, NJ: Prentice Hall, 2008). Exemplars of the implementation school are Jim Collins’s Good to Great (New York: HarperBusiness, 2001); Larry Bossidy and Ram Charan’s Execution (New York: Crown Business, 2002); Jack and Suzy Welch’s Winning (New York: HarperBusiness, 2005); Sydney Finkelstein’s Why Smart Executives Fail (New York: Portfolio, 2003); and Vijay Govindarajan and Chris Trimble’s Other Side of Innovation (Boston: Harvard Business Review Press, 2010).
9 2011 survey: Corporate Executive Board, “Building a Culture of Innovation,” 2011.
17 “The PAX System is our biggest technological breakthrough”: “Michelin PAX System,” Michelin.com, http://www.michelinman.com/pax/. Accessed September 16, 2010.
17 “we have reinvented the tire”: Chris Vander Doelen, “Run-Flats Give Tires an Inflated Value,” National Post (Canada), November 12, 2004.
17 “The adoption of the PAX System is inevitable”: Comments made at “Huitièmes Journées d’Histoire,” conference at l’ecole de Paris du management, March 22, 2002, transcript page 30, www.anrt.asso.fr/fr/pdf/CRateliers2002.pdf.
17 “most important component on a vehicle”: “Tire Basics: Getting a Grip on Tire Fundamentals,” Motor Trend, April 2005.
19 flat tires were both prevalent . . . and dangerous: Tire Safety Survey conducted for the AAA Foundation for Traffic Safety by Roper Starch Worldwide Inc., March 22, 1999, http://www.aaafoundation.org/pdf/tss.pdf.
19 “a major development in vehicle safety”: Warren Brown, “From Michelin, a Pricey New Tire That Survives Blowouts,” Washington Post, October 24, 2004.
22 “Goodyear and Michelin are convinced . . . PAX System is the best”: “Michelin, Goodyear in Run-Flat Tyre Venture,” Reuters, June 23, 2000.
22 seven out of eight consumers chose run-flats: Brad Dawson, “Tire Maker Eyes High-Profit, High-Tech Mix in ’02,” Rubber & Plastics News, February 25, 2002.
23 “They perform better in every respect”: William Diem, “Michelin’s Pax System Gaining Momentum,” Rubber & Plastics News, March 22, 1999.
23 by 2010 more than 80 percent of cars would be fitted with run-flats: David Shaw, “BMW Dominates Runflat Tyres as PAX Goes Down,” European Rubber Journal, May 1, 2005.
23 “The bottom-line benefit for the customers”: Leslie Allen, “Michelin Rolls Out New Run-Flat Design,” Chicago Tribune, February 11, 2005.
23 “traditional service and repair networks will continue to grow”: “Michelin PAX System Innovations Extend to Customer Service,” PR Newswire, September 27, 2004, http://www.prnewswire.com/news-releases/michelinr-pax-systemtm-innovations-extend-to-customer-service-73940867.xhtml. Accessed October 4, 2010.
24 several class-action lawsuits were filed: Kathy McCarron, “Running Away from Run-Flats,” Tire Business, March 26, 2007.
24 “we do not intend to develop a new PAX”: David Shaw, “Michelin: No Push for PAX,” Rubber & Plastics News, November 26, 2007.
25 “not unlike the transition to radial from bias”: Vera Fedchenko, “Run-Flat Revolution Gaining Ground in OE,” Rubber & Plastics News, October 31, 2005.
30 installing an air pressure monitor: Federal Motor Vehicle Safety Standards: Tire Pressure Monitoring Systems; Controls and Displays, Department of Transportation, NHTSA, http://www.nhtsa.gov/cars/rules/rulings/TirePressure/fedreg.htm. Accessed October 3, 2010.
30 the window of opportunity: The 2000 Transportation Recall Enhancement Accountability Documentation (TREAD) Act in the U.S. Congress. Drawn up in the wake of the Firestone tire recall on Ford Explorers, the TREAD Act mandated that by 2007 all new cars come equipped with a tire pressure monitoring system (TPMS). Michelin, J.D. Powers, and all the other industry participants were well aware of the act when making their heroic predictions of PAX success as late as 2004 in the expectation that PAX would become the standard before the act went into effect—more evidence of an industry blind spot.
32 over 3,500 Strykers have been built: “General Dynamics Awarded Contract for Stryker Production,” Deagel.com, October 9, 2009, http://www.deagel.com/news/General-Dynamics-Awarded-Contract-for-Stryker-Production_n000006659.aspx. Accessed October 18, 2010.
40 by the year 2000, mobile network operators had over 700 million users: “Free Statistics: Mobile Cellular Subscriptions,” International Telecommunication Union, http://www.itu.int/ITU-D/ict/statistics/.
40 70 percent of adults had a mobile phone: “The Winners’ Curse,” Economist, June 14, 2001, http://www.economist.com/node/657390.
41 “next stage in the growth of the communications business”: Niall McKay, “Amid Telecommunications Gloom, Optimism in France,” New York Times, February 23, 2001.
41 “we do not know what services will eventually emerge for 3G”: Peter Lewis, “State of the Art Heading North to the Wireless Future,” New York Times, June 1, 2000.
41 3G business would match the size of Ericsson’s 2G: Paul Tate, “Mobile: Going Thataway,” ZDNet.com, December 10, 2000, http://www.zdnetasia.com/mobile-going-thataway-21163436.htm.
41 handset makers could sell everyone new phones: “Nokia succumbs,” Economist, June 14, 2001, http://www.economist.com/node/656251.
41 “two of the fastest-growing technologies of all time”: “Waves of the Future,” Economist, July 6, 2000, http://www.economist.com/node/4937.
42 $175 billion to build out their networks: “The Winners’ Curse,” Economist, June 14, 2001.
42 Nokia had been working on 3G prototypes: Stephen Baker, “3G’s Latest Snafu: Hellacious Handsets,” BusinessWeek, November 26, 2001, http://www.businessweek.com/magazine/content/01_48_/b3759154.htm.
43 “the most complex consumer electronics devices ever designed”: Ibid.
43 actual number was closer to 3 million: “Insight: Nokia Business Review 2000,” annual report, 2001.
50 increasing the chances of success to 16 percent: 0.85 × 0.85 × 0.75 × 0.3 = 0.1626.
52 “the battle of devices has now become a war of ecosystems”: “Full Text: Nokia CEO Stephen Elop’s ‘Burning Platform’ Memo,” Wall Street Journal, February 9, 2011, http://blogs.wsj.com/tech-europe/2011/02/09/full-text-nokia-ceo-stephen-elops-burning-platform-memo/.
53 $2.5 billion write-down: Martin Du Bois and Richard Hudson, “Philips Confirms Severe Troubles in Its Consumer Electronics Business,” Wall Street Journal Europe, August 7, 1992, p. 3.
