In the mid 1990’s Boeing was the premier manufacturer of airplanes, with a commercial market share approaching 70%, the company grew its business by mergers and acquisitions. Boeing also had the best in class engineering team that allowed them to expand businesses which created a well balanced company covering many sectors such as integrated defense systems, rocket divisions, etc. A key attribute to Boeings engineering success is its patent portfolio, when a company is ahead of the curve it creates barriers to entry from competitors. In order for a company to use the processes that Boeing has patented it would have to license the patent from Boeing or create a totally new process that does not cause patent infringements. Within the past years we have seen an increase in patent infringement and patent validation lawsuits, which have resulted in large payouts. There are companies that generate enormous profits solely on patent licensing as opposed to the actual services or products provided.
The airline industry is a very mature industry and yet a very fragmented one. Many countries have barriers to entry such as stringent ownership rules, government subsidies as well as route barriers. There are several competitors to Boeing’s different businesses but Boeing biggest competitor is the European Union’s Airbus. In the years 2000, and 2001 Boeing market share started dwindling considerably due to Airbus’s introduction of new airplanes and they outright sold more planes than Boeing. One of the main reasons that Boeing was losing its superior position was that it had not introduced a new commercial airplane since 1995.
Airbus introduced with much acclaim its A380; it is a double-deck, wide-body, four-engine airliner. It can be configured to hold more than 500 passeng ...