Co-Opetition - Adam M. Brandenburger [116]
The networks did try to make some of these arguments, but it was too little too late. The cable companies had already succeeded in painting the networks as the bad guys. When the cable companies and the networks came to negotiate fees, the networks were in a weak position. They’d be the ones the public would blame if the negotiations broke down.
In the end, all four networks gave retransmission consent for free, although three of them did manage to get a consolation prize. Fox played its hand early and did the best. In June 1993 TCI and Fox announced their deal: Fox gave retransmission consent, while TCI agreed to pay Fox 25 cents per subscriber for a new, undefined cable channel. ABC and then NBC got similar, though less generous, deals from the cable companies. Each was paid for creating a new cable channel.29 CBS held out the longest—and walked away with absolutely nothing, except perhaps a black eye:
Having rejected cash, and now a CBS cable channel, we are at a loss as to what the cable industry does want, short of our abject surrender.
—Larry Tisch, Chairman, CBS30
True Blue? In October 1994 Thomas Nicely, a math professor at Lynchburg College, Virginia, found a flaw in the way Intel’s Pentium chip did division. Intel had known about the flaw since the summer but had calculated that an error would occur only once in every 9 billion calculations. The average user would have to wait 27,000 years to encounter a problem. It had decided that there was no need to alarm people.
But once Nicely posted a message on the Internet, people were alarmed. First, they were alarmed by the notion that a computer chip could actually make a math error. Then they were even more alarmed that Intel had known about the flaw but hadn’t told them. Intel argued that people were overreacting, but did offer to replace Pentium chips on a case-by-case basis.
The tide was turning in Intel’s favor when in early December, just as the Christmas season was starting, IBM made the surprise announcement that the flaw in the Pentium was much more serious than Intel was letting on. According to IBM’s calculations, a spreadsheet user might encounter a problem once in every 24 days—not once in every 27,000 years. To protect its customers, IBM halted shipments on its Pentium-powered machines.
Over the following weeks and months, there would be much debate over who was right—Intel or IBM.31 In the meantime, IBM had created a critical level of uncertainty that Intel could not dispel. A week after IBM’s announcement, Intel changed its position and offered a no-questions-asked return policy.
At first blush, IBM looked like the Good Samaritan, doing right by customers. But that wasn’t the whole story. IBM was still pushing its 486-powered machines; Pentium-powered machines accounted for fewer than 5 percent of its sales. By contrast, most hardware makers—Acer, AST, Dell, Gateway, Packard Bell, and others—were aggressively pushing Pentium machines. It would be to IBM’s benefit if nervous customers decided to play safe and continue to buy 486 machines. There was also the fact that IBM was working to develop the PowerPC chip, a rival to Intel’s line. IBM wouldn’t mind too much if Intel’s reputation got a little tarnished.
But IBM had made its own miscalculations. Its attempt to stir up a fog backfired. Cynical observers asked whether IBM’s announcement wasn’t just a little self-serving. And once Intel improved its return policy, customers flocked back to the Pentium machines, leaving IBM with a large inventory of the now-less-desirable 486 machines. At this point, IBM was hardly in a position to jump on the Pentium bandwagon.
4. Is PART the Whole?
You can change the game by changing people’s perceptions. This is the domain of tactics. In some sense, everything is a tactic. Everything you do, and everything you don’t do, sends a signal. These signals