56 “most significant improvements to the products in more than a decade”: Microsoft, “2007 Microsoft Office System Is Golden,” press release, November 6, 2006, http://www.microsoft.com/presspass/press/2006/nov06/11-062007OfficeRTMPR.mspx.
58 revenues of close to $4 billion: Leonard Pukaite, “The Hard Truth,” Cutting Tool Engineering, June 1996.
60 15 percent of the abrasives market: “Freedonia Focus on Abrasives,” Freedonia Group Inc., October 2010, p. 6.
60 staff needed to be retrained: J. F. G. Oliveira, E. J. Silva, C. Guo, F. Hashimoto, “Industrial Challenges in Grinding,” CIRP Annals—Manufacturing Technology, January 2009, p. 665.
60 most of the market opted to stay with traditional grinding wheels: Ibid.
66 first commercial DLP . . . projectors: “DLP History,” Texas Instruments DLP Web site, DLP.com, 2009, http://www.dlp.com/technology/dlp-history/default.aspx.
67 development of the digital telecine scanner: Kevin Shaw, “A Brief History for Colorists,” Finalcolor.com, May 23, 2010, http://www.finalcolor.com/history4colorists.htm.
67 Star Wars: Episode I—Phantom Menace was screened: “DLP History,” DLP.com.
67 40 percent by the end of 2010: “MPAA Theatrical Market Statistics,” Motion Picture Association of America, 2010, http://www.mpaa.org/Resources/93bbeb16-0e4d-4b7e-b085-3f41c459f9ac.pdf.
68 avoiding the $1 billion spent annually: Charles S. Swartz, Understanding Digital Cinema: A Professional Handbook (Focal Press, 2004).
68 studio’s printing cost alone can come to $7.5 million: Sherman Fridman, “Theaters to Convert to Digital Movies,” Newsbytes, May 30, 2000.
68 Traditionally, movies were rolled out in a staggered fashion: Katherine Monk, “Thwarting the Pirates: Sony Hopes Global Release Strategy Will Take a Bite Out of Illegal File Sharing,” National Post (Canada), May 18, 2006.
68 alternative to pirated films: Ibid.
68 digital film technology allowed for encryption: Ibid.
69 “Digital cinema is like looking out of a window”: Ann Donahue, “Paving the Way for Digital Projection,” Variety, March 7, 2001.
69 $70,000–$100,000 per screen conversion cost: Nicole Norfleet, “Theaters Weigh Pros and Cons of 3D Conversion,” Washington Post, April 19, 2010.
69 digital projectors have a life span of only ten years: MKPE Consulting, “Digital Cinema Business: Frequently Asked Questions,” September 2010, www.mkpe.com/digital_cinema/faqs/.
70 “It’s up to exhibitors, now”: “James Cameron Keynote NAB2006 Digital Cinema Summit,” DV.com, March 2, 2006, http://www.dv.com/article/22026.
70 “we’ll be out of business”: Ty Burr, “Reel Gone? Why Are Multiplex Owners Afraid to Byte?,” EW.com, May 7, 2001, http://www.ew.com/ew/article/0,108459,00.xhtml.
70 came together to form Digital Cinema Initiatives: Digital Cinema Initiatives LLC, 2011, www.dcimovies.com.
71 “if we left it up to the exhibitor”: Carl DiOrio, “Studios Near D-Day,” Variety, March 25, 2002.
71 “a little longer than people had expected”: Carl DiOrio, “D-Cinema Systems on Hold As Studios Set Standards,” Variety, February 3, 2003.
71 theater owners were unwilling: MKPE Consulting, “Digital Cinema Business.”
72 “have their act together this year, or it’ll fall apart”: David Lieberman, “Digital Film Revolution Poised to Start Rolling,” USA Today, May 18, 2005.
72 “The proportion of financing”: Eric Taub, “Questions of Cost Greet New Digital Projectors,” International Herald Tribune, June 2, 2004.
72 whatever form the financing plan took, it must be industry-wide: Gabriel Snyder, “NATO Takes Digital Stand,” Variety, November 22, 2004.
73 80 percent of the exhibitor’s conversion costs: “The VPF Model,” Arts Alliance Media, http://www.artsalliancemedia.com/vpf/.
74 James Cameron’s 3-D record-breaking sci-fi megahit: Brandon Gray, “‘Avatar’ Claims Highest Gross of All Time,” BoxOffice Mojo.com, February 3, 2010.
74 Toy Story 3 became 2010’s top-grossing picture: David Twiddy, “Theaters Will Add Dimension with Digital Systems Upgrade,” Kansas City Business Journal, March 28, 2010.
74 38 percent of U.S. screens: David Hancock, “Digital Screen Numbers and Forecasts to 2015 Are Finalised,” Screen Digest, January 26, 2011.
74 The costs of digital preservation: A fascinating discussion can be found in The Digital Dilemma: Strategic Issues in Archiving and Accessing Digital Motion Picture Materials, Science and Technology Council of the Academy of Motion Picture Arts and Sciences, 2007.
84 value chains and supply chains: Classic books on value chains include Michael Porter’s Competitive Advantage (New York: Free Press, 1998) and Charles Fine’s Clockspeed (New York: Perseus Books, 1998). Adam Brandenburger and Barry Nalebuff introduce the role of complementors in Co-opetition (New York: Currency, 1996), and Clayton Christensen discusses the roles of value networks in affecting innovation incentives in The Innovator’s Dilemma (Boston: Harvard Business School Press, 1997). The value blueprint builds on these perspectives, with a focus on designing the most effective configuration to deliver the value proposition.
88 $550 device: “Sony Shows Data Discman,” New York Times, September 13, 1991.
88 The Rocket, developed by NuvoMedia: Martin Arnold, “From Gutenberg to Cyberstories,” New York Times, January 7, 1999.
88 That same year the SoftBook: Peter Lewis, “Taking on New Forms, Electronic Books Turn a Page,” New York Times, July 2, 1998.
88 Gemstar released two models: Ken Feinstein, “RCA REB1100 eBook Review,” CNET.com, February 21, 2001, http://reviews.cnet.com/e-book-readers/rca-reb1100-ebook/4505-3508_7-4744438.xhtml.
89 proof that the electronic book was ready for the mainstream: Doreen Carvajal, “Long Line Online for Stephen King E-Novella,” New York Times, March 16, 2000.
90 Random House’s e-book revenues doubled: Nicholas Bogaty, “eBooks by the Numbers: Open eBook Forum Compiles Industry Growth Stats,” International Digital Publishing Forum, press release, July 22, 2002, http://old.idpf.org/pressroom/pressreleases/ebookstats.htm.
