Word: low-cost
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...most people, the cost and confusion of a PC is no bargain. Their wired future lies in the emergence of low-cost, easy-to-use consumer electronics devices--Net-linked TVs, phones or game machines projected to be a $1 billion market by the turn of the century. Microsoft placed a bet on the "info appliance" business in April when it bought WebTV for $425 million. Last week Sun Microsystems joined the party. The giant server firm acquired Diba, an appliance start-up in search of deep pockets...
...Telecommunications Act of 1996 was supposed to turn the phone companies into a pack of hungry competitors, willing to tear one another to pieces for the privilege of providing you with low-cost phone service. AT&T and its long-distance rivals were to charge into the $100 billion market for local calling, freeing the seven Baby Bells to enter the $70 billion long-distance fray...
Launching a carrier into this turbulence isn't much more difficult than flying a kite in a hurricane. Yet Martin Shugrue, no stranger to troubled airlines, insists that Pan American World Airways, a new carrier with an old name, can compete as a low-cost, full-service discount carrier. "We'll make money with a high-quality product at an affordable cost," Shugrue says. Pan Am's promise is cheaper fares without the cramped seats and the bag of peanuts masquerading as in-flight service. Says he: "It's not rocket science...
...ValuJet has a new competitive problem too. When ValuJet launched its low-cost service in Atlanta, incumbent Delta didn't pay much attention. But Delta's service level crumbled as it tried to cut costs, and ValuJet proceeded to inhale market share...
Delta won't make that mistake again. This time it is consistently matching ValuJet's fares out of Atlanta. Delta now has a low-cost airline, Delta Express, to fight ValuJet on its own rock-bottom terms. This is a lesson that the other major airlines have learned in battling upstart competitors, to their considerable profit. Alas, for travelers, the major airlines' profit is the flying public's loss...