First, implementing a business model may require systems, processes and assets that are hard to
replicate e such was the situation with potential entrants into the towns too small to sustain
a Wall-mart competitor. Similarly, while at some level Dell Computer’s direct-to-user (consumers
and businesses) business model is obvious (you simply disintermediate wholesalers and retailers),
when Gateway Computers tried to implemented a similar model, their failure to achieve anywhere
near Dell’s performance levels has been attributed to the inferior implementation of processes. Capabilities
matter. Likewise, when Netflix pioneered delivery of DVDs by mail using a subscription
system, Blockbuster video responded with a similar offering. But Netflix held on to its lead, both
because it was not handicapped by Blockbuster’s cannibalization concerns, and because it had patents
on the ‘ordered list’ (which it later accused Blockbuster of infringing) by which subscribers
indicated online their movie preferences.