Wednesday, 1 June 2011

Take away exam semester 2

Are companies loosing their consumer focus?

 ‘Some of the world's smartest technology companies may be a little bit too smart for their own good. Fuelled by corporate leaders with big egos and a desire to develop and control new markets, companies like Apple, Google and Microsoft are increasingly treating their operations like a game of chess.’

Patricio Robles Econsultancy Blog

Is it inevitable that companies lose their consumer focus as they get larger?

In my opinion, companies like Apple, Google and Microsoft are very profit focused, they are only concentrating on making money, instead of taking in consideration their consumer’s needs and wishes.

For example, Bobby Kotick chief executive officer of Activision (which are currently the biggest and first 3rd party developer and publisher of the games industry) has confessed that he has no love for the industry. Instead of making games he is more interested in making money.
"We have a real culture of thrift. The goal that I had in bringing a lot of the packaged goods folks into Activision about 10 years ago was to take all the fun out of making video games."- declared once the chief executive officer.

Everyone can see that the company is interested in long-term focus and commitment to providing superior returns to their shareholders. If they could, they would raise the prices even further.

            Some franchises don’t tend to be exploited every year across every platform, but Activision’s objectives are earning $100 million plus franchises. This money focused strategy seems to work very well for them, claims Bobby Kotick.

This behaviour revolts even other people working in the game industry. A respected video game designer, Tim Shafer said Kotick makes a big deal about not liking games, and he thinks this attitude is no good for games in general. He doesn’t consider them an industry of widgets and he fancies the CEO isn’t suitable for the industry.
“You can't just latch onto something when it's popular and then squeeze
the life out of it and then move on to the next one. You have to at some point create something, build something.”- claims the popular game designer.

            It very much seems so that Activision are the worst developer and publisher to work under. They have run talented studios and popular games into the ground. For example Bizarre Creations who created the very successful Project Gotham
When the studio was bought by Activision they decided to hand them games that they had no experience creating.  Activision decided to hand them a game, very different to what their speciality is. This resulted in the bad welcome of the game by gamers and critics. After this Activision decided to close down the studio with everyone
who works there made redundant.
“Bizarre is a very talented team of developers, however, because of the broader economic factors impacting the market, we are exploring our options regarding the future of the studio, including a potential sale of the business.”- parried the company.

Guitar Hero is also an Activision franchise which was first released in 2005. Since then, because of the company’s strategy there have been over 17 sequels. After saturating the market with their own titles, sales have dried up. Activision have then decided to cancel all titles in the series and make no more until further notice.

They claimed they can’t make these games profitably, based on current economics and demand. Instead, they want to focus their time and energies on marketing and supporting their strong catalogue of titles and downloadable content, especially to new consumers.

            At the moment Activision is suing Jason West and Vince Zampella, who were two of the most important people at Infinity Ward which is also an Activision franchise. The reason for this is that it seems that the two were having meetings with other companies in the game industry (Electronic Arts) while being employed at Activision. It is likely that West and Zampella have shared documents, code and resources belonging to Infinity Ward with Electronic Arts.

            Taking in consideration the above information, you can draw the interference that big companies are not consumer focused any more, they would do anything to make more profit, release as much sequels as possible, steal information or buy off other companies to annex them.

This rivalry can be seen everywhere amongst big companies. For example Apple and Samsung are also competing with each other.

Apple (which is mostly known for its Macintosh line of computers, the iPod, iPhone and iPad) since 2010 is one of the largest companies in the world. Samsung Group (which is a multinational, multi-industry company) includes many diverse businesses that today extend from advance technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels and more.

 Samsung Electronics is the world’s largest electronics company with a 2009 revenue of $117.4, the company even took the position of the world’s biggest IT maker by surpassing the former leader Hewlett-Packard.

Samsung Electronics leading mobile phone line is the Galaxy S, an Android smartphone, top competitor to Apple’s iPhone. Apple sued Samsung because of committing patent and trademark infringement with its Galaxy line of mobile products.
"We felt the mobile communications business of Samsung had crossed the line, and after trying for some time to work through the issue we decided we needed to rely on the courts.”- claims the company.

            Samsung Electronics decided to fight back and in response they accused Apple of infringing on patents covering the underlying technology of cellular telephony.

It is strange to see that despite their different strengths and scope, they formed an odd relationship based on both rivalry and collaboration. Both companies need the
other while competing for the same customers.

This constitutes of the fact that Samsung provides Apple with components to used them in iPhones and iPads.  Apple is Samsung’s single largest customer.

There was a rumour that Apple wanted to team up with a company in order to make the A5 chip for the iPad, the chairman of that company claimed that for every iPhone sold by Apple Inc. it brings his company millions of revenues.
To be more popular, Apple even tried to get at Google’s Android operating system.

            In my opinion, in business life the main principle for companies is that they use every source and tools they can in order to process, expand and gain profit. While Apple could afford it, it used Samsung as supplier, but when Samsung exploited it, they opted to associate with another company. The goal wasn’t to produce as best iPads as possible, the prestige was more important. They didn’t like the fact that Samsung tried to imitate their product, so they decided to take revenge. The consumers fell out of the focus.

Another greedy member of the digital media industry is Sony. After the release of their Play Station 3, a 21 year old man hacked it. Sony, as a result sued him because they believe that he put PS3 at risk and his hacking allows people to develop custom software and pirated games.
claims that the jailbreak violates the Digital Millennium Copyright Act and the Computer Fraud Abuse Act. The court filing says that George Francis Hotz, alias Geohot  allegedly trafficked in circumvention technology, products, services, methods, codes, software tools, and devices. The company is especially concerned that the jailbreak will enable use or playing of illegal copies of PlayStation 3 video games on the PS3 system.

While most companies would work on fixing the exploit to their system, Sony is just furious hat their supposed unhackable PS3 has been hacked and its flaws released to the world. Hotz says that they just want to send a message to other hackers by suing him.
“Even worse, you sued the guy who actually can write that patch, that’ll sure teach him. If you haven’t realized yet, the PS3 security isn’t irreparably broken at all. But your reputation just might be.”

It seems Sony doesn’t care that what Hotz did was legal, they don’t really care about piracy, they care about control. Other companies in Sony’s place would rather employ the one who hacked their product, so then they can repair that gap, but they instead try to seek revenge.

It’s hard to tell what are the motives of both side. It can be a commercial strategy as well. It is possible that Hotz wants to become famous in order to get a good job at a bigger company. After the suit will be shot down, maybe someone will hire him.
The other possibility is that Sony is getting weak comparing to other rivals, so they want to be in the spot light, because that could increase sales. Many speculations come up, it’s hard to tell what the truth is, and the outcome of the whole business could be that after the trial Hotz might even join Sony.

After reviewing the digital media industry and its participants, I come up with the surprising (and at the same time sad) fact that the world’s smartest and talented companies, led by greedy CEO’s with big egos are led by the desire to control and gain, instead of the will to give something new, exciting and fun to the consumers. 

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