Strategy & Competition
Where to play, how to win, and staying ahead of competitors.
Only the paranoid survive.
SourceAttributed to Andrew S. Grove in · via Wikiquote
A free people ought not only to be armed, but disciplined; to which end a uniform and well-digested plan is requisite; and their safety and interest require that they should promote such manufactories as tend to render them independent of others for essential, particularly military, supplies.
SourceFirst Annual Address, to both Houses of Congress, January 8, 1790 · Mount Vernon Ladies' Association on George Washington's Mount Vernon
There can be no greater error than to expect, or calculate upon real favours from Nation to Nation.
SourceFarewell Address · National Archives on Founders Online
There is nothing so likely to produce peace as to be well prepared to meet an enemy.
SourceLetter to Elbridge Gerry · National Archives on Founders Online
It may be laid down as a primary position, and the basis of our system, that every Citizen who enjoys the protection of a free Government, owes not only a proportion of his property, but even his personal services to the defence of it, and consequently that the Citizens of America (with a few legal and official exceptions) from 18 to 50 Years of Age should be borne on the Militia Rolls, provided with uniform Arms, and so far accustomed to the use of them, that the Total strength of the Country might be called forth at a Short Notice on any very interesting Emergency.
SourceLetter to Alexander Hamilton · National Archives on Founders Online
To be prepared for war is one of the most effectual means of preserving peace.
SourceFirst Annual Address, to both Houses of Congress · National Archives on Founders Online
If we desire to avoid insult, we must be able to repel it; if we desire to secure peace, one of the most powerful instruments of our rising prosperity, it must be known, that we are at all times ready for War.
SourceFifth Annual Address to Congress · Mount Vernon Ladies' Association on George Washington's Mount Vernon
It is our true policy to steer clear of permanent alliance with any portion of the foreign world.
SourceFarewell Address to the People of the United States · National Archives on Founders Online
You should learn from your competitor, but never copy. Copy and you die.
SourceSpotlight: Jack Ma, co-founder of Alibaba.com - Business - International Herald Tribune, by SONIA KOLESNIKOV-JESSOPJAN · via Wikiquote
And it comes from saying no to 1,000 things to make sure we don't get on the wrong track or try to do too much. We're always thinking about new markets we could enter, but it's only by saying no that you can concentrate on the things that are really important.
SourceAs quoted in "The Seed of Apple's Innovation" in BusinessWeek (12 October 2004) · via Wikiquote
I've always wanted to own and control the primary technology in everything we do.
SourceAs quoted in "The Seed of Apple's Innovation" in BusinessWeek (12 October 2004) · via Wikiquote
A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.
SourceInterview with the New York Times (5 June 2007) · via Wikiquote
The desktop computer industry is dead. Innovation has virtually ceased. Microsoft dominates with very little innovation. That's over. Apple lost. The desktop market has entered the dark ages, and it's going to be in the dark ages for the next 10 years, or certainly for the rest of this decade.
SourceAs quoted in "Steve Jobs: The Next Insanely Great Thing" in WIRED magazine (February 1996) · via Wikiquote
The Internet doesn't change everything. It doesn't change supply and demand.
If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job. There are lots of them and many of them are hungry.
There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment - and you start to decline.
When a change in how some element of one's business is conducted becomes an order of magnitude larger than what that business is accustomed to, then all bets are off.
I think that's part of building your team is trying to anticipate where your team is going and to a certain extent where, especially defensively because you have to react to what they put on the field. Defensively you have to be able to defend those things.
You go to the draft board and think, 'Here's a nose tackle. Who needs a nose tackle?' Well, eight teams in front of you need a nose tackle, and there's two nose tackles. It's something you have to figure out where you can get the players to play in your system.
The way to be successful in the software world is to come up with breakthrough software, and so whether it's Microsoft Office or Windows, its pushing that forward. New ideas, surprising the marketplace, so good engineering and good business are one in the same.
Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes.
We are in the throes of a transition where every publication has to think of their digital strategy.
