Can a company dependent on a revered luxury item boost its sales with a low-end product without alienating long-time customers?

FORBES: Stringing them along

Question: Can a company dependent on a revered luxury item boost its sales with a low-end product without alienating long-time customers?

FORBES: Stringing them along

After studying a few exceptions to the pattern of disruption, Christensen concluded that the only way a big company could avoid being disrupted was to set up a small spinoff company that would function as a start-up, make the new low-end product, and be independent enough to ignore what counted as sensible for the mother ship.

NEWYORKER: When Giants Fail

But some executives worry that a low-end disruptive product might harm their established brand.

FORBES: Book Excerpt

The various pieces would then be lined up and laminated together to form a working print head, a process which required HP to have two different manufacturing lines and product designs for low-end and high-end print heads.

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"Lenovo has had a more diversified product portfolio, making low-end and high-end PCs as well as smartphones, and has a deeper pocket to support its immense marketing needs, " Chen said.

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Intel brought out the Celeron chip, a cheap product that was ideal for the new low-end PCs, and within a year it had captured thirty-five per cent of the market.

NEWYORKER: When Giants Fail

The lower sales number can also, in part, be attributed to the company's shift in product groups to high-end products, away from low-quality printers.

FORBES: Magazine Article

Schwartz, senior product manager at Gateway, says manufacturers lose money on the low-end machines but can make a gross profit of 20% to 30% on the fancy ones.

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