90 “difficult to find, buy and read e-books”: Steven Levy, “The Future of Reading,” Newsweek, November 26, 2007.
90 Paltry content and intense digital rights management: Ginny Parker Woods, “Sony Cracks Open New Book with Reader,” Toronto Star, February 20, 2006.
90 “We’ve been very cautious in launching [the Reader]”: Michael Kanellos, “Sony’s Brave Sir Howard,” CNET.com, January 17, 2007, http://news.cnet.com/Sonys-brave-Sir-Howard/2008-1041_3-6150661.xhtml.
90 almost 20 percent cheaper than the Librié: Sony Librié ebook Review, eReaderGuide.Info, www.ereaderguide.info/sony_librie_ebook_reader_review.htm.
90 10,000 titles available at Connect.com: Edward Baig, “Sony Device Gets E-Book Smart,” USA Today, October 5, 2006.
91 the iPod of the book industry: David Derbyshire, “Electronic BookOpens New Chapter for Readers,” Daily Telegraph, September 28, 2006.
91 much fanfare from the press: Amanda Andrews, “Sony’s Hitting the Books,” Australian, February 28, 2006.
92 lowering publisher confidence: George Cole, “Will the eBook Finally Replace Paper?,” Guardian, October 5, 2006.
93 “four factors need to be in place”: Ibid.
93 Barnes & Noble superstore carries as many as 200,000 titles: Barnes & Noble company profile, Hoover’s Inc., Hoovers.com.
94 backlist titles went for as low as $4: Charles McGrath, “Can’t Judge an E-Book by Its Screen? Well, Maybe You Can,” New York Times, November 24, 2006.
94 difference between the cost: Peter Wayner, “An Entire Bookshelf, in Your Hands,” New York Times, August 9, 2007.
96 “downright industrially ugly”: Tom Regan, “Costly ‘Kindle’ Reader Gets a Lot of It Right,” Christian Science Monitor, November28, 2007, http://www.csmonitor.com/2007/1127/p25s01-stct.xhtml.
96 weighed more, and had an inferior screen: Product specs (4-shade gray scale vs. 8), Amazon.com, http://www.amazon.com/Kindle-Amazons-Original-Wireless-generation/dp/B000FI73MA/ref=cm_cr_pr_product_top.
96 “This isn’t a device, it’s a service”: Levy, “The Future of Reading.”
96 330,000 within two years: Motoko Rich, “Barnes & Noble Jumps into E-Book Sales with Both Feet,” International Herald Tribune, July 22, 2009.
97 $9.99 or less: David Pogue, “Books Pop Up, Wirelessly,” New York Times, November 22, 2007.
97 “works as a stand-alone device”: “A Conversation with Amazon.com CEO Jeff Bezos,” Charlie Rose, November 19, 2007.
97 “King of the Retail Jungle”: Farhad Manjoo, “Amazon, King of the Retail Jungle,” Washington Post, February 8, 2009.
97 30 percent of books sold in the United States: “40: Jeff Bezos—CEO, Amazon.com [The Global Elite],” Newsweek, December 19, 2008, http://www.thedailybeast.com/newsweek/2008/12/19/40-jeff-bezos.xhtml.
97 Kindle was both closed and proprietary: Rob Pegoraro, “Kindled, but Not Enlightened,” Washington Post, December 6, 2007.
98 Amazon sacrificed some e-book profits up-front: David Gelles and Andrew Edgecliffe-Johnson, “A Page Is Turned,” Financial Times, February 9, 2010.
98 able to make up much of the difference: Mark Muro, “The New Republic: The Kindle, America’s Decline,” NPR.org, February 26, 2010, http://www.npr.org/templates/story/story.php?storyId=124107775.
98 margins of $200 per unit: “Major Cost Drivers in the Amazon Kindle 2,” iSuppli Corporation, April 2009.
98 at the behest of publishers: Motoko Rich and Brad Stone, “Publisher Wins Fight with Amazon over E-Books,” New York Times, January 31, 2010, http://www.nytimes.com/2010/02/01/technology/companies/01amazonweb.xhtml.
99 3 billion on e-books: James McQuivey, “eBook Buying Is About to Spiral Upward: U.S. eBook Forecast, 2010 to 2015,” Forrester Research, November 5, 2010.
99 e-book sales were fast approaching $120 million: Industry Statistics, International Digital Publishing Forum, 2011, http://idpf.org/about-us/industry-statistics#Additional_Global_eBook_Sales_Figures.
99 it held 80 percent market share: Gelles and Edgecliffe-Johnson, “A Page Is Turned.”
99 estimated sales of the Kindle at 6 million: Sam Gustin, “Amazon Says New Kindle Is Its Top-Selling Product,” Wired, December 27, 2010.
99 48 percent market share of e-readers: IDC, “Nearly 18 Million Media Tablets Shipped in 2010 with Apple Capturing 83% Share; eReader Shipments Quadrupled to More Than 12 Million, According to IDC,” press release, March 10, 2011.
100 fighting to hold the number five spot: Ibid.
101 347 million diabetics worldwide: Goodarz Danaei et al., “National, Regional, and Global Trends in Fasting Plasma Glucose and Diabetes Prevalence Since 1980: Systematic Analysis of Health Examination Surveys and Epidemiological Studies with 370 Country-Years and 2.7 Million Participants,” Lancet 378, no. 9785 (July 2, 2011): 31–40.
101 25 million diabetics in the United States: “National Diabetes Statistics, 2011,” National Diabetes Information Clearinghouse, National Institute of Diabetes and Digestive and Kidney Diseases of the National Institutes of Health, http://diabetes.niddk.nih.gov/DM/PUBS/statistics/.
101 “We’ve never had such a response”: Laurie Barclay, “Exubera Approved Despite Initial Lung Function Concerns,” Medscape Medical News, WebMD, February 9, 2006.
102 annual costs of diabetes in the United States alone is over $200 billion: Diabetes Statistics, American Diabetes Association, January 26, 2011, citing a 2007 study. Note that medical costs have risen substantially since then, so this is a very conservative estimate.
102 “These products, if approved, could expand the market for insulin”: “New Formulations Set to Transform Diabetes Treatment,” In-PharmaTechnologist.com, June 16, 2003.
102 sales of more than $1.5 billion by 2009: Morgan Stanley Dean Witter Equity Research, North America, “Pfizer Inc.—Rational Exuberance?,” May 7, 2001.
102 device would garner $1 billion annually by 2007: Credit Suisse First Boston Equity Research, “Pfizer—Confirms European Filing of Exubera,” March 4, 2004.
102 “breakthrough medical advance”: Peter Brandt, Pfizer Q2 2006 earnings conference call, July 20, 2006, p. 3.
