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Divergent Ways of Failing
If you need another proof that the PC era is gradually coming to an end, here it is: more people are using their mobile phones for internet browsing, surpassing the PC. The market seems so promising and crucial that even Amazon is developing smartphones. But guess who wouldn’t be basking in this momentous and glorious event? Most of the phone makers.
The downfall of Kejian (a well-known Chinese phone maker in the 1990s) put the last nail on the coffin of the first generation of Chinese cell phone makers. Not just Chinese phone makers, but overseas phone makers are getting killed as well, and not just RIM or Nokia.
How could that be? First of all, it’s hard for everyone to be winners, so there are bound to be losers. Yet in many occasions, not being first is not synonymous with being broke. Take game, the most popular source of revenue for smartphone, for example. Game as a category may be on the demise, but it’s still making a boatload of money.
Of course, that’s not to say every loser will make money, especially in a contracting market. Take PC games, for example. Playing these games is fun, but making these games is not for the faint hearted, and turned out to be too much even for the man who buried Babe Ruth’s ghost with a bloody sock. But for most developers who didn’t suddenly switch lanes mid-career, gaming, even, PC gaming, still makes money.
So a demising market is tough, but it does not necessarily condemn the participants to death, let alone a blossoming one. Why people lose money requires another explanation, and in the end, it comes down to two things: vision and execution.
Foreign phone makers are crumbling because they didn’t have vision and the ability to adapt quickly, and it’s hard to catch up when you are facing competitors such as Apple, who excel at both the visionary and the execution part of the game. But that doesn’t mean they have problems with execution.
Okay, maybe not RIM, who just sucks at everything and is killing itself pretty quickly, but both Nokia and Sony responded to the challenge with some pretty good products. Lumia 900 and Xperia have good reviews to show for their effort, if not sales. The fact of the matter is, Nokia and Sony are not good enough for Apple and other competitors who are operating at a much higher level, but by ordinary standards they are doing fine. This is like Karl Malone running into Michael Jordan, there is no shame in losing.
Not so for the bankrupting Chinese phone makers. These companies failed because they cannot even execute. They are not Karl Malone, but Jacque Vaughn. At the height of its power, Kejian was more focused on landing Chinese players in the English Premiere League instead of building better phones.
Kejian is not the only Chinese companies suffering from inattention, of course, because it just seems so either to make money some other ways. Develop real estate or put the money to use in the stock market all seem so much easier than dig deep and make cell phones. The Chinese companies are afflicted by one of the original innovator’s dilemmas as well as the tendency to choose the path of the least resistance, so while they met the same fate as Nokia, their path couldn’t be more different, and that makes all the difference.
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