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Don’t Reinvent the Wheel: Buffett donates to William and Melinda Gates Foundation

June 26, 2006 by SGEntrepreneurs  
Filed under Social Entrepreneurship

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Warren E. Buffett, the chairman of Berkshire Hathaway Inc. plans to donate the bulk of his fortune to the Bill and Melinda Gates Foundation and four other philanthropies starting in July. We review why this move offers a good lesson for any organizations from student enterprise to big MNCs.

From the New York Times (by Timothy L. O’Brien and Stephanie Saul dated 26 June 2006), here is an excerpt from the article:

Warren E. Buffett, the chairman of Berkshire Hathaway Inc. and one of the world’s wealthiest men, plans to donate the bulk of his $44 billion fortune to the Bill & Melinda Gates Foundation and four other philanthropies starting in July…..

Mr. Buffett plans to give away 85 percent of his fortune, or about $37.4 billion, all in Berkshire stock. Of that amount, he will channel the greatest share, about $31 billion, into the Gates Foundation. The Gates Foundation, dedicated to improving health and education, especially in poor nations, is already the United States’ largest grant-making foundation, with current assets of almost $30 billion. Mr. Buffett’s huge contribution may permanently solidify that philanthropy’s standing as the biggest and most influential organization of its kind. Mr. Buffett will join Mr. and Mrs. Gates as a trustee of their foundation.

The immense size of the assets at the disposal of the Gates Foundation as a result of the partnership is apparent when compared with the United Nations Educational, Scientific and Cultural Organization, or Unesco, which had a budget of $610 million for 2004-05. The Gates Foundation made $1.36 billion in grant payments in 2005; at a minimum, Mr. Buffett’s contribution may eventually allow the foundation to more than double that amount annually once he transfers all of his stock.

Mr. Buffett’s contribution will not be made all at once, but rather in smaller annual increments. Moreover, the distribution could change in an as-yet unspecified way if Mr. Buffett dies before the entire sum is paid. The terms of the donation also require the continued active participation of at least one of the Gateses for the payments to continue……

I applaud the philanthropy demonstrated by both top 10 richest people in the world, despite all the nay-sayings from the critics and cynics. What I thought was interesting, is how they go about it. First of all, Warren Buffett could have just taken the wealth and hired a few new people to run a new “Buffett Foundation”. To do that, he will have to search for capable and competent people to run this new foundation and it will create a layer of administration & bureaucracy and set up time for the projects that will help the poor people out in the world. Instead he chose to put the money into a foundation which is already in operation, and have been doing good work. The notion of putting money into another foundation and not getting so much fame later (in future, people will remember the Gates Foundation, but perhaps, the W. Buffett fund or grant) is what I think is remarkable of Warren Buffett.

So what is the lesson learnt from this? The answer is: Focus on core competency and don’t reinvent the wheel or recreate the same thing unless the market opportunity is present. A lot of Asians like to recreate the wheel. For example, we have Baidu, who wants to create a clone of Google. In doing that, they demonstrate no innovation, but merely copying what is done in existence to the present model. If they modify that, I will consider that as innovation and entrepreneurship. In some ways, Warren Buffett has outsourced the operation in distributing his donation to Bill Gates, because Bill Gates already created the infrastructure for his foundation. Think about it this way, I often see students who cannot come to consensus in their past committees of so and so student societies, and decide to create splinter groups to replicate what the existing student societies are doing. That’s the problem. In Asian business, if you translate from the way how student enterprises work, you end up seeing businesses are also operating this way. In business, the issue is slightly different. The first business with the new innovation will have the first mover advantage and capture 40% of the market once the market matures, with the rest of the copycats trail. Unless you are Apple which I thought that they are still successfully capturing about 80% of the mp3 player market, with all the other companies trailing a large margin behind. There must be something that they are doing from the rest.

The trick is to think of ways to block your competitors from copying your idea. That is where you as the entrepreneur needs to think a few steps ahead. Entrepreneurs who come to me, without ten steps ahead, will worry me, because they need to think about the future. The other approach is to consolidate your position by giving a win-win position to splinter groups, who is thinking of branching out. Ultimately, as one of our frequent commentators, Claris put it elegantly, “The organization is greater than yourself.” For those who are CEOs, you should start thinking how to ensure that everyone benefits from the start to the end.

References:
[1] Wikipedia entries on Warren E. Buffett and Bill and Melinda Gates Foundation
[2] Picture extracted from CNBC news
[3] Google News on Buffett donating his money to the Gates Foundation.

