Hello.
Inspired by another visit to the Sony store, this time in Ho Chi Minh City. An expensive shopping mall in the center of Vietnam’s second largest city, the store itself cannot be called small, it matches the location. In the center of the store, a local cathedral was built so that you could try out Sony cameras, see how they shoot. And a bunch of other entertainment that should captivate and involve the buyer, show the product at its best. Inside, there was not a single buyer except me, the brand is too expensive for Vietnam. While I was looking at the cathedral, another European came in, he was looking for a charger for an ancient digital Sony point-and-shoot camera, he flew to Saigon with a camera, but forgot the charger at home. The seller shrugged his shoulders, more than fifteen years have passed, they do not have such chargers.
Memory is strangely arranged, and being far away from Sweden, I remembered the merger of the mobile division of Ericsson and Sony, when a joint venture was created. The first flagship that the companies released on the market was the Ericsson T68m, at that time something cosmic in every sense. A color screen, an unusual case shape, maximum characteristics for a business device. In a short time, this model became extremely popular, despite its cost. And then there was the Sony Ericsson T600, then the K750i and its version W800, which revived the Walkman line. Those were the golden times of Sony Ericsson, it seemed that the union of the two companies was blessed in heaven. Each new model attracted more and more attention, sales exceeded all internal forecasts, a real shortage of components arose, and factories hastily deployed new production lines.
Inside the company, the success was described simply – the engineering genius of Ericsson, marketing from Sony. Whatever one may say, it was exactly like that, two companies that had been unsuccessful separately until that moment suddenly created a new quality of product. The question remains open whether Ericsson could have achieved such success with the same T68m without Sony’s participation or not. Ericsson employees sincerely believed that they could, while Sony attributed the sales merits to themselves. The conflict between engineers and marketers within Sony Ericsson arose at that very moment, they could not find a common language. Accordingly, the engineers considered all the successes to be their own, and attributed the failures to the marketers. And exactly the opposite.
I visited R&D companies many times in those years, and I perceived the internal confrontation as something funny, but not worthy of attention. While sales were growing, Sony Ericsson’s share and profit were not in question, everything was perfect. But then the company lost its development speed, and this happened for several reasons, the main one of which was not the internal conflict, but that the company became too successful in the market.
Any company consists of people, each of whom has their own ideas about what is beautiful, but also their own life principles. Only a few can lay down their lives for the good of the company and not receive anything in return; in most stories there is healthy egoism. What happens when the company you have been working for for twenty years suddenly becomes very successful, and you have shares and options in your hands, you have already reached certain heights? The answer directly depends on your character, but, as practice shows, most want peace – they have already proven everything to everyone, there is no need to continue to give their all one hundred and more. You need to hold out until retirement and at the same time preserve your achievements, in particular, avoid any risk to the company, any changes that can put it in an awkward position. And here the interests of the company and specific people come into conflict, this has happened before my eyes dozens of times. The company grows, takes a large market share, then makes one mistake after another, cannot restructure, and the “old-timers” hold the line and stick to their guns.
As an example that has become classic, we can recall ARM, today the name of this company is on everyone’s lips, it creates the architecture of processors that are used in almost all mobile devices, of which hundreds of millions appear every year (I am writing this text on a plane, I can’t look, but it seems that more than thirty billion such devices are produced every year, and these are not only smartphones, tablets, but also servers, and much more).
At one time, ARM was sold by Intel, because the same “old-timers” won inside, they convinced everyone around that Intel’s engineering genius was such that they would create their own solution at any moment and defeat ARM in no time. In their opinion, there was no need for such a product on the market, it did not look promising, and most importantly, it threatened the established status quo inside Intel. That same risky bet that the company’s employees did not want, who had already achieved everything they could dream of. And there was no external lever that could influence them. Today, Intel is fighting for its survival, and Intel Atom, created to compete with ARM solutions, is perceived as a synonym for failure.
Let’s talk about the modern market. How many real developments have appeared under Tim Cook inside Apple? Almost none, all we see is a more or less successful or not very successful repetition of competitors and their approach. The strategy is fundamentally different from what Steve Jobs did, he came up with something new, combined ideas from different worlds and knew how to push his vision into the market. Tim Cook squeezes everything possible out of the old machine, since its resource will last for his lifetime, and let those who come after him solve subsequent problems. In the corporate world, such an approach is widespread, one can say that here the personal prevails over the public. And if there is no external control, a force that forces the company to change, it’s all over.
Today, this moment has been completely forgotten, but in the last years of Steve Jobs’ life, he had a personal project, he tried to digitize his style of decision-making, company management, and creation of new products. He was preparing a textbook on how to play games for his successor. Together with Jobs’ departure, this topic simply disappeared, no one talks about it, and Tim Cook’s management style is fundamentally different, which is normal, since he is a completely different person. It turns out that Tim Cook did not play by someone else’s rules, but created his own world. Which led to the fact that many veterans who started with Jobs left the company (the most striking was the departure of Jony Ive, who is said to have had a personal conflict with Tim Cook).
It is easy to figure out who might have problems in the near future, just look at stock quotes. For example, we see Nvidia take off, the company has a capitalization of more than three trillion dollars, it benefits from interest in AI computing. It seems that here and now it has no problems, the queue for its products is formed for years to come.
Jensen runs the company in his own style, and this is the only insurance that can guarantee the absence of stagnation, since he is used to breaking other people’s opinions over his knee. Whether he will guess or not is an open question, but the chances that success will not create a cozy swamp are definitely present.
If you look at the company’s executives, middle managers, the recent stock surge has made them very rich people. Some are just ordinary millionaires, some have received several tens of millions, and someone’s stock package is literally approaching a couple of billion dollars. It is clear that you need to sell the stocks to secure this money, but in any case, unexpected wealth greatly influences people’s behavior. And they want to protect themselves from risks as much as possible, not to change anything.
What does this mean for Nvidia? Continue to focus on graphics accelerators used in AI computing, increase their power, and expand their use for new algorithms. A safe, understandable strategy and tactic, but it risks becoming a dead end.
The market is extremely unhappy with the fact that the AI theme is tied to one company, moreover, Amazon, Google, Microsoft, Apple are developing their own AI chips, since it is necessary to have their own hardware. At the same time, the listed companies already have this or that mathematics, algorithms that they use, and not all of them fit well with Nvidia’s hardware.
In such a concept, the risk for Nvidia is the need to create new generation solutions, focusing not on familiar developments in the field of graphics and the adaptation of these calculations for everything else, but on the creation of fundamentally new solutions, including in the field of mathematics (and for the company this is a risky bet, it is not a fact that it will work out, it is not a fact that such solutions will be in demand on the market). That is, the company needs to create a competitor for its current solutions and at the same time make it obviously better than all competitors who are going in the same direction. A risky task, and many inside Nvidia are trying to disown it. Why do we need this? What will we gain? And we can lose a lot. And it is easy to understand those who reason this way, they can lose those very millions that they already consider theirs today, and they do not want such a development of events.
Success has its downside, calmness arises within companies, unwillingness to take risks, an attempt to save what has been earned at any cost. And here everything depends on the structure of the company, how much it can change from within, whether it is ready to fight internal resistance. In many ways, everything depends on the personality of the manager or sometimes the owner of the company. But, as experience shows, only a few are ready to fight, the rest record their achievements and pass on problems to their followers.
Source: mobile-review.com
