Saturday, July 09, 2011

Shimano, New Balance and Apple - how brands live and die

My Shimano bike shoes weren't clipping out. For the first time in over 10 years I took the cleats off and cleaned out some cement-like gunk.

Which meant I looked at the shoes. Damn, they look as good as new. All the years of strain and road slime and salt and they're still fine.

Not like my New Balance shoes. They used to make quality gear, but the last two high end NB runners of mine died young. They simply fell apart. Most recently I bought some dirt cheap NB's that came with a manufacturing defect. Why spend money if they won't last anyway?

The NB brand is dying. The Shimano brand, at least in bicycling, is very strong. They make beautiful stuff, they make regular stuff. They've done it consistently for forty years. From what little I can find, their share price hasn't done too badly either.

How have they done it? We think we know why Apple's brand is strong -- because Jobs is a freakin' Picasso-like unpleasant genius with a freakish hold on a publicly traded company. We all assume that when he goes Apple will emulate post-Gates Microsoft.

Shimano though -- they don't have a Steve Jobs. They're as corporate as can be.

How'd they do it?

I'm tempted to buy this $7 2006 HBR Review ....

Professional cycling teams use road bikes made up of several parts or components: frames, forks, wheels and tires, saddles, seat posts, handlebars, and pedals. Pedals hold a cyclist's special shoes in place so they can "clip in" for greater control and power, and several companies make different models of pedals. Lance Armstrong, seven-time winner of the Tour de France, uses Shimano pedals. Shimano, founded and based in Sakai City, Japan, makes many of the key components of a bike. The fact that each of the different components to a high-end road bike are manufactured by different companies makes for a complicated bike industry supply chain.

By 2006, Shimano had grown from a family-based business (founded by Shozoburo Shimano in 1920) that focused on freewheels, to a $1.6 billion global company (with net income of $186 million) that not only manufactured mid- to high-end bike components (and low-end components as well), but also made fishing tackle. Eighty percent of the company's sales were from high-end bike components and 20 % from mid-range bicycle components. Seventy-five percent of the company's earnings could be attributed to components. Shimano led the bike component industry, owning over 80 % of the high-end component market. But growth did not come overnight. Shimano's leaders reflected on the company and its growth trajectory. They were particularly proud of Shimano's market domination, largely attributable to the company's commitment to research and technology, as well as to the amount of value the company had been able to leverage from the industry's supply chain. As new technologies and new companies began to enter the market, and the longer term sales trend of a mature road bike industry remained relatively flat--despite the "Armstrong effect"--Shimano's leaders and their team wondered how to continue their growth in the mid- to high-end components market and achieve growth on an even greater global scale.

Personally, I want to know who makes Shimano's shoes, and whether that supplier makes any other kind of shoe.

Apple's board though, they might want to visit Shimano.

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