Eventually, all companies are replaced.
Google's done a super good job on search; Apple's done a great job on the IPod.
The potential financial reward for building the 'next Windows' is so great that there will never be a shortage of new technologies seeking to challenge it.
With Windows 8, Microsoft is trying to gain market share in what has been dominated by the iPad-type device. But a lot of those users are frustrated. They can't type. They can't create documents.
Steve Jobs' ability to focus in on a few things that count, get people who get user interface right, and market things as revolutionary are amazing things.
In this business, by the time you realize you're in trouble, it's too late to save yourself. Unless you're running scared all the time, you're gone.
If you have 50 different plug types, appliances wouldn't be available and would be very expensive. But once an electric outlet becomes standardized, many companies can design appliances, and competition ensues, creating variety and better prices for consumers.
Apple has always leveraged technologies that the PC industry has driven to critical mass - the bus structures, the graphics cards, the peripherals, the connection networks, things like that - so they're kind of in the PC ecosystem and kind of not.
Netscape was able to get the government working on its behalf.
If you're entering anything where there's an existing marketplace, against large, entrenched competitors, then your product or service needs to be much better than theirs. It can't be a little bit better, because then you put yourself in the shoes of the consumer... you're always going to buy the trusted brand unless there's a big difference.
The goal of Tesla is to accelerate sustainable energy, so we're going to take a step back and think about what's most likely to achieve that goal.
I think long term you can see Tesla establishing factories in Europe, in other parts of the U.S. and in Asia.
I do think there is a lot of potential if you have a compelling product and people are willing to pay a premium for that. I think that is what Apple has shown. You can buy a much cheaper cell phone or laptop, but Apple's product is so much better than the alternative, and people are willing to pay that premium.
Boeing just took $20 billion and 10 years to improve the efficiency of their planes by 10 percent. That's pretty lame. I have a design in mind for a vertical liftoff supersonic jet that would be a really big improvement.
Facebook is quite entrenched and has a network effect. It's hard to break into a network once it's formed.
Stationary storage will be as big as the car business long term. The growth rate will probably be several times what it is for the car business.
SpaceX has the potential of saving the U.S. government $1 billion a year. We are opposed to creating an entrenched monopoly with no realistic means for anyone to compete.
I think the high-tech industry is used to developing new things very quickly. It's the Silicon Valley way of doing business: You either move very quickly and you work hard to improve your product technology, or you get destroyed by some other company.
The U.S. automotive industry has been selling cars the same way for over 100 years, and there are many laws in place to govern exactly how that is to be accomplished.
In the case of Apple, they did originally do production internally, but then along came unbelievably good outsourced manufacturing from companies like Foxconn. We don't have that in the rocket business. There's no Foxconn in the rocket business.
Selling an electric sports car creates an opportunity to fundamentally change the way America drives.
Whenever you do something, people try to re-do it and do a better version, especially if they're in another country.
Unrestrained competition can drive people into actions that they would otherwise regret.
The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.
Competition is the keen cutting edge of business, always shaving away at costs.
The competition between me and Bill Gates, probably: Who can spend money more effectively that can do better philanthropy.
Our philosophy is that we want to be an ecosystem. Our philosophy is to empower others to sell, empower others to service, making sure the other people are more powerful than us. With our technology, our innovation, our partners - 10 million small business sellers - they can compete with Microsoft and IBM.
Our focused customers are small business and young people. We did a great job in China. How can we help those young people in India, in Pakistan, in Africa. If they can use in the same ways.
The difference between Amazon and us is Amazon is more like an empire - everything they control themselves, buy and sell.
Our philosophy is, using internet technology, we can make every company become Amazon.
What we need to do is always lean into the future; when the world changes around you and when it changes against you - what used to be a tail wind is now a head wind - you have to lean into that and figure out what to do because complaining isn't a strategy.
If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.
There are two ways to extend a business. Take inventory of what you're good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backward.
Great industries are never made from single companies. There is room in space for a lot of winners.
