Leapfrog – artdiamondblog.com

Former Biggest Retailer Sears Limps into Bankruptcy

(p. A1) For much of the 20th century, Sears defined American retailing with catalogs and department stores that brought toys, tools and appliances to millions of homes.
By the time Sears Holdings Corp. limped into bankruptcy on Monday [Oct. 15, 2018], the once-great company was shriveled and sickly. Decades earlier, it had been dethroned by Walmart Inc. as the biggest U.S. retailer. Then it was crippled by a chief executive with unorthodox strategies, and Amazon.com Inc., an endless online catalog that sucked profits out of the business.

For the full story, see:
Suzanne Kapner. “Sears, Once Retail Colossus, Enters Painful New Era.” The Wall Street Journal (Tuesday, Oct. 16, 2018): A1 & A6.
(Note: bracketed date added.)
(Note: the online version of the story has the date Oct. 15, 2018, and has the title “Sears Reshaped America, From Kenmore to Allstate.”)

AMD Chips Leapfrog Intel Chips

(p. B2) A.M.D.’s shares are easily the best performing among the chip makers in the Standard & Poor’s 500-stock index.
That is quite a reversal.
. . .
For years, A.M.D. produced processors whose main attraction was price. When Lisa Su took over as chief executive of the company in 2014, she sought to change that. But in the semiconductor industry, new products take years to develop, and so the efforts have only recently borne fruit.
The company’s Ryzen chips, used in high-performance enterprise and gaming computers, outperform Intel’s flagship processors. Many computer makers, including Acer, Asus, Dell, HP, Huawei, Lenovo and Samsung, have begun using them in their devices.

For the full story, see:

Jamie Condliffe. “Chip Maker, Once Lagging, Outpaces Its Competitors.” The New York Times (Saturday, Aug. 25, 2018): B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date Aug. 24, 2018, and has the title “Why A.M.D.’s Stock Is Outperforming Intel’s.”)

Silicon Valley Firm Defies Disruption

(p. A1) LOS GATOS, Calif.–Companies that resist change don’t tend to last long in the caldron of innovation called Silicon Valley.
Then there’s the Z.A. Macabee Gopher Trap Co.
Founded in 1900 by local barber and inventor Zephyr Albert Macabee to manufacture his patented metal gopher traps, the company is a stickler for tradition.
The traps’ design has remained exactly the same, including their forest green color–despite complaints that the hue makes them hard to spot. Some customers gripe of hitting them with mowers, and have repainted them bright red or other colors. Still, the company doesn’t waver.
Macabee operates out of the same small Victorian house where “Zeph” Macabee started it all on a quiet residential street. Even the packaging—Spartan white boxes of 24–remain unchanged since the postearthquake edition of 1906.
“We have a strong product identity,” says Ronald Fink, the company’s cheerful septuagenarian general manager, who grew up on a nearby apricot farm.
But existential questions loom. The company’s patent expired in 1917. The threat of cheap Asian knockoffs led the company in (p. A10) 2008 to shift all production to China and lay off the eight Cambodian refugees who built traps in the basement on decades-old machines.
Another new competitor has popped up: a pest exterminator named Steve Albano, founder of Trapline Products in Redwood City, who used and studied Macabee traps and came up with what he considers a better design. “I think they just work better,” says Mr. Albano.
. . .
As the owners sort out their differences, copycat traps are flooding the market. Most retail for about a third less than the roughly $9 a Macabee commands, including several that even mimic the forest color.
“But people still buy us, because they know they’re getting quality,” says Mr. Fink.

For the full story, see:
Timothy Aeppel. “Old Time Rodent-Trap Company Doesn’t Gopher Change; At one firm in Silicon Valley, disruption is a dirty word; existential fears after 100 years.” The New York Times (Fri., June 19, 2015): A1 & A10.
(Note: ellipsis added.)
(Note: the online version of the story has the title “Macabee, an Old Time Maker of Rodent Traps, Doesn’t Gopher Change; At one firm in Silicon Valley, disruption is a dirty word; existential fears after 100 years.”)

