1.Is DoCoMo wise to offer its existing mobile phone rivals access to FeliCa?
Yes, it is a good strategic decision for Docomo for several reasons. First, as the case stated, Docomo does not want to bear all the costs, and risks of a first mover. In fact, it might not be able to afford the premium required to hold exclusivity on this technology. Second, by giving rivals access to Felica, Docomo will be able to increase value of this technology due to the network effects. As Felica network and applications proliferates faster, it will easily become the standard in this industry, and since Docomo had a stake on Felica’s Network, it will be able to make profits from the use of this technology. In addition, Docomo will still be able to have a competitive advantage by being able to learn about the new Felica applications before competitors and to start negotiations before its rivals.
2.Is search a winner-take-all business?
Search is not a winner- take all business because of the following reasons:
First, multi-homing costs are low for users on both sides. End users can use many search engines at the same time at no cost, and switching costs are also zero.
Cross-side and same-side Network Effects are not strong and are neutral. Search engines do not have more value to people if more people are using it. People will select search engines based on performance or maybe new added features. Some people might have some preference for some new features or novelties provided by search engines. There is room for special features in the engines that might satisfy some special needs although, today, most search engines are offering standardized features. Thus, search is a multi-homing platform.
Since the writing of the Electronic Arts Case the Sony Playstation 3 and the Nintendo Wii have been released and both have online gaming capabilities. What’s your assessment of the current online gaming market?
In general, in the gaming industry, there has been a switch in terms of market share among console makers. The leader of the console makers now is Nintendo Wii, who is selling, over 3 times as many units as the PS3, and even more than that against the Xbox 360. In 2008, there was an increase on U.S. retail sales of video games, consoles and game accessories, and total video game sales in America topped $21 billion, and, after many years of operating loss, as of 2008, the console and digital media products of Microsoft's Entertainment and Devices Division (EDD) have finally become profitable.
Focusing only in the online gaming market, according to some critics, Microsoft's X Box live system has done the best job so far of connecting a home console to the Internet and bringing the entire experience together with ease and relative stability.
Although Nintendo and Sony have made available downloadable games and multi-players, they are not doing it quite well. According to a CNET article, The Nintendo Wii's Virtual Console lets gamers enjoy some of the best games from the Nintendo, Super Nintendo, and other classic systems, and the PlayStation Network offers both new games and classic PlayStation titles for download. Unfortunately, the Wii's multiplayer component feels incomplete and awkward, and the PS3's library isn't as large and its interface isn't nearly as friendly as it could have been.
In addition, Microsoft has also announced that as of January 2009 there were 17 million paying subscribers signed up to their Xbox Live service. It is a success for Microsoft, who bet on a subscription-based model for the online gaming market. Many analysts thought people wouldn’t be willing to pay for that kind of service.
Since the publishing of this case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?
Due to the emergence of Video on Demand, Netflix has made its best efforts to be proactive and be ready for the possible mass adoption of VOD technology. The CEO of Netflix stated their willingness to embrace this new technology by saying that they are on the business of “allowing for the best home video viewing for the customers” and not just provide DVD rentals. This statement reflects the dynamism and flexibility of this company.
As of today, Netflix has integrated VOD in its business model and is attempting to establish itself as the market leader in VOD, by integrating a free value added feature to its offering, streaming online video. Netflix is offering unlimited video streaming of over 12000 selections with a subscription of $8.99 or $13.99 per month. This video could be downloaded to a computer or TV through an Internet connected device such as XBOX360, Netflix player, and so on. This added feature is allowing Netflix to increase market penetration of the VOD market and increase customer retention, which has been one of the big challenges for Netflix. As stated before, this move reflects the dynamic capabilities of this firm and a good attempt to address this new technology as a growth opportunity in its path to continue its success.
Who will win the competitive battle between P2P file sharing networks and iTunes over the long run and why?
As it was stated on this case, P2P networks and software has been improved a lot in the last few years. These sytems have improved their speed, security, and distribution. Moreover, the code of these systems is available for other to change them and release new improved versions of the existent systems. The films and music industry can stop some of the creators of current systems such as Bitorrent, Grokster, Per Impact and so on, but they can not stop the release of other more secured networks based on the mentioned systems that will encrypt the files transmitted and will keep complete anonymity of people uploading and downloading any kind of files. Moreover, the author of the P2Psoftware and network should not be liable for any wrong-doing with their systems. They are just creating the technology that could have other multiple legal and beneficial uses such as file sharing of company’s information within a the same, instant messaging, or son on.
It is difficult for the films and music industry to stop all users through the legal system. By 2006, there were more than ten million of users worldwide of P2P systems, and this number is increasing day by day. P2P users are always trying to finding new ways to share their files and hack security schemas. Although some law suits were won against some major P2P systems, these suits are too costly and slow to stop the increasing number of member and users of P2P systems. Perhaps, the ISP providers are the ones who could help establish some filters to avoid illegal piracy, but, as the article stated, they do not want to interfere and are constantly upgrading their systems to support the increase in traffic demand because P2P systems is increasing its use and number of affiliates.
Despite iTunes success (“reviving online music”), iTunes is not making any profits for itself. Apple’s real goal is to make money by selling iPhones or iPods. Furthermore, many efforts have been made to sell music online, but most of them have failed in the process. My opinion is that the business of digital information good as it is these days is not working, and firms in this business might be defeated by P2P systems if they do not update their business model to be profitable in the long run.