Real estate is the key cost of physical retailers. That's why there's the old saw: location, location, location.
There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.
A company shouldn't get addicted to being shiny, because shiny doesn't last.
On the Internet, companies are scale businesses, characterized by high fixed costs and relatively low variable costs. You can be two sizes: You can be big, or you can be small. It's very hard to be medium. A lot of medium-sized companies had the financing rug pulled out from under them before they could get big.
Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.
In this industry, there's a lot of cases of being a competitor in one way, but you're often a customer and a vendor in another way. It's not atypical in aerospace. Actually, it's not that atypical in a lot of industries.
With the amount of fixed expense that goes into developing something like the BE-4 engine, you want it to be used as much as possible.
I think it is often easier to make progress on mega-ambitious dreams. Since no one else is crazy enough to do it, you have little competition. In fact, there are so few people this crazy that I feel like I know them all by first name.
I don't think there's any question that the UFL or any other league that wants to challenge the NFL can have an impact. The demand for professional football is off the charts.
Traditional TV will have to innovate their TV delivery software in new ways beyond just offering their content in an app in order to change the viewing erosion of TV.
Someone is out there looking to put you out of business. Someone is out there who thinks they have a better idea than you have. A better solution than you have. A better or more efficient product than you have.
What I do know, at least what I think I have learned from my experiences in business, is that when there is a rush for everyone to do the same thing, it becomes more difficult to do. Not easier. Harder.
When you've got 10,000 people trying to do the same thing, why would you want to be number 10,001?
I think Amazon is the greatest start-up and the greatest company in the world. The way they are using new technologies is not just disrupting retail, it's getting ready to disrupt everything.
Once you have a product that you are happy with, you the need to centralize things to continue growth.
Figuring out what the next big trend is tells us what we should focus on.
Our goal is not to build a platform; it's to be cross all of them.
Our mission is to connect every person in the world. You don't do that by having a service people pay for.
It's really easy to have a nice philosophy about openness, but moving the world in that direction is a different thing. It requires both understanding where you want to go and being pragmatic about getting there.
This is a perverse thing, personally, but I would rather be in the cycle where people are underestimating us. It gives us latitude to go out and make big bets that excite and amaze people.
Our role is to be a platform for making all of these apps more social, and it's kind of an extension of what we see happening on the web, with the exception of mobile, which I think will be even more important than the web in a few years - maybe even sooner.
There are good examples of companies - Coca-Cola is one - that invested before there was a huge market in countries, and I think that ended up playing out to their benefit for decades to come.
The connectivity declaration is about uniting the whole industry - a lot of companies that typically compete very fiercely - to push in a coherent direction.
When we are thinking about stuff like embeds, we are not thinking about how we are competing with YouTube. We are thinking about how are we going to make it more useful for people to share stuff on Facebook.
We're a community of a billion-plus people, and the best-selling phones - apart from the iPhone - can sell 10, 20 million. If we did build a phone, we'd only reach 1 or 2 percent of our users. That doesn't do anything awesome for us. We wanted to turn as many phones as possible into 'Facebook phones.' That's what Facebook Home is.
A lot of people are focused on taking over the world or doing the biggest thing and getting the most users. I think part of making a difference and doing something cool is focusing intensely.
I think a lot of the time there isn't such a black-and-white difference between what's a platform and what's an app. It's really just like the most important apps become platforms.
One of my big regrets is that Facebook hasn't had a major chance to shape the mobile operating system ecosystem.
Facebook is in a very different place than Apple, Google, Amazon, Samsung, and Microsoft. We are trying to build a community.
We started off as this platform inside Facebook; and we were pretty clear from the beginning that that wasn't where it was going to end up. A lot of people saw it and asked, 'Why is Facebook trying to get all these applications inside Facebook when the web is clearly the platform?' And we actually agreed with that.
Games is probably the biggest industry today that has gone really social, right. I mean, the incumbent game companies are really being disrupted and are quickly trying to become social. And you have companies like Zynga.
