As my former boss, #HBS strategy guru Michael Porter explained in Competitive Advantage, if you want to earn better profits than your rivals, you have two strategies from which to choose:
Low cost producer – set your prices lower than rivals and get your costs well-below the price; or
Differentiation — give customers such great product benefits that they’re willing to pay you a higher price than rivals’ — and your costs.
Unfortunately, two rivals in the data storage industry — #NimbleStorage, provider of flash/disk data storage hybrids and data management software as a service and #PureStorage, a maker of all-flash arrays — are pursuing strategies in which they slash their prices below their costs.
The level of price cutting in the $40 billion storage industry is so intense, that it is difficult to see how either of these companies will ever make money.
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