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Comments

  • vm
    Kee Peow, what you said is absolutely correct.
  • Anonymous
    Hi Claris, Let's continue part 2..

    I do agree however, for me Art is not just judgement but being creative. I do not how to assess military war nor know about the Art of War. But I view business as being creative. And science and technology is so far important as well. Without those science and technology. We will still be living in old age Jurassic era. Don't mention about IPODs, MD, CDs or radio. Without science, We won't have electricity vice versa the luxurious goods that had been installed inside our house.

    Without science and technology, People can't invent. They need the right knowledge to invent as well. And right knowledge do not come from business alone. But with people who specialise in different area and industry. Like for example in a large organization. We are not merely talking about people, managers. We can recruit and employed a whole bunch of people but if they do not specifically specialize in the area they supposed to specialize in then it would be a waste. Business depend alot on the R/D team as you notice in alot of business. If the key developer is gone. Unless the CEO had all the knowledge of the Key developer/stronger tactics than the key developer. Or else the company will be in a mess like Borland. In a business, Employees are classified as the main assets which mean they need to fulfill the KPI - Key Performance Indicator to provide internal and external support or solution towards the business. But like you say judgement do count. However if we have to recruit a person who doesn't possess any knowledge/had any education about softwares and we allow him to take up the main role of business programming. It would deem as a mistake.

    So I believe education is still important whether you are in the arts area or science area or business area..

    And also I like the way when you say Science and Business are interwined. That's really a good word to put into sentence. ;)

    Finally, I do agree with you they are all somehow link together whether it's science, Arts or Business.To be precise each subject had it's own beauty. ;) And it's essential for a large business organization to survive.
  • Anonymous
    Kee Pow, What you say I definitely agree with that? That's why I didn't continue doing my MBA unlike my friends they had all probably completed their MBAs by now.

    As for me I think if I completed my MBA, I will be probably be classified as overqualified in the business environment due to double major and minor. And due to overlack of experience in business environment. It would probably be hard for me to even obtain a job to fully equip myself.

    After working a few years, Then I fully understand the theory of what I actually studied.And I think I would continue my MBA in the future probably thru correspondence.
  • Anonymous
    Anyway Claris, I can see that you are becoming more interesting. I see more of a productive output coming out from you thru several comments from different thread ;)

    Like alot of points are covered, Like Michael Porter is one of my favourite business strategies. And you did use some good theories in your writing as well. Looks like I didn't find the wrong person to discuss afterall.

    Well, I do have to agree with you..Experience is more important than education at some stage. Just like in today working world. People heck care if you have high education? But if you can communicate well with others. Have different experience from different industry. They obviously look hard at that. But of course having tertiary qualification is a bonus as well. If let say grad A and Grad B. If Grad A had qualification and experience where as Grad B only had qualification. Then the role will obvious goes to Grad A. Because of the ability to identify tricky mistakes and problems in workplace. I used to interview one CEO of a medium size business which is also my friend relative. They had a prominent business in our country. And so I had to interview them for my research project with regards to HR assignment. She told me, It's the experience that count. They are not too bothered about the education level because sometimes fresh grad could not identify some tricky transactions. :) And it's best they look for someone who have at least 5years of experience in their workplace.

    So experience do counts from my job hunting experience as well. But for innovation area, Education is truly important plus you need the technology and right knowledge to invent. And business knowledge only cover part of the innovation area. ;)
  • Kee Peow
    Claris here tells a good story on technology business, kinda like a business school case study. So here I digress from the main discussion on collaboration.

    Like Claris, I am very pro-education. Education maketh a man (or a woman for that matter). The devil, as they say, is in the appreciation of one's education. Having been in business for several years, I have been very very appreciative of my education. Now I truly understand why many adults go back to school to get their degrees, second degrees and MBA. To me, it is all about the perspective as you go through education.

    When we were back in school, sometimes it is hard to truly understand the underlying message from these cases, real-life examples until you go through them. That is why if you work and study, you can really really gain more insight into the meaning and perspective offered in books/lectures.

    So to crystalize the point, the art of merging textbook information with business/work experience is the key to gain from our education and if 10 years after you leave school, and all you learnt is this skill, I think it would more than suffice.
  • Claris
    Part 2:

    But in the real world, knowledge is often translate into more art than science. Why do I say that ? Because most often knowledge itself doesn't sufficiently tell you how to apply it. YOu can use common sense, intuition. And That's why you have the "art of war" by Confucius. It so called art of war is full of knowledge and science of "war" but ultimately applying it is a matter of art (judgement).
    If textbook is written to be more than art than science, a lot of chaos will occur. People no matter how will like to be organized and systematic. And textbook is organized into concept and order. But in real world, those knowledge are in fact interwined. For example, innovation affect organization behaviour and culture, and finance and corporate strategy will also affect how you invest in technology.

