Wii = Blue Ocean Strategy for Nintendo.

I'd like to put the definition of the concept of the Blue Strategy on Marketing.

I read a book called Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim, Renée Mauborgne.

It was very interesting.

The basic of the Blue Ocean is to make for a company a new market without beating the current market. The competition will become irrelevant.

The book talked about the Red Ocean (the traditional way) and the Blue Ocean (the innovative way).

Here's a summary from a reviewer on Amazon that resumes very well the comparaison between the Blue Ocean and Red Ocean.

What is a BLUE OCEAN STRATEGY? The authors explain it by comparing it to a red ocean strategy (traditional strategic thinking):
1. DO NOT compete in existing market space. INSTEAD you should create uncontested market space.
2. DO NOT beat the competition. INSTEAD you should make the competition irrelevant.
3. DO NOT exploit existing demand. INSTEAD you should create and capture new demand.
4. DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off.
5. DO NOT align the whole system of a company's activities with its strategic choice of differentiation or low cost. INSTEAD you should align the whole system of a company's activities in pursuit of both differentiation and low cost.

To the readers, take these theories and put it on Wii. You'll see the puzzle of why Wii exists. Reggie and Iwata want to bring the applications on Wii.

Remember that Nintendo didn't say they want to be number 1. Remember the price of Wii (less than $250) and the cost of production of the dev kits (around $2000). Remember the WiiConnect 24, the virtual console.

Also there's another point. The Blue Ocean doesn't depend on new technologies. Wii has no HD support and won't have Dolby Digital 5.1.

Also, the cornerstone of a Blue Ocean strategy is value innovation which occurs "only when companies align innovation with utility, price, and cost positions. If they fail to anchor innovation with value in this way, technology innovators and market pioneers often lay the eggs that other companies hatch."

Also, the Blue Ocean takes notes that you must find new consummers. Nintendo wants to attract the non-gamers.

 In conclusion, Blue ocean strategies involve value innovation that increase buyer value while at the same time reducing costs allowing for a greater value for money bargain for consumers and superior margins and returns for companies (this is in direct contrast to the accepted wisdom that you can either go for cost leadership or differentiation but not both).

Also, the book revealed many companies that used the Blue Ocean before.

- NetJets (fractional Jet ownership)
- Cirque du Soleil (the circus reinvented for the entertainment market)
- Starbucks (coffee as low-cost luxury for high-end consumers) - Ebay (online auctioning)
- Sony (the Walkman - personal portable stereos)
- Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984)
- Computers: Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).

If Nintendo uses this, they are the winners.