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Who Is Your Real Competitor?

Essay by   •  September 11, 2011  •  Essay  •  409 Words (2 Pages)  •  1,415 Views

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As per a latest report, Research In Motion (RIM), has lost so much value that an acquirer could pay a 50% premium and still buy the BlackBerry market for a lower multiple than any company in the industry.

RIM, which was once worth $83 billion has fallen more than 80% from its record three years ago as Apple's iPhone and Google's Android platform siphoned off smart phone customers. Now RIM has a market capitalization of $13.6 billion, where as Apple is valued at 11 times earnings next year.

Similarly, Finland based Nokia has lost it's earnings at 48%. And it is loosing its market share to Android and Windows based phones as well, compared to its Simbian based phones.

Along the same lines, we can take the example of the Display Ad market in the US where Facebook piped Yahoo to take the number 1 spot.

So, what do we learn from these examples? The basic thing to note here is that none of the manufacturers faced the threat of loosing their market share to their competitors operating in the same domain. They lost their market to companies who were operating in an altogether different domain and then out of the blue, they came and wiped the competition clean.

The best example for this is again the iPhone. Apple, from being a computer manufacturer suddenly turned into the manufacture of mobile phones and dethroned traditional mobile companies like Nokia, RIM and Motorola to name a few. Similarly, Sony could never have predicted that Apple would eat up its share of the MP3 player market with the introduction of the iPod.

Again, now with the advent iCloud, the traditional HDD manufacturing companies like Segate etc stare at an uncertain future.

Then again, in the future, there can be a case of online services like Skype eating into the share of the mobile network service companies.

So, basically by quoting all these examples, what I want to highlight is that in the current scenario, a company cannot be sure if the competition will come from its traditional competitors or from a completely new cooperation which has got nothing to do with that particular sector.

Therefore this portrays the necessity for the companies to keep innovating and keep coming up with new products and constantly tapping the pulse of a very unfaithful population to survive, or stare at losing its costumers to someone else.

And finally, today no company can be sure who their real competitors are!

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