Profitability5_1Time Profit model typically is followed by a firm which comes up with a product,skims the market by catering to the early adopters and let the other players in the industry copy its products, specs . Hence the entire focus of the company is to come up with products at a faster rate. Intel is one classic example in the semi conductor industry where its self annihilation strategy coupled with time profit model has kept its flag high in the highly competitive market. When Intel are first to market with a
new product, profits happen in the first four or five quarters and then
drop down very quickly to almost zero after that. To make a profit,
Intel must work hard to maintain a two to three-year lead over its
competitors. Diffusing the product as instantly as possible helps
extend their period of profitability.

What are the other companies that use this model ? Food for thought !

Advertisements