“Vinyl Rose from the Ashes”

(p. A10) LODENICE, Czech Republic — He was a businessman, not a clairvoyant. Zdenek Pelc did not really foresee, a generation ago, that vinyl records would one day make a return from near extinction.
But he was smart enough to keep a vinyl record factory here, a relic of the Communist era, through all those years when albums gave way to CDs and then to iTunes and streaming, and to be ready when vinyl suddenly got hot again.
And that is why this village of 1,800, nestled in a lush furl of the Bohemian hills, improbably finds itself a world leader in the production of vinyl albums.
“I realized when I came to the company 33 years ago that vinyl would be finished one day,” said Mr. Pelc, 64, who now owns GZ Media and serves as president. “But I wanted our company to be the last one to stop making them.”
The trajectory of the company — and the village it once dominated — traces the Czech Republic’s transition to quirky capitalist colt from cranky Communist nag, all played to the kind of rock soundtrack that accompanies many modern Czech tales.
Instead of getting rid of the old equipment and moving CD-making machines into their space — as most music production companies around the world did in the late 1980s and early ’90s — Mr. Pelc kept only enough machines running to meet the dwindling demand, moving the rest into storage and cannibalizing their parts as needed.
“Frankly, if someone had told me back then that vinyl would return, I wouldn’t have believed it,” he said.
. . .
“Vinyl rose from the ashes,” Mr. Pelc said happily.
. . .
“From around 2005, the demand for vinyl grew steadily,” said Michael Sterba, GZ Media’s chief executive. “Then, it really took off in the last two or three years, like, whoosh.”
. . .
“Only an idiot thinks this can go on forever,” Mr. Sterba said. “Maybe making vinyl is a fashion that will disappear in a few years. Who knows? No one predicted this.”

For the full story, see:
RICK LYMAN. “LODENICE JOURNAL; Long-Playing Czech Company Rides a Resurgence to the Top.” The New York Times (Fri., AUG. 7, 2015): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 6, 2015, and has the title “LODENICE JOURNAL; Czech Company, Pressing Hits for Years on Vinyl, Finds It Has Become One.”)

How Sega Came Out of Nowhere to Leapfrog Near-Monopolist Nintendo

Source of book image: http://images.eurogamer.net/2014/usgamer/original.jpg/EG11/resize/958x-1/format/jpg

(p. C10) “Console Wars” tells how Sega, an unremarkable Japanese manufacturer of games played in arcades, came out of nowhere to challenge Nintendo for dominance of the videogame world in the first half of the 1990s. Nintendo, which had revived the stagnant home videogame category a few years earlier, had something close to a monopoly in 1990 and behaved accordingly, dictating terms to game developers and treating retailers as peons. Sega, in Mr. Harris’s telling, was a disruptive force in a highly concentrated market, introducing more advanced gaming technology, toppling Nintendo from its perch and becoming the largest seller of home videogame hardware in the U.S. by late 1993.

Mr. Harris’s hero is a former Mattel executive named Tom Kalinske, who became president of Sega of America, then a small subsidiary, in 1990. Mr. Kalinske assembled a team of crack marketers who would not have gone near Sega but for his reputation and persuasiveness. Within a year and a half, according to Mr. Harris, Mr. Kalinske’s leadership, along with a new gaming system called Genesis and a marketing assist from a mascot named Sonic the Hedgehog, made Sega the U.S. market leader in videogames.
And then, after only three years at the top, Sega fell from its pedestal. Sega’s management in Japan, suffering mightily from not-invented-here syndrome, rejected Mr. Kalinske’s proposals to collaborate with Sony and Silicon Graphics on new gaming systems. Instead, over his objections, Sega pushed out its ill-conceived Saturn game console in 1995. While Saturn flopped, Sony struck gold with its PlayStation; Silicon Graphics sold its chip with amazing graphics capabilities to Nintendo; and the game, so to speak, was over.
. . .
The author admits he has taken liberties: “I have re-created the scenes in this book using the information uncovered from my interviews, facts gathered from supporting documents, and my best judgment as to what version most closely fits the historical record,” he writes. The result is more a 558-page screenplay than a credible work of nonfiction.

