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What Clayton Christensen got wrong

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Re: What Clayton Christensen got wrong

#21

Post by Touche »

asveikau wrote: post #17
Touche wrote: post #13

Earlier quoted context omitted.

It keeps the high-end phone prices artificially high. Manufacturers cannot sell the same phone to consumers for less than they sell to carriers. This is why high-end phones are less popular in areas where paying full price for a phone is the norm.

This confuses me because it seems to contradict your original comment, and make exactly the point I was trying to nudge toward. I agree with you that the unsubsidized price does not matter in the United States for example, but one must acknowledge that this is a US-centric view and cannot explain what goes on worldwide. I read somewhere that most iPhone sales aren't in the US, so I suspect it doesn't even explain jus…

iPhone market share is much smaller worldwide than in the U.S. In the U.S. they're around 40%. Android has almost 80% worldwide.

Re: What Clayton Christensen got wrong

#22

Post by codex »

Another counter-example is the automobile market. Can I take an engine from BMW and put into a Buick? Can I swap stereos? Can I mix and match body panels from Japanese and American cars? The answer is no. And the reason is that an automobile is more than the sum of its parts: to appeal to the target market, the entire experience of the car is customized and optimized. Inefficiencies from specialization are not as important as the conceptual integrity of the whole.

Homes are another example: pre-fab has yet to catch on, because almost no two homes are alike.

I think you see integrated approaches whenever the performance of a particular product is highly multi-dimensional, such that global optimization is very difficult.

Re: What Clayton Christensen got wrong

#23

Post by asveikau »

Touche wrote: post #21
asveikau wrote: post #17

Earlier quoted context omitted.

This confuses me because it seems to contradict your original comment, and make exactly the point I was trying to nudge toward. I agree with you that the unsubsidized price does not matter in the United States for example, but one must acknowledge that this is a US-centric view and cannot explain what goes on worldwide. I read somewhere that most iPhone sales aren't in the US, so I suspect it doesn't even explain jus…

iPhone market share is much smaller worldwide than in the U.S. In the U.S. they're around 40%. Android has almost 80% worldwide.

I was not talking about market share. Of the raw number of iPhones sold, what percentage are sold in the US?

(This by the way was not even my primary point. I can't tell what your primary point is because you've contradicted yourself.)

Re: What Clayton Christensen got wrong

#24

Post by Touche »

hollerith wrote: post #16
Touche wrote: post #13

Earlier quoted context omitted.

It keeps the high-end phone prices artificially high. Manufacturers cannot sell the same phone to consumers for less than they sell to carriers. This is why high-end phones are less popular in areas where paying full price for a phone is the norm.

So, Apple keeps the price of the iPhone high in countries where people pay for access to the cellular network separately from the phone hardware to keep US carriers happy. Is that your assertion? I still do not get it. It seems to me that US carriers subsidize the phone hardware because US consumers have an irrational unwillingness to pay the full price of the hardware -- or an irrational willingness to pay monthly c…

You misunderstand me. The prices of high-end smartphones are the result of market pressures, not carrier policy. But the market pressure is, primarily, between the manufacturers and carriers; not the manufacturers and consumers. Carriers would like to pay less, obviously, but they make so much money by keeping people on expensive contracts that the market prices the phones where they are.

They prices of high-end smartphones have virtually unchanged in years, where the price of mid-range and low-end phones have plummeted. My assertion is that the reason for this is that high-end phones aren't targeted at consumers.

Re: What Clayton Christensen got wrong

#25

Post by Touche »

asveikau wrote: post #23
Touche wrote: post #21

Earlier quoted context omitted.

iPhone market share is much smaller worldwide than in the U.S. In the U.S. they're around 40%. Android has almost 80% worldwide.

I was not talking about market share. Of the raw number of iPhones sold, what percentage are sold in the US? (This by the way was not even my primary point. I can't tell what your primary point is because you've contradicted yourself.)

Where have I contradicted myself? The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized. Are you disagreeing with this?

Re: What Clayton Christensen got wrong

#26

Post by monkbent »

mrxd wrote: post #7

Some very interesting points. I think the thesis can be made even stronger by observing that the flaw in Christensen's model is that he views a product only as a means to an end. Two products that provide the same outcome are identical, so the cheaper one will win in the market. This assumption holds for business decisions, but consumers are people and are capable of having experiences. I can love or hate the experie…

OP here.

This is a wonderful point. I'm in general a big believer in the "jobs-to-be-done" idea, but this is absolutely missing. Thanks for sharing.

Re: What Clayton Christensen got wrong

#27

Post by asveikau »

Touche wrote: post #25
asveikau wrote: post #23

Earlier quoted context omitted.

I was not talking about market share. Of the raw number of iPhones sold, what percentage are sold in the US? (This by the way was not even my primary point. I can't tell what your primary point is because you've contradicted yourself.)

Where have I contradicted myself? The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized. Are you disagreeing with this?

First comment:

> It doesn't matter than the iPhone costs twice as much

Most recent comment:

> The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized.

This reads as a contradiction to me, as I've stated. I pointed out that your first comment didn't tell the entire story, and ever since then you've seemingly agreed with me. :-)

Re: What Clayton Christensen got wrong

#28

Post by Touche »

asveikau wrote: post #27
Touche wrote: post #25

Earlier quoted context omitted.

Where have I contradicted myself? The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized. Are you disagreeing with this?

First comment: > It doesn't matter than the iPhone costs twice as much Most recent comment: > The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized. This reads as a contradiction to me, as I've stated. I pointed out that your first comment didn't tell the entire story, and ever since then you've seemingly agreed with me. :-)

> This reads as a contradiction to me, as I've stated.

In the first statement I was making a comment on the U.S., where iPhone is most popular, in the second I was making a comment on globally, because you brought it up. Both statements are true.

Re: What Clayton Christensen got wrong

#29

Post by gculliss »

An interesting confirmation of this theory is explained in the recent Washington Post article entitled, "What killed BlackBerry? Employees started buying their own devices." That article basically explains how the smartphone market shifted from a business market to a consumer market, where consumers wanted the superiority of non-blackberry devices. While not dealing with the modularity issue, the article supports the different values in those two market perspectives (they're really not segments). http://www.washingtonpost.com/blogs/the-switch/wp/2013/09/20...

Re: What Clayton Christensen got wrong

#30

Post by asveikau »

Touche wrote: post #28
asveikau wrote: post #27

Earlier quoted context omitted.

First comment: > It doesn't matter than the iPhone costs twice as much Most recent comment: > The iPhone (and other high-end smartphones) are less popular in countries where they are purchased unsubsidized. This reads as a contradiction to me, as I've stated. I pointed out that your first comment didn't tell the entire story, and ever since then you've seemingly agreed with me. :-)

> This reads as a contradiction to me, as I've stated. In the first statement I was making a comment on the U.S., where iPhone is most popular, in the second I was making a comment on globally, because you brought it up. Both statements are true.

It was never stated that the first comment was only about the United States.
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