    I am intrigued by business and technology because both are interwined. Without technology, there eventually won't be business, without business, there eventually won't be technology. Each help to fuel each other. Technology doesn't have to mean physical invention, it could be knowledge knowhow, expertise etc.

    Business as a matter of fact is interesting because of human behaviour. Everything about business is actually about human. Human is customer who influence by advertisement and marketing and buy product and service that sustain a company's existence and profitability. Human are executive who make wise and stupid decision. Human are person whose greed and unethical act bring down mighty company like Enron, worldcom, Anderson Consulting.

    So business and management is all about people. And so is technology. People invent and use technology to improve their well-being.

    And look around you and others, isn't almost more than half of our time spend in business (Working) ???
    If you are a worker/employee, you are in business of sustaining yourself.
  • Claris
    Part2: Continue

    But in the real world, knowledge is often translate into more art than science. Why do I say that ? Because most often knowledge itself doesn't sufficiently tell you how to apply it. YOu can use common sense, intuition. And That's why you have the "art of war" by Confucius. It so called art of war is full of knowledge and science of "war" but ultimately applying it is a matter of art (judgement).
    If textbook is written to be more than art than science, a lot of chaos will occur. People no matter how will like to be organized and systematic. And textbook is organized into concept and order. But in real world, those knowledge are in fact interwined. For example, innovation affect organization behaviour and culture, and finance and corporate strategy will also affect how you invest in technology.

    I am intrigued by business and technology because both are interwined. Without technology, there eventually won't be business, without business, there eventually won't be technology. Each help to fuel each other. Technology doesn't have to mean physical invention, it could be knowledge knowhow, expertise etc.

    Business as a matter of fact is interesting because of human behaviour. Everything about business is actually about human. Human is customer who influence by advertisement and marketing and buy product and service that sustain a company's existence and profitability. Human are executive who make wise and stupid decision. Human are person whose greed and unethical act bring down mighty company like Enron, worldcom, Anderson Consulting.

    So business and management is all about people. And so is technology. People invent and use technology to improve their well-being.

    And look around you and others, isn't almost more than half of our time spend in business (Working) ???
    If you are a worker/employee, you are in business of sustaining yourself.
  • Claris
    I a stronge believer of education. No matter what many people tell you that experience matter most, education is still as important. Education teaches you about the wonder and working of the world, be it business, technology and like and like. Education doesn't have to be confine to formal education. It can be through interaction, attending seminar and likes and likes.

    And that means textbook is a great source of knowledge and wisdom. Why ? Because all the experience is been conceptalize into "fact" and science. Textbook make you aware of concept and understanding of certain issue. But how you apply it will be up to you. and to apply the knowledge you learn through textbook, you can either seek experience or learn from others. But I could definitely tell you, there is no experience from others that is never covered in books (of course, it doesn't apply if you have wacky ideas
  • Anonymous
    Hi Claris,

    Hehe, You seems to know quite alot about the IT industry. ;)

    Anyway, Let's continue..It's true textbook doesn't teach you everything. But still without reading, the knowledge itself will be empty.

    I would say books are known as a stepping stone to succeed. ;) Yes, Though it might sound harder than it say. But I believe using the right procedure and right strategy can allow you to excel in a business.

    Like Borland and Microsoft, If I am Borland I will sure take up joint venture. Though yes, alot of conflict strategy will occur in the business and Microsoft is quite tricky as well. But if they don't merge one will definitely go Bust and also both producer will suffer due to price war and Consumer will end up being the sole bread winner. The first one to go bust will be eliminated forever. That's the rule between Microsoft and Borland.
  • Anonymous
    Hi Claris,

    Hehe, You seems to know quite alot about the IT industry. ;)

    Anyway, Let's continue..It's true textbook doesn't teach you everything. But still without reading, the knowledge itself will be empty.

    I would say books are known as a stepping stone to succeed. ;) Yes, Though it might sound harder than it say. But I believe using the right procedure and right strategy can allow you to excel in a business.