102 “Pfizer will have a blockbuster product on its hands”: Val Brickates Kennedy, “Firms to Vie for Inhaled-Insulin Sales,” MarketWatch, May 7, 2005, http://www.marketwatch.com/story/drug-rivals-to-vie-for-share-of-inhaled-insulin-market.
103 buy out Aventis’s share in Exubera for $1.3 billion: “Pfizer to Acquire Global Rights to an Insulin That Is Inhaled,” New York Times, January 13, 2006.
104 “a wealth of experience with not just the use of insulin”: Brandt, Pfizer conference call, p. 16.
105 estimated $1.5 billion in Exubera sales by 2010: Morgan Stanley, “Pfizer,” equity research report, February 12, 2006; Bear Stearns, “Pfizer—Enthusiasm Building Ahead of Exubera Launch,” equity research report, June 12, 2006.
105 projecting “only” $1.3 billion: West LB Equity Research, “Novo Nordisk,” equity research report, November 8, 2006.
106 launched its “full-court press”: “Kindler’s Honeymoon Over? Analysts Press Pfizer Execs on Series of Stumbles,” Pink Sheet, April 1, 2007.
106 would reach $2 billion, although perhaps not by 2010: “Pfizer Plans Exubera ‘Full Court Press’ in 2007 after 2006 Stumbles,” Pink Sheet, January 29, 2007.
106 sales “continued to be disappointing”: Cathy Dombrowski, “Lilly Expects Experience to Help Avoid Mistakes of Pfizer’s Exubera Launch,” Pink Sheet, September 1, 2007.
106 Exubera was dead: “As Pfizer Closes Door on Exubera, Has Window Opened for Others?,” Pink Sheet, October 22, 2007.
106 “one of the most stunning failures”: Avery Johnson, “Insulin Flop Costs Pfizer $2.8 Billion,” Wall Street Journal, October 19, 2007. Quote is from Mike Krensavage, an analyst at Raymond James & Associates.
107 “it was kind of like generation zero”: “As Pfizer Closes Door on Exubera, Has Window Opened for Others?”
107 “doesn’t diminish our enthusiasm for our product”: Lilly Q3 2007 earnings conference call, October 18, 2007, p. 12.
107 Pfizer wrote off $2.8 billion: Johnson, “Insulin Flop Costs Pfizer.” Lilly’s write-off was reported in its Q1 2009 results. Novo’s charge of 1.3 billion Danish kroner ($260 million) was reported in its financial statement for 2007, issued January 31, 2008.
108 some patients would embrace the inhaler, while others would balk: There are scores of positive testimonials as well as heartbreaking pleas by patients on Exubera urging Pfizer not to pull the drug. Online discussion boards are rife with back-and-forth debates between patients who loved Exubera and skeptics who criticized (but usually hadn’t tried) it. The following quote from reader comments to a BusinessWeek article on Exubera, posted October 26, 2007, captures the typical sentiment of Exubera’s supporters : “After multiple daily insulin injections since 1974, I have finally been given an insulin delivery system that works beautifully. . . . This delivery system works perfectly as touted. Cumbersome, BIG Deal! As if taking injections doesn’t command stares and comments in public. For years I went to the restrooms for injections in public . . . now there is a sanitary place. Exubera was my dream come true.”
109 “target those highly experienced, primarily endocrinologists”: Peter Brandt, Pfizer Q2 2006 earnings conference call, July 20, 2006, p. 12.
109 “we don’t see that as an issue”: Ibid, p. 20.
111 endocrinologists were so overbooked: Andrew F. Stewart, “The United States Endocrinology Workforce: A Supply-Demand Mismatch,” Journal of Clinincal Endocrinology & Metabolism 93, no. 4 (April 2008): 1164–66.
112 has spent nearly $1 billion of founder Alfred Mann’s own money: David Holley, “MannKind Stock Plummets After FDA Rejects Insulin Inhalant,” Daily Deal, January 21, 2011.
112 MedTone device was one-tenth the size of the bulky Exubera: Ibid.
112 Technosphere Insulin System closely mimics the release of insulin: “Type 1 Diabetes: MannKind Initiates Two U.S. Pivotal Phase III Studies of Inhaled Technosphere Insulin,” Drug Week, April 7, 2006.
112 company is “certainly resolved to pursue”: MannKind Q4 2010 earnings conference call, February 10, 2011.
119 number to be as high as 98,000: Linda Kohn, Janet Corrigan, and Molla Donaldson, eds., To Err Is Human: Building a Safer Health System (Washington, DC: Institute of Medicine National Academy Press, 1999).
119 adverse events occur in one-third of hospital admissions: David C. Classen et al., “‘Global Trigger Tool’ Shows That Adverse Events in Hospitals May Be Ten Times Greater Than Previously Measured,” Health Affairs 30, no. 4 (April 2011): 581–89.
119 still in place in approximately 80 percent of American hospitals: Lena Sun, “Doctors Wary of Switch to Digital Records,” Washington Post, March 15, 2011.
119 drug errors alone are estimated to harm 1.5 million people per year: Gardiner Harris, “Report Finds a Heavy Toll from Medication Errors,” New York Times, July 21, 2006.
119 “solutions to medical mistakes will ultimately come through better information technology”: Robert Wachter, “The End of the Beginning: Patient Safety Five Years After ‘To Err Is Human,’” Health Affairs, November 30, 2004, http://content.healthaffairs.org/content/suppl/2004/11/29/hlthaff.w4.534.DC1.
119 a $2 trillion industry: David Ahern, introductory remarks presented at a seminar entitled “Patient-Centered Computing and e-Health: Transforming Healthcare Quality,” Boston, Mass., March 29, 2008.
119 health-care industry spends only 2 percent: “The No-Computer Virus—IT in the Health-Care Industry,” Economist 375, no. 8424 (April 30, 2005): 72.
119 gain of nearly 30 percent efficiency: Steve Lohr, “Who Pays for Efficiency?,” New York Times, June 11, 2007.
120 more than 20,000 forms each year: TelecomWorldWire, “IBM Heads Venture for Electronic Health Records,” M2 Communications, December 5, 2005.
120 “safety savings of $142–$371 billion”: Richard Hillestad et al., “Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, and Costs,” Health Affairs 24, no. 5 (2005): 1103–17, http://content.healthaffairs.org/content/24/5/1103.abstract.
120 devoted massive resources: Larry Pawola, “The History of the Electronic Health Record,” University of Illinois at Chicago HIMSS (Healthcare Information and Management Systems Society) 2011 Conference, Orlando, Fla., February 22, 2011.
121 more than 5,000 pharmacies by 1997: “IBM & Medic Computer Online Prescription Deal,” Newsbytes, February 24, 1997.
