October 23 in business history: a $950,000 elephant, an underpriced order book, and a $399 player
Three October 23s — a $950,000 Disney feature in 1941, a Finnish shipyard that bankrupted itself on an underpriced order book in 1989, and the $399 iPod in 2001 — each turned on which number the company chose to defend.
Three October 23s, three companies under pressure, and three different numbers each of them chose to defend. The cost of what they made. The volume of work they booked. The price they charged.
Only one of the three numbers could be held, and each company decided which. Every choice was defensible in the room where it was made.
What nobody in those rooms had put a figure on was who would carry the difference.
The picture they made smaller
Dumbo opened in New York on 23 October 1941 and went into general release on 31 October. At 64 minutes it was among the shortest animated features the studio had made to that point. 1
The studio needed a cheap picture. Pinocchio and Fantasia, both released in 1940, had lost money, and Dumbo was produced to recoup those losses through deliberate simplicity and economy. 2
The year got harder before the film opened. On 29 May 1941 the studio's animators struck. 3
Walt Disney signed with the union that year, fearing the loss of government contracts and the recall of the studio's bank loans. 3
The number the studio protected was unit cost. Dumbo was made for $950,000, half the cost of Snow White and less than a third of what Pinocchio had cost. 12
The cut worked. The film returned a profit of $850,000 and was the studio's most financially successful release of the 1940s. 2
Decision mirror: Disney ran the same comparison in 2025 with two live-action remakes. Lilo & Stitch, made for $100 million, took $1.04 billion worldwide. 4
Snow White took $205.7 million worldwide. 5 Disney's own filings put its cost at $336.5 million and the loss at $170 million. 6
The cheap picture returned more than ten times what it cost. The expensive one returned less than what it cost.
The order book they kept filling
Wärtsilä Marine filed for bankruptcy at 3:30 p.m. on 23 October 1989. 7
The company had been formed two years earlier by merging the shipbuilding yards of Wärtsilä and Valmet, with Wärtsilä holding 70 per cent. 8
So it filled the yards. Wärtsilä's own history says the company "took as many orders as it was able to get its hands on", including three cruise ships for Carnival which, the history concedes, "were underpriced". 7
The order book outgrew the yards. Filling it would have taken about 10,000 workers; by late 1988 the yards had roughly 7,000. 7
Subcontractors covered the difference at rising prices. Losses reached about 1 billion Finnish markka by summer 1988, and more than 1.5 billion a year later. 7
The banks refused to put up more money that Monday, and the filing followed the same afternoon. 7
Martin Saarikangas, who ran the Helsinki shipyard, said later that a financing meeting had been set for 25 October. "If they had waited just two more days, I would have come up with the money." 7
On 7 November 1989 he started a new company and said it needed 600 million markka of share capital, in cash. 7 He had the money in ten days. 7
Decision mirror: The cash cycle that broke Wärtsilä Marine is still the industry's structure. Meyer Werft, a German cruise-ship builder in Papenburg, employed more than 3,000 people and held 11 billion euros of orders to 2031. 9
Its own account of the squeeze: about 80 per cent of a ship's price is paid only on delivery, so the yard borrows to build. 9
On 17 September 2024 the federal government and the state of Lower Saxony agreed to take about 80 per cent of the company for 400 million euros, plus guarantees of around 1 billion euros each. 9
Finland's government refused to become an owner in 1989. Germany's became the majority owner in 2024, with a buy-back right for the family.
The price they opened with
Apple introduced the iPod on 23 October 2001 at $399. It held 5GB, which Apple counted as 1,000 songs, weighed 6.5 ounces and played for 10 hours. 10
Apple's own comparison was to what already existed: 20 per cent of the volume of the hard-drive players on sale, and 30 times faster than USB players at loading a CD. 10
The $399 bought a closed loop. The iPod synced only with a Mac running iTunes 2. 10
Windows support arrived with iTunes for Windows on 16 October 2003, two years after the player. 11 Until then, Windows users were outside the market Apple could serve.
The volume came anyway. Apple sold its 100 millionth iPod on 9 April 2007, five and a half years after the first one. 12
By then 4,000 accessories had been built for it, and 70 per cent of 2007-model American cars offered iPod connectivity. 12
Decision mirror: Apple ended the iPod line on 10 May 2022 and let the touch model sell out rather than replace it. 13
The release names what carried the library instead: an iPhone, an Apple Watch, a HomePod, and 90 million songs on Apple Music. 13
For twenty-one years the loop sold the object. In 2022 Apple kept the loop and dropped the object.
Three questions for the day
- Which number is your plan defending this quarter, and which of the other two is absorbing the strain without appearing on the page?
- When you cut a product to protect its cost, what has to survive the cut for the result to still be worth buying?
- When the number you protected turns out to have been the wrong one, who is holding the difference eighteen months later?
References
- 1Box Office Mojo, "Dumbo (1941)"
boxofficemojo.com
- 2Wikipedia, "Dumbo"
en.wikipedia.org
- 3Animation Guild, "The Disney Strike, 1941"
animationguild.org
- 4Box Office Mojo, "Lilo & Stitch (2025)"
boxofficemojo.com
- 5Box Office Mojo, "Snow White (2025)"
boxofficemojo.com
- 6
- 7
- 8Wikipedia, "Wärtsilä Marine"
en.wikipedia.org
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