This is the sixth and last in a series of postings about my thoughts from sessions that I attended at the Information Technology Alliance’s Fall Collaborative (<-I love that word) held in Palm Springs.
Delivered by five partners, four of them Sage partners. Wows included:
While listening to a recent podcast from the Cato institute on the value of globalization, I was introduced to something called the Stan Shih Smile Curve of Value.
The idea is that the lowest value item in the production chain is the manufacturing of the product. This is why, for example, that the while every iPod and iPhone are considered to be manufacturing imports we should not care. The real value of the product is in the development and end-use. It is estimated that of the $400 price of an iPhone a mere $5 goes to manufacturing in China, about $45 goes to Japan for parts, the other $350 to the US or, in this case, Apple. This is why every iPod and iPhone say, “Designed by Apple in California. Assembled in China.”
Anyway, this got me to thinking about what this curve would look like for software implementation firms. Here is what I came up with:
What this shows is that the value to the customer is actually delivered at the extremes of the relationship.
What are your thoughts? I am just beginning to play with this model, so it is very open to criticism.
This is the fifth in a series of postings about my thoughts from sessions that I attended at the Information Technology Alliance’s Fall Collaborative (<-I love that word) held in Palm Springs.
This was one of the most anticipated sessions of the conference and it did not disappoint. Michael Lock is the director of channel at Google and give the association an update on Google’s thinking:
Google makes the assumption of abundance of all things, for example, bandwidth and processing power. Apple did this when they created the graphical user interface. You must assume abundance to be innovative.
Some choice quotes were:
- “We will look for a fewer number of quality partners.”
- “You can move off of google.com anytime at zero switching cost. We have to keep you interested.”
- “Operating systems should be (errr, will be) free!”
- “Google is in the 1st inning of the first game of a 162 game season.”
- “Google has over one million users on the Premier version of Google apps at $50 a pop that’s a cool $50 million.”
- “Google has introduced 109 new features in gmail this year alone. How were we able to do this – We only have one version.”
When asked about Google Wave, Lock replied that he is unclear of what will happen it. I love that. That is how great innovation is done – lots of ideas. Some of them will work and some won’t.
In a moment of pure irony the presentation Lock was using, created in Google’s presentation software, of course, was interrupted by a Microsoft Windows dialogue box with an error message indicating that ActiveX (a Microsoft product) had crashed.
Hat tip to my buddy Jason for sending this along to me.
This graph originally posted on ReflectionOf.me blog and reposted on The Consumerist and others, once again demonstrates that price is not based on cost. Interestingly enough, most of the comments are railing against Hewlett Packard. Give me a break! You basically get the printer for free and HP recovers the money by charging I higher price for the ink.
One a side note, this graph also shows why it will so hard to get the developing world to shift away from fossil fuels with crude oil being less expensive than bottled water.