121 Health Data Network Express, announced in 1998: Steve Shipside, “Nurse, the Screens,” Guardian, March 26, 1998.
121 IBM teamed up with several providers: Doug Bartholomew, “Health Care’s Shocking Affliction: This Trillion-Dollar Industry Is Shamefully Backward When It Comes to IT,” Industry Week, August 2002.
121 an HMO with nearly 9 million members: Marianne Kolbasuk McGee, “IBM, Geisinger Health Deal Aims to Provide More Personalized Patient Care,” InformationWeek, October 11, 2006.
121 Dossia, an employer-led program: Marianne Kolbasuk McGee, “Another E-Health Project in Disarray,” InformationWeek, July 14, 2007.
121 “It’s time to modernize the health care system”: Julie Appleby, “Tech Executives Push for Digital Medical Records,” USA Today, October 13, 2005.
122 HealthVault, a free Web-based health records system: Marianne Kolbasuk McGee, “Microsoft Unveils Free Web Health Tools for Consumers,” InformationWeek, October 4, 2007.
122 as late as 2009 only 9 percent of U.S. hospitals had implemented: Walecia Konrad, “Some Caveats About Keeping Your Own Electronic Health Records,” New York Times, April 18, 2009.
124 hefty sales price ($20 to $50 million): Rainu Kaushal et al., “The Costs of a National Health Information Network,” Annals of Internal Medicine 143, no. 3 (August 2005): 165–73.
124 kill more than 90,000 patients per year globally: Pauline Chen, M.D., “Why Don’t Doctors Wash Their Hands More?,” New York Times, September 17, 2009.
125 “instead of investing in that, many hospitals are out building new buildings”: Jennifer Steinhauer, “A Health Revolution, in Baby Steps,” New York Times, October 15, 2000.
125 The Mayo Clinic, University of Pittsburgh Medical Center: Steve Lohr, “Most Doctors Aren’t Using Electronic Health Records,” New York Times, June 19, 2008.
126 handoffs among departments are streamlined: Richard Quinn, “Digital Dilemma: HM Groups Need a Proactive Approach to Health Technology Design and Implementation,” Hospitalist, September 2009.
127 improved quality of life: The development of the electronic picture archiving and communication system (PACS) in the 1980s furthered the adoption of EHR in radiology. PACS allows X-ray or CAT scan images to be transmitted digitally, eliminating the cost of printing and storing hard copies. The system also allows radiologists to record their interpretations. Traditionally, findings would be dictated into a recording device such as a Dictaphone. With PACS, radiologists rely on voice recognition software to transcribe their findings, another example of why radiology’s transition to EHR was relatively uncontroversial. These departments are more than early adopters—they are pre-adopter, typically having put in their department-specific systems years before the administration started moving toward hospital-wide EHR. So while they are most ready to appreciate the benefits of digital, they are often loath to give up their existing systems, which are often not compatible with hospital-wide solutions. This makes them highly imperfect allies in the quest to extend the seamless EHR footprint across departments.
127 78 percent of hospitals were enabled with electronic radiology: A. K. Jha et al., “Use of Electronic Health Records in U.S. Hospitals,” New England Journal of Medicine 360, no. 16 (April 2009): 1628–38.
127 doctor productivity dipping 20 percent: Julie Schmit, “Health Care’s Paper Trail Is Costly Route,” USA Today, July 20, 2004.
129 total of 3.9 billion prescriptions filled: “Prescription Drug Trends,” Kaiser Family Foundation, May 2010, http://www.kff.org/rxdrugs/upload/3057-08.pdf.
130 “We underestimated the challenges”: Marianne Kolbasuk McGee, “Intel, Wal-Mart, and Others Refocus to Get Worker E-Health Record System Running,” InformationWeek, September 17, 2007.
131 serving over 8.5 million veterans at 1,100 facilities: “Largest U.S. Health Care System Links Staff and Resources,” Esri.com, Fall 2010, http://www.esri.com/news/arcnews/fall10articles/largest-us-health.xhtml.
131 VHA has an error rate of just 0.003 percent: Catherine Arnst, “The Best Medical Care in the U.S.,” BusinessWeek, July 17, 2006.
131 allocated substantial funding ($27 billion): Steve Lohr, “Carrots, Sticks and Digital Health Records,” New York Times, February 27, 2011.
131 prior administration’s $50 million: Julia Adler-Milstein and David Bates, “Paperless Healthcare: Progress and Challenges of an IT-Enabled Healthcare System,” Business Horizons 53, no. 2 (March–April 2010): 119–30.
131 “meaningful use of certified EHR systems”: David Blumenthal, “Stimulating the Adoption of Healthcare Information Technology,” New England Journal of Medicine 360, no. 15 (April 2009): 1477–79.
131 receive up to $44,000: Lena Sun, “Doctors Wary of Switch to Digital Records,” Washington Post, March 15, 2011.
131 in 2015, these carrots turn to sticks: Blumenthal, “Stimulating the Adoption of Health Information Technology.”
131 updating digital records with diagnoses, monitoring drug interactions: Washington Post, March 15, 2011.
135 cutting the follower out of the ecosystem: The book Platform Leadership by Gawer and Cusumano offers an interesting exploration of this issue from the perspective of the leader. See also The Keystone Advantage by Iansiti and Levien.
141 Sony’s Walkman retained a 50 percent market share: Susan Sanderson and Mustafa Uzumeri, “Managing Product Families: The Case of Sony Walkman,” Research Policy 24, no.5 (April 1994), pp. 762–63.
142 increase capacity to a then unheard-of 6 GB: Eliot Van Buskirk, “Bragging Rights to the World’s First MP3 Player,” CNET.com, January 25, 2005, http://news.cnet.com/Bragging-rights-to-the-worlds-first-MP3-player/2010-1041_3-5548180.xhtml.
142 unit sales in 2001 were only 248,000: Hong Kong Trade Development Council, “MP3 Jukebox Has US Sales Rocking and Rolling,” Hong Kong Trader, June 25, 2002, http://www.hktdc.com/info/vp/a/ict/en/1/2/1/1X00G4BD/MP3-Jukebox-Has-US-Sales-Rocking-And-Rolling.htm.
143 “they’ll never go back to dial-up”: Sylvia Dennis, “High Speed Net Access Market to Reach 16Mil US Households,” Newsbytes, September 1, 1998.
143 “cumbersome to move even compressed CDs around”: Doug Reece, “Industry Grapples with MP3 Dilemma,” Billboard, July 18, 1998.
144 “Apple has about 5 percent market share”: Joe Wilcox, “25 Apple Stores to Sprout This Year,” CNET.com, May 15, 2001, http://news.cnet.com/25-Apple-stores-to-sprout-this-year/2100-1040_3-257633.xhtml.
144 “I am going to wait for the next big thing”: Quoted in Richard Rumelt, Good Strategy/Bad Strategy: The Difference and Why It Matters (New York: Crown Business, 2011), p. 14.