    Like Borland and Microsoft, If I am Borland I will sure take up joint venture. Though yes, alot of conflict strategy will occur in the business and Microsoft is quite tricky as well. But if they don't merge one will definitely go Bust and also both producer will suffer due to price war and Consumer will end up being the sole bread winner. The first one to go bust will be eliminated forever. That's the rule between Microsoft and Borland.

    However if they had a joint venture. That means Borland is delaying the time of going bust and also it doesn't have to go bust and start from scratch all over again. Though like you said it might not be a win win situation. But Borland can just gain 51% share of the company so Borland still can run the company their own way if not sell some shares off to let public be their investors, though both had equal share knowledge and also if Borland make a loss, Microsoft can share the loss . And during that time Borland can also make use of Microsoft resource to innovate something new.

    Which mean delay the time and start another strategy plan...If you are defeated at least you don't have to lose the whole business.

    Yes, If you decide to have a joint venture makesure the company Mission Statement/ Vision are
    similar to each other where both company are sharing same goal. And makesure the company is strong enough to allied with.

    The effort of being able to see things outside the facade is important especially for IBM and Microsoft. Currently, I would say Microsoft power is still relative stable. Especially in the commodities market niche. Even in PCs, Almost all computers are using Microsoft softwares like Windows. If APPLE had to target the market it would be difficult. Like mostly 3G Mobile phone, GPRS function to browse on mobile phone all come from Microsoft, Big companies softwares are mostly derived from Microsoft. And also usually information saved from MAC PCs can never be used in Ordinary PCs? Unless they have to reformat the whole floppy disk? Business PDA uses mainly Microsoft softwares as well.

    So I would say it's not going to be easy if Apple become Microsoft competitor.

    I think IBM is rather smart as well to focus on something else instead of being in the same market with Microsoft which is also another example of what Borland can do. XBOX and PS3 is doing very well. I heard the new PS3 had new pretty cool features like satelite to watch TV? But I am not sure whether it's true.

    As for CEO turning things around is usually very common in business nowadays. But usually wise CEO will stay long in the business. ;) When a CEO make wise decision business will often prosper. But if it's a bad decision. It could led to downfall of the business.
  • Claris
    That's quite true of business. No matter how much textbook reading tell you that collaboration is the key to winning business, it is always harder to do.

    Look at the most merger, joint venture and acquisition. Majority will hurt the the companies because these often come together not because of creating win-win business but because of losing business and market share in the competitive environment. As a result, little thought is given to adapt to the structural change, strategy and culture of different companies. The IBM, Motorola and Apple in development of powerPC is an example of this. Their joint venture to develop the next generation of PowerPC is actually in response to WinTel initiative of Microsoft and Intel. However, the venture soon collapsed because eventually each company adopt "conflicting" strategy. The IBM is more interested in building processor to serve mass market need like like game console.
    The Xbox360 and Playstation3 is using the Cell processor developed by IBM and these market is what IBM is after rather than the PC market which is rather dominated by Intel/AMD.
    Motorola begin to focus their core competency in building the handphone.

    So you see eventually, most venture and merger failed because their business are not actually aligned but come together just to response to the competitive environment.

    And look at what happened to the once-mighyt Novell. So many companies they acquired, including a consulting firm and office suite, eventually are sold off and now their core business is concentrated mainly on linux.

    The worse thing ever happened in recent years is the fad that bring a CEO can turn a company around. Usually, a CEO is bring into a company to steer the company direction which unfortunately lead to more confusion and distraction.

    Of course, some make it like IBM where Lou Gerstner, the CEO make a 360 degree transformation of IBM from closed-company to a more open-company. Just look at the amount of open-source code it donate, and contribution to the Eclipse platform and Java.

    IBM strategy is that if you cannot beat Microsoft in the same game (Closed-company), then you beat it in the different game (open-company). Now, at least IBM has become the advocate leader in open-source but Microsoft is struggling with its own legacy business model and attempt to come to term with open-source.
  • Anonymous
    Well, I am impressed with what you write. Now I gain a better side of the story ;) Thanks Claris.

    I guess in every battle like one of the Chinese proverb had said, "Winner will remain as King.."

    Just like animals in a habitat..The fittest to survive as I mentioned earlier.

    Sometimes in the battlefield, Pride makes you loses everything. But then in every competition. Sometimes it's too crucial that we see ourselves respecting others. Even in the ball courts, Either you win or either you been defeated badly. Sometimes I don't really like this rule. When I was in a competition last year. My partner was very angry with me because he told me I was too soft to my enemies. But I couldn't care less, He said I will get killed so he was more anxious than me in that game because we could lose the match any minute. But still I remained calm..He told me in any match there is only one team who can win. But I didn't agree to play ruthless. For me, I believe not in depriving others even if they lose. Yes, I was soft. And I had been mock by my opponent. But in the end, We still won the match not because of aggressive. I think Patience. Like I say business is similar to ball strategy. No Speed Limit will be essence of today's business world..