I mean, we've built a lot of products that we think are good, and will help people share photos and share videos and write messages to each other. But it's really all about how people are spreading Facebook around the world in all these different countries. And that's what's so amazing about the scale that it's at today.
Video is growing very quickly on Facebook. A lot of people compare that to YouTube. I think that kind of makes sense. YouTube isn't the only video service, but I think it's the biggest, and it probably makes more sense to compare Facebook video to YouTube rather than Netflix because that's a completely different kind of content.
There are people who are really good managers, people who can manage a big organization, and then there are people who are very analytic or focused on strategy. Those two types don't usually tend to be in the same person. I would put myself much more in the latter camp.
Our strategy is very horizontal. We're trying to build a social layer for everything. Basically, we're trying to make it so that every app everywhere can be social, whether it's on the web or mobile or other devices. So inherently, our whole approach has to be a breadth-first approach rather than a depth-first one.
We're very focused on making News Feed really good, making our photos experience really good, making messaging really good, and creating great location apps. That's the nature of a platform business of our scale. Most companies that are relevant to us will have some overlaps in some competitive way.
The basis of our partnership strategy and our partnership approach: We build the social technology. They provide the music.
We just think that there are all these different ways that people want to share, and that compressing them all into a single blue app is not the right format of the future.
I think we basically saw that the messaging space is bigger than we'd initially realized, and that the use cases that WhatsApp and Messenger have are more different than we had thought originally.
It's a juicy thing to say we're building a phone, which is why people want to write about it. But it's so clearly the wrong strategy for us.
Basketball is a simple game. Your goal is penetration, get the ball close to the basket, and there are three ways to do that. Pass, dribble and offensive rebound.
We have teams of people working on electric cars. So you never know - you may find Virgin competing with the Tesla in the car business as we do in the space business.
We, we - as I say, we go in and shake up other industries and I think, you know, we do it differently and I think that industries are not quite the same as a result of Virgin attacking the market.
If you are a small company taking on a big company, you need to have a sense of humor.
We've always had a pretty competitive and pretty ferocious battle with British Airways... It's lasted now about 14 years, and we're very pleased to have survived it.
Well, we know that people in Australia love the idea of both Impulse and Virgin Blue getting up and adding a bit of competition, and it's fun to be able to deliver it.
And you know, I've had great fun turning quite a lot of different industries on their head and making sure those industries will never be the same again, because Virgin went in and took them on.
I suppose Virgin is an unusual brand in that I suspect we're the only 'way of life' brand in the world. We're one of maybe the top 30 best known brands in the world, yet if you look at the other 29, they all specialize in one area. Whether it's Google, Coca-Cola, Microsoft, etc., they all generally specialize in one area.
With Virgin, I've just loved creating things. And as a private company, I can get away with moving Virgin from records to airlines to train companies to space companies to whatever, without ever having to worry about analysts knocking the value of my stock.
Information technology is at the core of how you do your business and how your business model itself evolves.
The opportunity ahead for Microsoft is vast, but to seize it, we must focus clearly, move faster, and continue to transform.
I think reconceptualizing Microsoft as a devices and services company is absolutely what our vision is all about. Office 365 and Azure on the services side are representative of it.
One of the things that I'm fascinated about generally is the rise and fall of everything, from civilizations to families to companies.
We all know the mortality of companies is less than human beings.
When we think about even the PC market and what is required in the student as well as in the consumer market, we want to be able to compete in the opening price point.
We had the Windows app store in Windows 8, but one of the big changes in the design of Windows 10 is to make sure that the app store is front and center where our usage is, which is the desktop.
The enterprise market is never winner-take-all.
I'm not claiming that we are the only guys who are going to succeed in the cloud. Others can succeed as well, just like in the previous generation.
Competition is not going to kill us.
We have only one Windows. We don't have multiple Windows. They run across multiple form factors, but it's one developer platform, one store, one tool chain for developers. And you adapt it for different screen sizes and different input and output.