145 “things are slowing down in the MP3 player market”: Peter Brown, “Is MP3 Here to Stay?,” EDN.com, June 25, 2001, http://www.edn.com/article/484332-Is_MP3_Here_to_Stay_.php.
145 “the hit of the holiday season”: Arik Hesseldahl, “iPod’s a Winner,” Forbes.com, December 7, 2001, http://www.forbes.com/2001/12/07/1207tentech.xhtml.
145 “revolutionary,” and “brilliant”: Eliot Van Buskirk, “How the iPod Will Change Computing,” CNET.com, November 2, 2001, http://reviews.cnet.com/4520-6450_7-5020659-1.xhtml.
146 purchased over 600,000 iPods: “Apple Press Info,” Apple.com., 2011, http://www.apple.com/pr/products/ipodhistory/. Accessed July 23, 2011.
146 Apple held only 15 percent of the digital player market: Brian Garrity, “Digital Devices Get Smaller, Capacity Grows; Will Consumers Respond?,” Billboard, November 9, 2002.
146 “iTunes Music Store offers a groundbreaking solution”: Apple, “Apple Launches the iTunes Music Store,” press release, April 28, 2003.
146 200,000 songs from major labels: Ibid.
146 8 billion songs: William Blair & Company, “Apple Inc.,” equity research report, September 2, 2009.
146 operating margin of 10 percent: Estimate from report by Pacific Crest Securities analyst Andy Hargreaves, discussed in Eric Savitz, “Apple: Turns Out, iTunes Makes Money, Pacific Crest Says, Subscription Service Seems Inevitable,” Tech Trader Daily, April 23, 2007.
146 compatible with both FireWire and USB cables: Michelle Megna, “Apple’s Shining Moment: The Company Hits the Right Notes with Its New Online Music Store and Revamped iPods,” New York Daily News, May 11, 2003.
146 sales of portable CD players were still more than double: Christopher Walsh, “All They Want for Xmas Is the iPod,” Billboard, January 29, 2005.
147 sales of the iPod had leaped 616 percent: Mark Evans, “Apple’s iPod Is ‘the Kleenex’ of MP3 Players: Cultural Phenomenon Garnered Apple US$1.1-Billion in Q3,” National Post (Canada), July 15, 2005.
147 closest competitor with 8 percent market share: IDC data cited in William Blair & Company, “Apple Inc.,” equity research report., September 2, 2009.
147 “These waves of technology, you can see them way before they happen”: Betsy Morris, “Steve Jobs Speaks Out,” Fortune, March 7, 2008.
147 “the Walkman of the early 21st century”: “Behind the Smiles at Sony,” Economist, March 12, 2005.
148 pioneers are the ones with arrows in their backs: Peter N. Golder and Gerard J. Tellis, “Pioneer Advantage: Marketing Logic or Marketing Legend?,” Journal of Marketing Research 30, no. 2 (May 1993): 158–70; Subramanian Rangan and Ron Adner, “Profits and the Internet: Seven Misconceptions,” MIT Sloan Management Review 42, no. 4 (Summer 2001): 44–53; and Marvin B. Lieberman and David B. Montgomery, “First-Mover (Dis)advantages: Retrospective and Link with the Resource-Based View,” Strategic Management Journal 19, no. 12 (1998): 1111–25.
150 four-year project focused on the semiconductor lithography industry: Rahul Kapoor and Ron Adner, “Managing Transitions in the Semiconductor Lithography Ecosystem,” Solid State Technology (50th Anniversary Perspectives Issue), November 2007, offers a brief primer on the history of lithography. For the full study on early-mover advantage, see Adner and Kapoor, “Value Creation in Innovation Ecosystems: How the Structure of Technological Interdependence Affects Firm Performance in New Technology Generations,” Strategic Management Journal 31 (2010): 306–333. A second study, Adner and Kapoor, “Innovation Ecosystems and the Pace of Substitution: Re-examining Technology S-curves,” 2011, examines broad patterns of technology substitution in the industry (Tuck School working paper).
166 largest car manufacturer in the United States: David Kirsch, The Electric Vehicle and the Burden of History (New Brunswick, N.J.: Rutgers University Press, 2000), p. 31.
166 “electric vehicle industry is well established”: Ibid., p. 29.
166 99 percent of these contained gasoline-burning internal combustion engines: Ibid., p. 15.
166 GM’s unveiling of the Impact: Seth Fletcher, Bottled Lightning: Superbatteries, Electric Cars, and the New Lithium Economy (New York: Hill and Wang, 2011), p. 80.
167 between $399 and $549 per month: Keith Naughton, “Detroit: It Isn’t Easy Going Green,” BusinessWeek (international edition), December 15, 1997.
167 approximately 1 billion vehicles: Deborah Gordon and Daniel Sperling, “Surviving Two Billion Cars: China Must Lead the Way,” Yale Environment 360, March 5, 2009; see also “Automobile Industry Introduction,” Plunkett Research, http://www.plunkettresearch.com/automobiles%20trucks%20market%20research/industry%20overview.
167 a transfer of $325 billion to foreign governments: The U.S. Energy Information Administration estimates that in 2010 the United States imported 4,289,772,000 barrels of oil at an average price of $75.87 per barrel; http://www.eia.gov/.
169 Leaf, launched in 2011 with a retail price of $33,000: Camille Ricketts, “Nissan Leaf Undercuts Rivals with $33,000 Price Tag,” VentureBeat.com, March 30, 2010, http://venturebeat.com/2010/03/30/nissan-leaf-undercuts-rivals-with-33000-price-tag/. For the 2012 model year, Nissan raised the price of the base model to $35,200.
169 Versa can travel over 400 miles on a full tank of gas: Steve Almasy, “The New Fear: Electric Car ‘Range Anxiety,’” CNN.com, October 20, 2010, http://www.cnn.com/2010/US/10/18/ev.charging.stations/index.xhtml.
169 Most drives are well within this range: “Average Annual Miles per Driver per Age Group,” U.S. Department of Transporation Federal Highway Administration, http://www.fhwa.dot.gov/ohim/onh00/bar8.htm. Accessed August 4, 2011.
170 3,834 public charge stations deployed across 39 states: “Alternative Fueling Station Total Counts by State and Fuel Type,” U.S. Department of Energy, http://www.afdc.energy.gov/afdc/fuels/stations_counts.xhtml. Accessed October 23, 2011.
171 Drivers reaching the end of their battery power: The range of the Volt is 25 to 50 miles, depending on temperature, terrain, and driving style, before the gas generator kicks in. Essentially, this means that even if you drive 60 miles per day, you get an unheard-of 150 miles per gallon.