For the full review, see:
MARC LEVINSON. “Sonic Boom; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and–briefly–won.” The Wall Street Journal (Sat., May 24, 2014): C10.
(Note: ellipsis added.)
(Note: the online version of the review has the date May 23, 2014, an has the title “Book Review: ‘Console Wars’ by Blake J. Harris; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and–briefly–won.”)

The book under review is:
J., Harris Blake. Console Wars: Sega, Nintendo, and the Battle That Defined a Generation. New York: HarperCollins Publishers, 2014.

Edison, Not Antitrust, Reduced Power of Hated Gas Monopolies

Counterbalancing the angst of those hurt by the death of an old technology is sometimes the triumph creative destruction provides to those who were less well-served by the old technology. Some look to governments to restrain a dominant technology; but sometimes a more effective way is to replace the old technology through creative destruction’s leapfrog competition.

(p. 84) Gaslight monopolies had few friends outside of the ranks of shareholders. At the beginning of the nineteenth century, gaslight had been viewed as pure and clean; seventy years later, its shortcomings had become all too familiar: it was dirty, soiled interior furnishings, and emit-(p. 85)ted unhygienic fumes. It was also expensive, affordable for indoor lighting only in the homes of the wealthy, department stores, or government buildings. The New York Times almost spat out the following description of how gas companies conducted business: “They practically made the bills what they pleased, for although they read off the quantity by the meter, that instrument was their own, and they could be made to tell a lie of any magnitude…. Everybody has always hated them with a righteous hatred.”

Edison credited the gas monopoly for providing his original motivation to experiment with electric light years before in his Newark laboratory. Recalling in October 1878 his unpleasant dealings years earlier with the local gas utility, which had threatened to tear out their meter and cut off the gas, Edison said, “When I remember how the gas companies used to treat me, I must say that it gives me great pleasure to get square with them.” The Brooklyn Daily Eagle printed an editorial titled “Revenge Is Sweet” in which it observed that the general public greatly enjoyed the discomfort of the gas companies, too: “To see them squirm and writhe is a public satisfaction that lifts Edison to a higher plane than that of the wonderful inventor and causes him to be regarded as a benefactor of the human race, the leading deity of popular idolatry.”

Source:
Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.
(Note: ellipsis in original.)

With iTunes, Apple Leapfrogged CD Burners (a Boat Apple Had Missed)

Is the example sketched below, and in a previous entry, a case of a first mover disadvantage? Or is it simply a case of a lucky or wise bounce-back from a genuine mistake?

(p. 382) . . . [Job’s] angry insistence that the iMac get rid of its tray disk drive and use instead a more elegant slot drive meant that it could not include the first CD burners, which were initially made for the tray format. “We kind of missed the boat on that,” he recalled. “So we needed to catch up real fast.” The mark of an innovative company is not only that it comes up with new ideas first, but also that it knows how to leapfrog when it finds itself behind.

Source:
Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.
(Note: ellipsis and bracketed “Job’s” added.)

Apple “Finding a Way to Leapfrog Over Its Competitors”

Isaacson says Jobs wanted two refinements in the iMac. One was new colors. The other is discussed below.
I am not sure what to make of this episode. Is Isaacson suggesting that it was good for Apple that Jobs made a mistake on the type of CD hardware to put in the iMac? That this added constraint “would then force Apple to be imaginative and bold”?
Or is the moral that good people who make a lot of quick decisions, make mistakes, sometimes big mistakes, and that Jobs found a way to bounce back from this one?

(p. 356) There was one other important refinement that Jobs wanted for the iMac: getting rid of that detested CD tray. “I’d seen a slot-load drive on a very high-end Sony stereo,” he said, “so I went to the drive manufacturers and got them to do a slot-load drive for us for the version of the iMac we did nine months later.” Rubinstein tried to argue him out of the change. He predicted that new drives would come along that could burn music onto CDs rather than merely play them, and they would be available in tray form before they were made to work in slots. “If you go to slots, you will always be behind on the technology,” Rubinstein argued.