    If Microsoft don't eliminate their competitors it will be their company that go bust. So therefore the situation is crucial in somewhere too.

    I believe it's the time of making right decision. Borland and Microsoft had feud which cannot be end. That's one of the pitfalls of failure.

    If both of them can co-operate I believe they would be very successful.

    I know what Microsoft done is quite unethical. But you can't say it's not creative. However, there are still alot of loop holes as well. But if I am Borland, I would still suggest a joint Venture alliance. ;) Even knowing Microsoft will use their ideas.. ;) It just depend on how the next chess move is being played. :)
  • Claris
    In order to understand why Microsoft and Borland did not collaborate through strategic alliance, we have to return back in history through 1990s.

    The then Philippe Khan, founder and CEO of Borland is very much a high profile figure which bend on "destroying" Microsoft in the same way Microsoft want to destroy his company. Borland make very successful software development product, and also purchased Dbase 4, Wordperfect, develop Quattro spreadsheet and many products in order to capture market share from Microsoft. Is this case, would you think that either want to collaborate ??

    In fact, later, both undercut each other in price in order to gain market share in expense of profitability. But in the end, Khan lose the war and ousted out of the Borland. Since then, Borland has been trying to reinventing itself and recover from the disaster.

    So why has this happened ? A company is normally lead by a charimatic leader with a vision. Khan provide the vision which unfortunately lead to his downfall. He believe in being the first in everything and diversified into more than software development product. However, over time, Borland began to lose its core competency and capability as Microsoft began to retaliate by withdrawing crucial information that Borland use to develop its product further.

    Microsoft at that time is known to crush any competitors and is ruthless in doing anything in order to make their product standout. If you read the testimony of Microsoft's trial, Bill Gates will do anything to crush the competition. Moreover, Microsoft is known to collaborate with partners and learn about their technology and gain expertise, and then break contract with them to develop their own version. The Stacker versus DoubleSpace file compression in MSDOS version is the example of Microsoft's "unethical" act.

    So, it is obviously virtually impossible for Borland and Microsoft to work with each other as they see each other as rivalry rather than mere competitor.

    At that time, Microsoft will want to be number one and make sure there won't be number 2 to threaten its position. Both Microsoft's and Borland's mentality is "I win-You lose"

    As a result, Microsoft eventually employ a different tactic by luring away Borland's key personal to weaken Borland's strenght.

    I won't comment if it is wrong of Microsoft, it is just "business as usual" for them. Since Microsoft has monopolised the industry, they rather reap the benefit themselves rather than share with others.
    However, after the Microsoft's trial, their practice began to change to a more win-win situation.

    So the verdict is that in business, there is more than meet the eyes in why company will "do foolish thing". It could be politics, mismanagement, lost of focus, wrong strategy and unclear vision etc
  • Anonymous
    Hi Claris,

    Before I continue, I seriously thought about what you mentioned above. About Borland and Microsoft, It's true that Borland developed first-mover advantage. But like you said there are some mismanagement and also headhunters that disintegrate borland into half.

    But on the other perspective, If Borland can come up with a new strategy plan at that time. Instead of splitting up or fighting hard with competitors. They could eventually come up with a compromise plan which is a joint venture plan where both competitors can reap the benefits off each other without fighting to reach survival of the fittest.

    If Borland and Microsoft can allied together. I am sure it would be more like a win-win situation. Where both still can utilize same resources - like expertise in people instead of their own staff being headhunted by another company and even if it had been headhunted by Microsoft but still all under one roof. It would be a lower cutting cost alternative as well if Borland can allied with Microsoft and took advantage of their resource. With regards to control, Yes though Borland might fear Microsoft might gain larger control/decision making over borland. But still if Borland gain 50/50 of the share in the company. Both still have equal share/right to make decision.

    So therefore I think there are still some options for us to reconsider before making a decision. And if Borland and Microsoft allied...Perhaps Borland might be better off after all and also gain a name in the Hall of Fame.
  • Anonymous
    Yes, Bingo..You hit the right spot ;)

    It's good hearing ideas from you as I can see you discuss alot of good points in this topic as well.
    And take all ideas into good critical thinking. ;)
  • Claris
    Sure no problem, there always advantages and disadvantage of everything in business.