171 Volt is an expensive proposition at $41,000: Nick Bunkley, “The Volt, G.M.’s Plug-In Car, Gets a $41,000 Price Tag,” New York Times, July 27, 2010.
171 similarly equipped Chevrolet Cruze: Terry Box, “A Cruze Worth Taking,” Dallas Morning News, November 20, 2010.
171 “But do I think it’s going to be a volume seller? No”: Jonathan Welsh, “Chevy Volt: Are Electric Cars Too Expensive?,” Wall Street Journal, July 28, 2010.
171 “pitching these products only to the rich”: Daniel Gross, “The Volt Jolt,” Slate.com, July 28, 2010.
173 key component of a new car’s value and attractiveness: “2011 Best New Car Values: Best Resale Value,” Kiplinger.com. Accessed June 9, 2011.
174 750-megawatt load: 24 kWh battery charged over 8 hours draws 3 kW continuously for the charge cycle; 3 kW × 250,000 cars = 750-MW load.
174 L.A. County’s average electric load: According to the California Energy Commision, Los Angeles Country consumed a total of 73,089.6 million kWh in 2009. Dividing by 365 days/year, 24 hours/day, and 1,000 kw/MW yields an average consumption load of 8,344 MW. See http://ecdms.energy.ca.gov/elecbycounty.aspx.
180 “no other job could compare”: Josette Akresh-Gonzales, “Energy CEO Shai Agassi on Recognizing a ‘Sliding Doors’ Moment,” Harvard Business Review, May 1, 2009.
184 placed an order for 100,000 Fluence Z.E. cars: Jim Motavalli, “Better Place Reveals E.V. Charging Plan and Customer Center in Denmark,” New York Times, March 4, 2011.
186 “It’s MY car, MY battery, and MY time”: Reader comment posted in response to Jeff St. John, “Electric Vehicles Could Surpass Grid or Support It,” GreentechMedia.com, May 28, 2009, http://www.greentechmedia.com/articles/read/electric-vehicles-could-surpass-grid-or-support-it/.
187 a more detailed analysis: This is a scenario for thinking about relative prices. The key here is the logic rather than the specific values, all of which are reasonable as of the time of this writing, but which are also subject to change as a function of technological advance, bargaining power, geopolitics, tax regimes, etc.
The cost of an e-mile consists of:
Electricity cost: $0.025/mile (at $0.10 per kWh—the industrial rate in Israel and Denmark; in the United States it is less than $0.07—and 4 miles per kWh). Note that as technology improves and the number of miles per kWh rises, this cost will decrease.
Battery cost: $0.06/mile (at $650/kWh capacity, 24 kWh capacity, and a usable battery life of 250,000 miles). Note that improvements in batteries are sure to decrease cost per kWh and increase battery life.
Infrastructure cost: This cost is highly dependent on the number of charge spots and change stations to be deployed, their functional life span, the number of drivers, and the average number of miles driven. For an early market, a rough estimate—mine, not the company’s—might be $0.03 per mile ($200 million expenditure, lasting 10 years, for 40,000 drivers, driving 15,000 miles per year). This cost will decrease as additional drivers use the fixed infrastructure.
Figure N.1: The determinants of economic advantage for the Better Place model.
In this scenario (you can play with numbers as you wish), the cost to Better Place of an e-mile is $0.105. If one were to factor in government direct and indirect subsidies for infrastructure, the tax benefits that come from being able to depreciate the value of both the batteries and infrastructure, etc., this number can be substantially lower (and it probably is).
The price of a g-mile depends on two things: the price of a gallon of gas, and the mileage it yields. A typical mid-sized car might average 30 miles per gallon. But there is no such thing as a typical gas price. Although there is a global price of oil, gas prices vary dramatically across regions depending on tax policies. In July of 2011, for example, the average price of a gallon of gas was $3.58 in the United States, $8.33 in Israel, and $8.87 in Denmark. And so the price of a g-mile was $0.13 in the United States, $0.30 in Israel, and $0.32. At these prices, there are no savings in the United States, but at 15,000 miles per year, the annual savings in Denmark are $3,225 in Denmark and $2,925 in Israel. Over four years, this amounts to $12,900 and $11,700 respectively.
188 conventional cars are taxed at 180 percent, EVs at 0 percent: Daniel Roth, “Driven: Shai Agassi’s Audacious Plan to Put Electric Cars on the Road,” Wired, August 18, 2008.
188 one of the most environmentally conscious countries: Nelson Schwartz, “In Denmark, Ambitious Plan for Electric Cars,” New York Times, December 1, 2009.
188 fewer than 500 registered EVs: Ibid.
188 purchase a Fluence Z.E. at $37,962: European Commission Competition, “Car Prices Within the European Union,” January 1, 2010.
188 investors who have entrusted over $700 million: Nelson Schwartz, “Sites to Recharge Cars Gain a Big Dose of Funds,” New York Times, January 25, 2010.
189 successful network technologies of yesteryear: See Thomas Parker Hughes, Networks of Power: Electrification in Western Society, 1880–1930 (Baltimore, Md.: Johns Hopkins University Press, 1983), for a fascinating history.
194 Minimum Viable Ecosystem: In the first edition of The Wide Lens, this concept was referred to as “Minimum Viable Footprint.”
195 65 percent of the Kenyan population: “In Rural Kenya, M-Pesa Is Used as a Savings Account Tool,” Mobile Payment Magazine, March 3, 2011.
195 81 percent of Kenyans did not have access to a bank account: “Enabling Mobile Money Transfer: The Central Bank of Kenya’s Treatment of M-Pesa,” Alliance for Financial Inclusion, case study, 2010, p. 2.
195 27 percent of its citizens owned mobile phones: Ibid., p. 92.
195 63 percent of Kenyans were mobile phone subscribers: Kachwanya, “Kenyan Mobile Phone Penetration Is Now over 63%,” June 7, 2011. Data in figure 4, “Mobile Penetration,” provided by Communications Commission of Kenya. http://www.kach wanya.com/2011/06/07/kenyan-mobile-phone-penetration-is-now-over-63/. Accessed August 2, 2011. See also http: //mobilemonday.co.ke/ page/2/.
196 “too many challenges to mention”: Jaco Maritz, “Exclusive Interview: The Woman Behind M-PESA,” How We Made It in Africa, November 11, 2010, http://www.howwemadeitinafrica.com/exclusive-interview-the-woman-behind-m-pesa/5496/.
197 considerable complexity was added: Sarah Rotman, “M-PESA: A Very Simple and Secure Customer Proposition,” CGAP.org, November 5, 2008, http://technology.cgap.org/2008/11/05/m-pesa-a-very-simple-and-secure-customer-proposition/.
