Blue Ocean Strategy Tesla Motors – Allowing Competitors access its patented technology

Tesla Motors, Inc. designs, manufactures, and sells electric cars and it is the first company that combined the features  of the green vehicles that generate zero emissions with that of a premium sports vehicle, basically it provided an electric car that is not only environmentally friendly but also fast and powerful. Till Tesla Roadster, the company’s first vehicle that used lithium-ion battery cells as fuel, it was believed electric cars were small, slow, not suitable to travel long distances and expensive to fuel. The Roadster had a sports car look, accelerates from 0-60 mph in 4 seconds with a top speed of over 130 mph, can be charged anywhere and has a much wider range of over 200 miles per charge which was first for any electric vehicle at that time.  Tesla created an uncontested market space in terms of high performance electric cars that are high speed but with zero emissions targeting the environmentally conscious customers who are ready to pay top buck for cars that are extremely environmentally friendly. Tesla eliminated the traditional fossil fuel gasoline usage that emits carbon emissions that harm the environment and also maintenance costs related to motor oils and filters and also reduced the service maintenance costs and also the charge time for its battery fuel cells. Tesla also raised energy efficiency of the cars, driving range per charge, acceleration speed and created stylish and performing electric car that can be charged anywhere with its built in  battery charging system that plugs into commonly used outlets. The current size of the electric car market is just 1% of the overall car market size and Tesla Motors is planning to increase the market share.

Instead of withholding to its highly patented technologies, Tesla Motors granted access to its competitors all its intellectual property so that the competitors can also use these technologies to develop innovative electric cars and expand and grow the market size. Tesla Motors in order to increase its sales and market has to work with the traditional automakers that are also looking to manufacture new hybrid vehicles that run both on electric and gasoline. With more charging stations and other infrastructure in place more electric cars will be sold leading to economies of scale that reduce the cost of production which ultimately lead to low price of the cars. Currently electric cars are priced very high and are not affordable to most of the customers only the affluent customers can buy them. The company has announced to build a $5 billion battery factory in partnership with Panasonic that manufactures batteries for cars in quantities that exceed Tesla’s needs but also supply to other electric car manufacturers too. Tesla is also working with other industry layers to build common industry standards for charging stations and plugs so that all the electric cars can use same charging stations and also building the battery fuel cell standards too. Tesla wasn’t first with an electric vehicle but it pioneered the concept of electric cars and combined with superior design and strong technical leadership, it offered an innovative high performance car that attracted the customers. Tesla Motors beat the competition with a superior car with innovative features and created a new “green performance vehicle” market space. With the market expansion, Tesla Motors is expected to profit significantly as it has a significant advantage in terms of first mover advantage and access to key resources and technologies like the battery fuel cells. After creating a new market space, tesla Motors current mission is to increase the number and variety of electric cars available to the mainstream consumers.

Blue Ocean Strategy Amazon Web Services – Leading the Cloud Computing Red Ocean

Amazon started its cloud computing business Amazon Web Services in 2006, which that point was a disruptive innovation where in Amazon offered customers computing power and storage on demand at a low price. The Amazon Web Service (AWS) offering relies on company’s core technology infrastructure that was built to drive its ecommerce business and content business, also made cloud computing cheaper and more accessible at a very large scale. Jeff Bezos took a big risk in the year 2006 and utilizing Amazon’s vast experience in digital business, created a new business model for AWS and also created a first-mover advantage, and the high growth that goes with it, for the company. AWS offers its services at a drastically low prices and it initially targeted the startups that are highly price conscious, which proved highly successful as innovative web businesses like location-based social network Foursquare, document sharing site Scribd, crowd based review business like Yelp, etc. subscribed to AWS. AWS is based on Amazon strategy of not charging high initially for hardware but charge customers on long term use of the services (pay as per usage) which is a win – win for both the company and customers.

AWS has been a fast growing business within the Amazon business portfolio and it clocked revenues of $3.1 billion in 2013 and is expected to grow by 58% in 2014 according to a new estimate from Pacific Crest Securities. n a research note, Pacific Crest says it expects the business to keep growing at a clip, with revenue hitting $6.7 billion in 2015. Despite risks involved in cloud computing like cloud outages where in the websites of the companies that use AWS during outage will go down and do not function, still use Amazon’s web services clearly knowing risk involved, but the incentives of quick and inexpensive forcing smaller companies and startups to gamble rather than pay more high charges for a simple guarantee their services will never go down. AWS over the years has built a significant share in the cloud computing market wherein it even attracted the Fortune 500 companies and government departments to use its services. The reason behind the AWS success can be attributed to the low pricing that the company offers its customers. Amazon web services have lowered prices 31 times since it launched in 2006, including seven price reductions so far in 2013.

The price war highlights that the cloud computing market is a red ocean where in there is serious competition from major players like Google, Microsoft, Oracle, etc. and plenty of medium and smaller players. AWS is still leading this highly competitive market and building significant revenues from this business offering. Forrester Analysts forecast the public cloud market, the market segment AWS leads will grow from $4.7bn in 2013 to $44bn in 2020 as the market shifts towards replacement of current systems which also highlights the potential the AWS has in future. Amazon is further planning to reduce pricing but increase the performance and functionality of its offerings. Amazon has implemented a rich software infrastructure to allow users access to large quantities of computing resources at rock-bottom prices. Amazon Web Services accounted for 37% of the $9 billion infrastructure as a service (IaaS) market in 2013, according equity research company Evercore. The IaaS market is growing by 45%, but Amazon Web Services has a growth rate of 60% and it built a huge computational capacity.