    Thus, there always good and bad about being the first or the second, the most important is that the firm understand the business and reap the benefit better than the the competitors. The firm will have to understand its core competency and capability and determine whether it is worth and justified in pursuing the "so called first mover advantage".

    And it is good to have many viewpoints, good or bad, to serve as checklist so that the firm is better equipped to determine the course of action to take.
  • Anonymous
    IMHO, I think First Mover Advantage is very important. Claris, What you said also had a point which I strongly agree.

    However, First Mover Advantage can help you to gain a larger pie within the industry. If you are a company that pioneer the market then you have to be focus and stay overlook at your business.

    Often there are critical decision and option that you have to make and this involve making a decision. The larger your company get. The wiser decision you have to make. You know in large organization. Managers have often been pressurize. They have to be very careful in making certain decision. If they make one mistake. The whole business can be of total loss.

    It's often a problem with decision making. But First Mover advantage give you the right to be the first inside the industry to test the market and also never forget. Being first mover advantage can help you to dominate your company within the industry and also eliminate barriers to entry.

    But with your power alone is never enough. So you have to be continous with innovation of business strategy and bringing in new concepts within the company. Being able to seek for more opportunities not within your facade but outside your facade as well. If not why companies who want to recruit people require this characteristic from their candidates? To be able to think outside the square? As well as being a good problem solver.

    There are alot of business approach that we study..What is that used for if we can't apply it?
    Anyway, I am not going further..I believe there are some good thinking that we need to do before continuing this topic.

    That's just my 2cts. My apologies if it offend anybody. ;)
  • Claris
    First-mover advantage is no guarantee of sustaining competitive advantage. There are simply lot of elements come into play. The company must learn to take advantage of those first-mover advantage to reap its investment and this is very hard in the long term.


    Moveover, first-mover advantage may not always be advantageous. First of all, you are helping to test promote and grow the market, which is very time-consuming and costly. You are exposing innovation which other company may improve incrementally.
    And if you have small company, what will happen if your key-personal which developed the product is enticed by competitors with better pay and position ?


    That is what happened to Borland when most of its key staff enticed to work for Microsoft. Borland is the inventor of IDE development environment in the industry, then so called first-mover advantage. Unfortunately over time, due to mismanagement and key developers leaving to work for Microsoft because of stock option and better job prospect, Borland eventually lost its IDE market share, and now end up selling off its IDE products line and service. Borland used to be the icon of software development world, now it become icon of examples of company failure to sustain its competitive advantage.
  • BL
    Weichang,

    Interesting counter examples. There are two kinds of first-mover advantages:

    1. You have the patent invention and you set the trend for the products.

    Examples: Genentech (Biotech) company and ARM. ARM is the biggest chipset maker in the world, and no one knows of their existence unless u work with IBM, Apple, Nokia, Samsung, Motorola and Intel and they are the first mover in doing chipset design and still are the main dominant players in the market. Of course, you have mentioned biotech companies that supported the theory, for example, the makers of Viagra.

    2. You innovate upon an existing product and create a new market niche.

    Examples: Google uses pairwise ranking and Bayesian statistics which Yahoo was using very traditional suffix tree algorithms and pattern matching algorithms. Yes, you can argue on the semantics of who started the search engines, but the technologies employed for the market are very different.

    To support your theory that first mover advantage is overrated, there are biotech companies which failed at first mover advantage with patents as well. As I said before, first mover advantage is not sustainable, since it can only capture 30-40% of the market. However, the ability to block competitors from entering your market will significantly help you in becoming the dominant player. Perhaps, Microsoft has successfully done that till now.
  • WeiChang
    First mover's advantage in my point of view is highly over-rated. It's not just apple. Most technologies are milked by 2nd or 3rd movers. Unless you are a pharmaceutical with a wonderdrug and a stong patent of cause.

    Some counter examples are:
    Apple invented the OS and PC. Microsoft made $$$ from it.
    Zerox invented the mouse. Apple / microsoft made $$$.
    Alta vista invented the search engine. Google / yahoo made $$$.
    ICQ --> MSN / AIM
    Errickson mades handphones? ---> Nokia / now Motorola
    Ford made cars ---> Toyota makes more than Ford now.


    It's not just enough to just get a patent, the company would need to create a dominant design for a particular product or else it'll not be accepted by even if it is the first mover. In fact, I'll challenge you to name the first movers who carried on making $$$ after 10 years. They'll probably be the minority rather than the norm.
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