India for sure is a mobile-first country. But I don't think it will be a mobile-only country for all time. An emerging market will have more computing in their lives, not less computing, as there is more GDP and there is more need. As they grow, they will also want computers that grow from their phone.
In the post-Snowden world, you need to enable others to build their own cloud and have mobility of applications. That's both because of the physicality of computing - where the speed of light still matters - and because of geopolitics.
Microsoft has no SQL Server developers. We have only Azure developers.
There are nine million servers sold annually. Of those, just one million are sourced by the big guys. What we're trying to predict is: in the future, is that all going into the one million category? Or will there be some balance?
Culturally, I think we have operated as if we had the formula figured out, and it was all about optimizing, in its various constituent parts, the formula. Now it is about discovering the new formula.
In the past, there was hardware, software, and platforms on top of which there were applications. Now they're getting conflated. That is all going to get disrupted by the move to the cloud.
Cloud is just emerging, but it's high growth.
You've got to remember even the Apple regeneration started with colorful iMacs. So let us first get the colorful iMacs. I think with what we're doing with Lumia, we're at that stage. I want to do good devices that people like, and then we will go on to doing the next thing and the next thing.
The unique value that Microsoft can add is around productivity and platforms. Productivity is broadly something we can uniquely do.
Our goal with the cloud is to make sure that our cloud and our cloud applications are available on every device in the world.
When we think about Windows, we want to think of it as a broad platform, from wearables to industrial IoT platforms to PCs and tablets.
The fundamental truth for developers is they will build if there are users.
At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world.
We're not in hardware for hardware's sake. We're in hardware to be able to express all our platform and productivity software in a way that's unique.
Our goal is to make the best devices in the world, not to be the biggest.
I think right now it's a battle for the mindshare of developers and for the mindshare of customers, and right now iPhone and Android are winning that battle.
Apple's market share is bigger than BMW's or Mercedes's or Porsche's in the automotive market. What's wrong with being BMW or Mercedes?
Microsoft has had two goals in the last 10 years. One was to copy the Mac, and the other was to copy Lotus' success in the spreadsheet - basically, the applications business. And over the course of the last 10 years, Microsoft accomplished both of those goals. And now they are completely lost.
Pretty much, Apple and Dell are the only ones in this industry making money. They make it by being Wal-Mart. We make it by innovation.
The seven-inch tablets are tweeners: too big to compete with a smartphone, and too small to compete with an iPad.
The engineering is long gone in most PC companies. In the consumer electronics companies, they don't understand the software parts of it. And so you really can't make the products that you can make at Apple anywhere else right now. Apple's the only company that has everything under one roof.
There's no other company that could make a MacBook Air and the reason is that not only do we control the hardware, but we control the operating system. And it is the intimate interaction between the operating system and the hardware that allows us to do that. There is no intimate interaction between Windows and a Dell notebook.
It is piracy, not overt online music stores, which is our main competitor.
The reason we wouldn't make a seven-inch tablet isn't because we don't want to hit a price point, it's because we don't think you can make a great tablet with a seven-inch screen.
We think Android is very, very fragmented, and becoming more fragmented by the day. And as you know, Apple strives for the integrated model so that the user isn't forced to be the systems integrator.
But Apple really beats to a different drummer. I used to say that Apple should be the Sony of this business, but in reality, I think Apple should be the Apple of this business.
When you run a platform on scale, you have to make sure it's truly open. That way, not only do you do well, so do others.
When Larry and Sergey founded Google Search, one of the things that struck me is that it was available for everyone to use. We deeply desire our services to work for everyone. And that inherently means we have to work with partners. That is the thesis underlying everything we do.
Nest is one vertical implementation of a set of smart products for the home. But we will support other people's smart products for the home.
I think it is going to be hard for individual OEMs to create a platform on top of which people will write content and services and which users will transact.
You're going to have 100s of millions of users on Chrome, spanning mobile, tablets, and desktops. That is one unfragmented base. That uniformity is probably better than most of the issues across browsers.