“I don’t care, that’s what I want,” Jobs snapped back. They were having lunch at a sushi bar in San Francisco, and Jobs insisted that they continue the conversation over a walk. “I want you to do the slot-load drive for me as a personal favor,” Jobs asked. Rubinstein agreed, of course, but he turned out to be right. Panasonic came out with a CD drive that could rip and burn music, and it was available first for computers that had old-fashioned tray loaders. The effects of this (p. 357) would ripple over the next few years: It would cause Apple to be slow in catering to users who wanted to rip and burn their own music, but that would then force
Apple to be imaginative and bold in finding a way to leapfrog over its competitors when Jobs finally realized that he had to get into the music market.

Source:
Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

Android App Phones Play “One Seriously Crazy Game of Leapfrog”

“The Droid X is the latest “best Android phone on the market.”” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) You think technology moves too fast now? You think your camera, camcorder and computer become obsolete quickly?

Try buying an app phone. In this business, the state of the art changes as often as Lady Gaga changes outfits.
Suppose, for example, that you want one of the increasingly popular phones that run Google’s Android software.
Last November, you might have been tempted by the Motorola Droid, “the best Android phone on the market.” A month later, the HTC Hero was “the best Android phone on the market.” By January, “the best Android phone yet” was the Nexus One. In April, “the best Android device that you can purchase” was the HTC Incredible. In May, “the best Android phone on the market” was the Sprint Evo.
Either “the best Android phone on the market” is a tech critic’s tic, or we’re witnessing one seriously crazy game of leapfrog.
The latest buzz is about the Motorola Droid X, which Verizon will offer in mid-July for $200.
. . .
(p. B8) . . . , it’s thrilling to see the array of excellent app phones that the original iPhone begat. If you who crave power, speed, flexibility, dropless calls an almost-Imax screen and Verizon’s network (as opposed to Sprint and its similar Evo), the Droid X is a big, beautiful contender for the “best Android phone on the market” crown.
This month’s crown, anyway.

For the full story, see:

DAVID POGUE. “State of the Art; Big Phone, Big Screen, Big Pleasure.” The New York Times (Thurs., July 1, 2010): B1 & B8.
(Note: ellipses added.)
(Note: the online version of the article is dated June 30, 2010.)

Leapfrog Competition in the Wine Industry

“A machine makes Portugal whine.” Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.

(p. A1) ZEBULON, N.C.–In a nondescript factory in this small, wooded town, 10 giant machines worked around the clock last year to churn out 1.4 billion plastic corks, enough to circle the earth 1.33 times if laid end-to-end.

Unknown to most American wine drinkers, the plant’s owner, Nomacorc LLC, has quietly revolutionized the 400-year-old wine-cork industry. Since the 1600s, wine has been bottled almost exclusively with natural cork, a porous material that literally grows on trees in Portugal, Spain and other Mediterranean lands.
But over the past 10 years, an estimated 20% of the bottle stopper market has been replaced by a new technology–plastic corks that cost between 2 and 20 cents apiece. More than one in 10 full-sized wine bottles sold worldwide now come with a Nomacorc plug, while another 9% or so come from other plastic cork makers. Screw caps took another 11% of the market.
“We infuriated the cork industry,” says Marc Noel, Nomacorc’s chairman.
. . .
The story of how Nomacorc and other stop-(p. A10)per upstarts broke the centuries-old cork monopoly is a lesson in how innovation, timing and hustle combined to exploit an opening in a once airtight market. It shows that any dominant industry can be vulnerable to competition, especially if it grows complacent about its position.

For the full story, see:
TIMOTHY AEPPEL. “Show Stopper: How Plastic Popped the Cork Monopoly.” The Wall Street Journal (Sat., MAY 1, 2010): A1 & A10.
(Note: ellipsis added.)

Source of graph: online version of the WSJ article quoted and cited above.