Razor Blades and Razors

On the work front, I did a lot of good reading over the weekend.  How true it is that history repeats itself … over and over and over! And yes, this proves to be true even in high-flying fast-moving technology enabled world – even with vast changes in technology and the speed of innovation fueled by things like Moore’s Law and what the internet has made possible.  This collection of articles continued to fuel my thinking about what cloud technologies enable on the business model front and which ones will yield winners on both the consumer side and the shareholder side!

Tablets are a bit pricier than razor blades, but these three articles caught my eye and the leap was made to razor blades …  one suggesting that Amazon was potentially going to put serious hurt on Apple as the current leader with the iPad in the tablet device space.  I read in that article a suggestion from James McQuivey, Forrester VP, Principal Analyst, (paraphrased by me here) that Amazon would leverage their ability to use below margin pricing on the device to hook the consumers on the higher margin cloud service offerings — bringing immediately to mind for me the historical Gillette razor and razor blade business model.    As I read, I could only imagine that there is some sort of reverse plan from Apple to make the consumer “experience” of the Apple iPad as a current market leader in tablets somehow connected to their own cloud offerings soon to be available.  And then, I read yet another strategy of using the legal system to try to deny a market to your competitor being employed by Samsung – Samsung trying to ban the Apple iPad in the Netherlands due to a 3G license issue.  Razors, razor blades, patents, and more brought to mind!

I decided to do some “historical” reading on Gillette model, and among others this article caught my eye.  It endeavors to debunk the myth a bit.  The article provides a view of history that suggests that Gillette did not architect a “lock-in” but evolved quite differently.   Furthermore, in the end of the article the point is made that what will probably matter is focusing on providing value rather than architecting a “lock-in.”   I tend to agree, and, if history repeats itself … focus on value is what will ultimately produce those business models for cloud that are consumer and shareholder win-wins.


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