If we are building something that users need, and there is a lot of value we are driving, I think how search manifests in iOS will work out just fine.
We have seen a lot of interest from Chinese developers on Google Play because the extent to which Android is used. If we can figure out a model by which we can serve those users, it would be a privilege to do so. So I don't think of China as a black hole.
We don't expect Google as a first party service to provide all the answers. Part of the reason a platform is successful is because there are very very important things from other companies and other developers on top of the platform.
Things like WhatsApp are a great example of success that others have had on Android, which we see as welcome innovation on the platform.
We run Android in a very open way and work closely with all partners. We work with Samsung, and I spend a lot of time with them. But we've always supported other partners.
We're excited by the success of WhatsApp on top of Android. Amazon brings services like Kindle on top of Android. It's a competitive world and a lot more complex than people realize. When you run a platform on scale, you have to make sure it's truly open. That way, not only do you do well, so do others.
We need to bring Android and Chrome to every screen that matters for users, which is why we focused on phone, wearables, car, television, laptops, and even your workplace.
You can only do so many things great, and you should cast aside everything else.
The reality is, is that we love competition, at Apple. We think it makes us all better. But we want people to invent their own stuff.
The way we look at manufacturing is this: the U.S.'s strategy should be to skate where the puck is going, not where it is.
Apple is the only company that can take hardware, software, and services and integrate those into an experience that's an 'aha' for the customer. You can take that and apply to markets that we're not in today.
I don't think Apple has to own a content business.
You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user.
I don't really think anything Microsoft does puts pressure on Apple.
We have to make sure, at Apple, that we stay true to focus, laser focus - we know we can only do great things a few times, only on a few products.
When Apple looks at what categories to enter, we ask these kinds of questions: What are the primary technologies behind this? What do we bring? Can we make a significant contribution to society with this? If we can't, and if we can't own the key technologies, we don't do it.
To me, this is the perfect marriage. There's no friction. There's just, we have what they need, they have what we need. And so IBM is in the process, with our help, of designing many different apps for many different verticals.
Market in India is big enough for several brands. For us, it's about innovation, making best product, and making the ecosystem better and better. If we do that well, then more people will switch from Android to iOS.
We don't collect a lot of your data and understand every detail about your life. That's just not the business that we are in.
If you look at the automobile in many countries, there is a certified pre-owned market for Lexus, BMW, and many other brands. When you buy a high-end smartphone, you can expect the same kind of a situation there.
I see the Mac being a key part of Apple for the long term, and I see growth in the Mac for the long term.
The kind of investors we seek are long term because that's how we make our decisions.
It's not what Apple and Beats are doing today. It's what we believe pairing the two together can produce for the future.
I think the running game is very important to every offense. Being balanced is extremely important. There's times where you have to throw the ball. You could be down late in the game, you need to come back; you have to be able to pass it when they know you're passing it.
Everyone does things differently on offense. Everyone's goal is to score points.
You look at another team's style and how they do it, and you just want to understand how they're doing it and see if you can learn something and maybe implement it into what your team does.
I'll put the Packers' best players on defense. It's best for a team and good for its morale.
Go back through football, and you will see that the team with the best defense wins.
Times and conditions change so rapidly that we must keep our aim constantly focused on the future.
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
Predicting rain doesn't count. Building arks does.
Time is the friend of the wonderful company, the enemy of the mediocre.
Do not let spacious plans for a new world divert your energies from saving what is left of the old.
The great defense against the air menace is to attack the enemy's aircraft as near as possible to their point of departure.
Let our advance worrying become advance thinking and planning.
Battles are won by slaughter and maneuver. The greater the general, the more he contributes in maneuver, the less he demands in slaughter.
Those who can win a war well can rarely make a good peace and those who could make a good peace would never have won the war.
For good or for ill, air mastery is today the supreme expression of military power and fleets and armies, however vital and important, must accept a subordinate rank.
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