197 “bottleneck in transferring the money”: Nick Hughes and Susie Lonie, “M-PESA: Mobile Money for the ‘Unbanked’—Turning Cellphones into 24-Hour Tellers in Kenya,” Innovations, Winter/Spring 2007, p. 77.
198 “we would need to find a way to simplify things”: Ibid., p. 74.
200 expanded its customer base to 7.3 million: Michael Ouma, “M-Pesa Now Ventures Abroad to Tap into Diaspora Cash,” East African, October 19, 2009, http://www.theeastafrican.co.ke/business/-/2560/673512/-/5gaimnz/-/index.xhtml.
201 (Kenya’s GDP in 2009 was $63 billion): CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ke.xhtml. Accessed July 15, 2011.
201 “no Kenyan is locked out of accessing basic banking services”: “M-Kesho: ‘Super Bank Account’ from Safaricom and Equity Bank,” Techmtaa.com, May 18, 2010, http://www.techmtaa.com/2010/05/18/m-kesho-super-bank-account-from-safaricom-and-equity-bank/.
207 “Creative Zen Vision:M certainly has the goods”: “CNET Editors Cover the Best of CES 2006,” CNET.com, http://www.cnet.com/4520-11405_1-6398234-1.xhtml.
207 “hand-held computer that’s fully in the iPhone’s class”: Walt Mossberg, “Palm’s New Pre Takes On iPhone,” Wall Street Journal, June 3, 2009.
207 “the Android tablet concept”: David Pogue, “It’s a Tablet. It’s Gorgeous. It’s Costly,” New York Times, November 10, 2010.
209 90 percent of the world that used Windows: Ian Fried, “Are Mac Users Smarter?” CNET.com, July 12, 2002, http://news.cnet.com/2100-1040-943519.xhtml.
210 iPod, boasting 100 million customers: Steven Levy, “Why We Went Nuts About the iPhone,” Newsweek, July 16, 2007.
210 Apple’s stock shot up 44 percent: Matt Krantz, “iPhone Powers up Apple’s Shares,” USA Today, June 28, 2007.
211 “four times the number of PCs that ship every year”: Morris, “Steve Jobs Speaks Out.”
211 Ericsson released the R380: Dave Conabree, “Ericsson Introduces the New R380e,” Mobile Magazine, September 25, 2001.
211 Palm followed up with its version: Sascha Segan, “Kyocera Launches First Smartphone in Years,” PC Magazine, March 23, 2010, http://www.pcmag.com/article2/0,2817,2361664,00.asp#fbid=C81SVwKJIvh.
211 “one more entrant into an already very busy space”: “RIM Co-CEO Doesn’t See Threat from Apple’s iPhone,” InformationWeek, February 12, 2007.
212 the phone was exclusively available from only one carrier: In a handful of markets regulators ruled the exclusivity arrangement illegal.
212 “The bigger problem is the AT&T network”: David Pogue, “The iPhone Matches Most of Its Hype,” New York Times, June 27, 2007.
212 priced at a mere $99 in 2007: Kim Hart, “Rivals Ready for iPhone’s Entrance; Pricey Gadget May Alter Wireless Field,” Washington Post, June 24, 2007.
212 “cause irreparable damage to the iPhone’s software”: Apple, press release, September 24, 2007.
213 “I say I like our strategy”: Steve Ballmer interviewed on CNBC, January 17, 2007.
213 They ran out of the older model six weeks before the July 2008 launch: Tom Krazit, “The iPhone, One Year Later,” CNET.com, June 26, 2008, http://news.cnet.com/8301-13579_3-9977572-37.xhtml.
213 60 percent went to buyers who already owned at least one iPod: Apple COO Tim Cook’s comments at Goldman Sachs Technology and Internet Conference, cited in JPMorgan analyst report, “Strolling Through the Apple Orchard: The Good, the Bad and the Ugly Scenarios,” March 4, 2008.
215 the average iPhone user paid AT&T $2,000: Jenna Wortham, “Customers Angered as iPhones Overload AT&T,” New York Times, September 2, 2009.
215 as high as $18 per user per month: Tom Krazit, “Piper Jaffray: AT&T Paying Apple $18 per iPhone, Per Month,” CNET.com, October 24, 2007, http://news.cnet.com/8301-13579_3-9803657-37.xhtml.
216 Apple announced its 10 billionth app download: Apple.com, “iTunes Store Tops 10 Billion Songs Sold,” February 25, 2010, http://www.apple.com/pr/library/2010/02/25iTunes-Store-Tops-10-Billion-Songs-Sold.xhtml. Accessed October 20, 2011.
219 financial analysts, technology blogs, and the mainstream media were already obsessed: James Quinn, “Apple’s ‘Tablet’ to rival Amazon’s Kindle,” Daily Telegraph (London), May 22, 2009.
219 “Apple’s latest billion-dollar jackpot”: David Smith, “Steve Jobs’ New Trick: The Apple Tablet,” Observer, August 23, 2009.
219 “2010 Could be the Year of the Tablet”: Nick Bilton, “2010 Could be the Year of the Tablet,” New York Times, December 28, 2009.
219 “already 75 million people who know how to use this”: Joshua Topolosky, “Live from the Apple ‘Latest Creation’ Event,” Engadget.com, January 27, 2010.
219 all committed to providing books for the device: Ibid.
219 daily version of the paper specially tailored for iPad users: Andy Brett, “The New York Times Introduces an iPad App,” TechCrunch, April 1, 2010, http://techcrunch.com/2010/04/01/new-york-times-ipad/. Accessed July 24, 2011.
219 Rupert Murdoch even created an iPad-only newspaper: Dylan Stableford and Tim Molloy, “Rupert Murdoch Launches His iPad-Only Newspaper,” Wrap, February 2, 2011.
219 Condé Nast created iPad-only digital versions: Stephanie Clifford, “Condé Nast Is Preparing iPad Versions of Some of Its Top Magazines,” New York Times, February 28, 2010.
219 “we are committing the resources necessary”: Ibid.
220 asymmetric risk: Ron Adner and William Vincent, “iPad: A Dubious Bet for Publishers,” Forbes.com, November 29, 2010; http://www.forbes.com/2010/11/29/apple-ipad-publishers-leadership-managing-magazines.xhtml. Accessed October 23, 2011.
221 public fallouts: Georgina Prodhan, “Financial Times Pulls Its Apps from Apple Store,” Reuters, August 31, 2011; http://www.reuters.com/article/2011/08/31/us-apple-ft-idUSTRE77U1O020110831.Accessed October 23, 2011.
221 “Economically untenable”: Julianne Pepitone, “Rhapsody: Apple Has Gone Too Far,” CNNMoney, February 16, 2011; http://money.cnn.com/2011/02/16/technology/rhapsody_apple_subscriptions/index.htm.
222 poster child was Canon: C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review, May 1, 1990.