Blue Ocean Strategy Examples
Automobile Industry
The horse-and-buggy ruled transportation in the 1890s.
The Duryea brothers invented the car in 1893. Despite being unstable, they cost $1,500 — twice the typical yearly salary. They were widely vilified as excess.
In 1908, 500 American custom carmakers existed. Henry Ford invented the Model T, the first mass-produced car. Example of Blue Ocean Strategy.
Standardization decreased costs by replacing automotive craftspeople with unskilled labor. Car choices were limited, reducing distinctive components.
At $850, it was half the price of current automobiles. The price dropped to $290 by 1924.
Most American homes had cars by 1923.
Market share rose from 9% in 1908 to 61% in 1921.
Ford automobiles became dull after mass-marketization. From 1924, General Motors offered “a car for every purse and purpose.” Example of Blue Ocean Strategy.
Different choices generated fresh demand as purchasers moved up or downmarket from the Model T.
Frequent automobile upgrades increased demand by replacing them more often.
Ford’s market share declined from 50% to 20% from 1926 to 1950, while GM’s rose from 20% to 50%.
Ford and Chrysler adopted this technique, starting a crimson ocean of rivalry and imitation. The Big 3 controlled 90% of US market.
Japanese automakers developed a blue ocean of compact, economical, high-quality vehicles in the 1970s. Complacent US manufacturers focusing on luxury were surprised.
Chrysler introduced the minivan in 1984. Chrysler’s best-selling vehicle.
The SUV, with more room than the minivan and four-wheel drive and towing, debuted in the 1990s.
Computer Industry
Before computers, companies used ledgers and pens. This was cheap but sluggish.
Herman Hollerith designed the census punch card tabulating machine in 1890. It was costly, complicated, and maintenance-intensive.
The company combined to establish CTR in 1911.
Thomas Watson at CTR simplified tabulators in 1914. Cost and training time decreased.
He also developed a leasing scheme that allowed enterprises to replace devices often without big upfront expenditures.
CTR became IBM in 1924 with 85% of the tabulating market.
A rival introduced the UNIVAC, the first electronic computer, in 1952. IBM saw the potential and launched the IBM 650, a simpler, less powerful computer. Example of Blue Ocean Strategy.
End of 1950s: IBM owned 85% of commercial electronic computer market.
IBM then developed the System/360, a small-to-large computer line. Interoperable software and hardware were introduced.
IBM also sold hardware, services, and software separately, establishing the software and services sectors.
IBM, DEC, and others battled to produce increasingly powerful business computers in the 1970s. The Apple II, the first popular personal computer, debuted in 1978.
Apple II wasn’t the first PC; Altair 8800 was. The latter was hard to operate without a display, persistent memory, or keyboard. According to DEC president, “there’s no reason for any individual to have a computer in their own home.”
The Apple II combined easy-to-use technology with appealing home applications like word processors and games. At cheap prices, computers became popular. Example of Blue Ocean Strategy.
IBM introduced PCs in 1982.
Computer manufacturers supplied via distributors in the mid-1990s, competing on performance with additional features and software. Dell Computer broke this trend by selling directly to customers and lowering prices.
Dell delivered in 4 days, compared to 10 weeks for the industry.
Cloud computing, smart phones, and iPads are other blue seas.
Red Ocean Strategy Examples
Uber began as an on-demand black vehicle service in San Francisco. The market for luxury, on-demand transportation was longstanding. That area was dominated by luxury automobile services without an app. This distinction helped steal market share from black car and limousine services. Uber may be a blue ocean strategy example of disruptive innovation. It leveraged an established market and intentionally stressed distinction above affordability, maintaining the value-cost trade-off.
Video chat systems were not new when Zoom began. Zoom has outperformed the competition. Market exploitation was made possible by price and accessibility. Zoom has a better user experience due to its simplicity. Of course, free conference hosting helps too.
The Red Ocean carbonated soft drink competition between Coca-Cola and PepsiCo is longstanding. Through advertising, price promotions, and product diversification, they compete vigorously. Market saturation limits growth.
