AMAZON AND NINTENDODisruptive Innovation

John BrownellOctober 27, 2009

What is Disruptive Technology? Creates new and unexpected

markets

Transforms complication into simplicity

Disruptive Enablers

• Technological innovation

• Disruptive business model

• New value network• Customers • Distribution• Suppliers

Amazon.com, a Success Story “Earth’s Biggest Bookstore”

Innovative Web site Personalization Customer Reviews

“One-click” purchasing

Expansion of Amazon.com

Expansion beyond Books Music, Videos, Toys, Electronics,

Clothing, Digital Downloads

“Biggest Bookstore” to “Mass Merchandiser”

Amazon.com Critics Hit Hard Investing too much in technology

Inconsistent Margins

Profitability?

Why Infrastructure Services? Capability of

significant returns

High scalability

Address underserved markets

Highly differentiated

Amazon Web Services

Simple Storage Service (S3) Interface for storing and

retrieving data

Elastic Cloud Compute (EC2) Resizable computing

capacity in the cloud

Amazon Web Services

SimpleDB Real-time access to structured data

Simple Queue Service (SQS) Store data messages between apps

No subscription fee

No upfront costs

Pay-per-use pricing model

AWS, Disruptive Business Model

Calling all small companies, Why use AWS? Reliable, scalable,

inexpensive storage

Hitting markets harder and faster

Little cost associated with I.T infrastructure

AWS, Large Companies, No Match Too big to scale

High cost of bandwidth

Security and compliance issues

Extremely high data reliability

Gaming Industry Evolution

Markets

Teens and Arcades

Introduction of home consoles

Personal computer

“Entertainment platform” Pertaining to young

adults

Gaming Technology

Expand consoles into totally new products

Availability of broadband internet

HD graphic video

Inexpensive hard drive storage

Blu-ray video

Online gaming

Social networks

Gaming Key Players

Sony Playstation PS2 Ps3

Microsoft Xbox Xbox 360

Nintendo Wii DS

Nintendo’s Light at the End of the Tunnel

Increased complexity of games

Complicated controls

Not applicable for occasional gamers

What about the non-gamers?

Nintendo’s Strategy

Engage with non-gamers Health and Fitness Family gaming

Simplify games

Easier interactive controls

Downloadable games

Nintendo’s Disruption Starts

Portable gaming platform Nintendo DS

Simplified touch screen controls

Introducing Wii

Motion detecting controllers

Easy and fun games

Internet availability

“Family Gaming”

Social Networks

Simulation of real life games Tennis, Bowling,

Boxing, Baseball, Golf, etc.

Amazon’s Disruptive Strategy

Three Enablers of a Disruptive Strategy

Simplifying technology Amazon simplifying I.T Infrastructure Cloud computing

Business Model Innovation Pay-per-use No Subscription or upfront costs

New Value Market B2C B2B