One of the biggest strategic errors in recent history goes to the managers of the yellow pages.  They had a chance to become the go to source for local information, but lacked the vision to see how to turn this into a long term goldmine.

Before the web became widely adopted the yellow phone book was “the source” for local business information.  When people required the services  of a new business it was the first place they searched.

When the internet started gaining momentum and users, the Yellow Pages management viewed the web as an add on product to the big printed book that was the core of their business.  They lacked the vision to see the day that the web would replace a printed book for most consumers.  Instead of building for the future they took the immediate profits from add on sales, forgoing the long term strategic advantage.

With a lack of vision they asked businesses to pay an exorbitant monthly fee to show up in the online search results of their obscure pages.  Many  if not most refused, making the online version irrelevant.

Steven Troughton-Smith writing on his High Caffeine blog this week describing how easily the Palm Pre is to jailbreak.

The entire UI and all the apps are written in javascript, which in essence means the source code is available for you to modify at will, without recompiling anything.

Hardware is easy to copy, especially when you have a working example to tear apart.  The expense is in designing and testing the hardware not the actual hardware itself.  Early tear down reports are estimating hardware costs in the $140 to $170 range.

Software is much more difficult to copy.  Witness the myriad iPhone copies that have equal and sometimes arguably better (if using a checklist to compare) hardware specifications, such as the Hiphone T32.  Without access to iPhone, software clone makers are relegated to using the aging Microsoft Mobil OS.

Apple’s iPhone OS, Google’s Android OS, and now the Palm Pre differentiate on software and the subsequent usability, not simply bolting on the latest hardware.  It is the concert of software, hardware, and services all working in tandem to produce a truly great usability experience that consumer’s desire.

Google has developed Android OS as an alternative but to date the hardware and software combination’s lack inspiration.  This may change soon with many phones under development.  Google has made the source code for Android OS downloadable with an open source license and customizable.  It certainly has the potential to dominate the phone market the way windows has on the PC side for this reason alone.  It also has the potential to splinter and destroy the user experience.

Palm has made the source code easy to copy and extend, although not licensed to legally do so via open source.  Personally, I’m curious if Pre clones will start showing up with genuine Pre software, able to use the same services such as the Palm App store.

I keep reading bloggers that can not believe Apple would not want to follow the latest hot trend and build a netbook (as we know it).  This is similar to wondering why Mercedes doesn’t build a Chevy Aveo, and the answer is simple, branding and profit.

One common argument is that not everyone can afford a *real* laptop, but can afford a netbook, especially in the current economic climate.  You could make the very same comparison with the Aveo starting at $12,685, roughly half the price of the average automobile.

Another argument is that a netbook is all that most people really need, with the ability to surf the net, write a blog, or open the occasional text document.  The Aveo fills that role in the automobile world as well, with most people really just needing to move a few people, and perhaps some light luggage  from one place to another.  Most people simply lack the need to haul heavy loads or lots of people, at least in their second or third vehicle.

While the Aveo is functional, it is simply not a great user experience.  The small size makes using the vehicle cumbersome.  Similar to the user experience of small cramped keyboards and screen real estate that makes having two documents open side by side challenging.  They are functional but the race to reduce costs requires many compromises that also reduce the user experience.

Mercedes and Apple have both built brands that users expect a great user experience and quality products when they see the logo.  Producing lower quality inferior products for the masses they jeopardize losing the brand and its selling power (value).  Branding it the first reason Apple should not build a netbook as we know it.

The second reason is Profit.  Both Mercedes and Apple are for profit companies.  They have built the brand images and quality products that allow them to sell at above average margins.  Without even looking I am positive GM makes sub par earnings on the Aveo.   Netbooks are sold at razor thin margins by companies hoping that volume will lead to a meager profit.

There is simply no good reason to follow the masses and enter a market that jeopardizes the brand and makes sub par profits.  This is why the smart pundits are betting on Apple reinventing the category if and when they do enter, creating something similar to what I wrote about here.

I believe most of these writers really want an Apple but can not afford one, and therefore digress to whining about it on their blog.  I would really like to buy a new Mercedes for $13,000, but it is simply not going to happen unless mercedes invents a totally new concept of  a simple but high quality vehicle to move people from place to place, sold at a profitable margin.

Reading Sprint’s latest SEC filing covering Q4 and all of 2008, reveals several interesting facts about the company, their health, and perhaps some insight into their CEO Dan Hesse’s goals.  I believe it is worth reading the full report, but here are a few random exerts.

Perhaps the most telling sentence in the filing is “Customers are responding to our messages of value, simplicity and productivity”.   This is apparently current goals under Hesse, and explains the “simply everything” pricing plan, and perhaps the odd commercials.

The most telling number in the filing is simply the number of customers changed from 53.8 million at the end of 2007 to 49.3 million at the end of 2008, for  a net loss of 4.5 million customers last year.

The “prime” credit rating of their user base improved from 79% to 84%.  I read this as moving their base to clients better able to pay their bills is a goal of Sprints.  Curious what strategy besides showing commercials in black and white this entails?

While they lost 8.3% of their subscribers during the course of the year, wireless revenue fell 13% to 6.6 billion.  This is attributed primarily to the lower revenue per subscriber.  I believe the lower revenue per subscriber is simply the effect of competition in a saturated market.  The loss of subscribers clearly hurts Sprint.

Palm’s Pre is promoted as an opportunity later in 2009.  This may prove the best device from Sprint if the Pre lives up to the hype, early demos look promising.  Sprint is the exclusive carrier for the Pre through 2009.

Companies list possible threats to their business and Sprint includes the ability to attain compelling CDMA phones,  specifically Motorola.  Interesting since Motorola phone sales fell 27% last year and they are on pace go from first to last among the big five handset makers.

Also listed as a threat is the performance of their 4g  wimax partner, Clearwire Corp.  Clearly, Sprint’s future performance and market relevance are tied closely to Clearwire.

For full disclosure, I have always secretly rooted for Sprint, as they have one of the few corporate campuses in the state of Kansas.  Although my last family member gave up and canceled their service with them about four years ago.  The problem was not their phone service, but rather their inability to bill correctly, and their inept customer service agents.

The latest filing reveals that they have continued to improve customer service, which I believe should be their number one strategic goal.

Staci Kramer writing for Moconews.net explains why she was one of the millions who dropped sprint last year.   Dan Hesse still has many challenges ahead.