An Economic Overview of Internet Mobile Pla6orms by Nicolas Bär
Agenda Introduc?on Ecosystem Overview Pla6orm Providers Pla6orm Provider Economic Perspec?ve Strategies and Business Models Opportuni?es and Challenges Applica?on Developer Economic Perspec?ve Applica?on Delivery Process Applica?on Pricing Pla6orm Decision EndUser Economic Perspec?ve
Topic Convergence of tradi?onal mobile telephony, internet services and personal compu?ng Pla6orms: Apple, Google and MicrosoK Economic dimensions Pla6orm provider Applica?on developer EndUser
Ecosystem Market Par?cipants
Ecosystem Rela?ons ref: Rahul C. Basole: Structural Analysis and Visualiza?on of Ecosystems, AMCIS 2009 Proceedings, Paper 292, 2009. hup://aisel.aisnet.org/amcis2009/292
Ecosystem Rela?ons ref: Rahul C. Basole: Structural Analysis and Visualiza?on of Ecosystems, AMCIS 2009 Proceedings, Paper 292, 2009. hup://aisel.aisnet.org/amcis2009/292
Pla6orm Providers: Apple ios Business Origins 1970: Apple Computers 2001: ipod MP3 Player 2007: iphone 2010: ipad Strong focus on graphical user interface and interac?on (mouse, mul?touch gestures, etc.) Mobile Pla1orm Specifica7on Powers iphone, ipod Touch, ipad and Apple TV Strong integra?on with other Apple devices Ini?ally without support for 3rdparty sokware development Objec?veC based SDK Online Services App Store App adver?sement itunes MobileMe icloud
Pla6orm Providers: Google Android Business Origins 1998: Search Engine 2000: AdWords 2000 now: Tons of new online services 2005: Google acquires Android startup 2007: Open Handset Alliance (84 Members: HTC, Sony, Dell, Intel, Motorola, Samsung, LG, etc.) Mobile Pla1orm Specifica7on Device support for various tablets and phones Provides basic funcionality e.g. messages, calendar, photo etc. Java, C, C++ compa?ble framework Mobile Services Android Marketplace App adver?sement Maps Naviga?on YouTube Goolge+ Gmail Sync etc.
Pla6orm Providers: MicrosoK Phone OS Business Origins 1984: MicrosoK Windows 1990: Office Suite 2000: PocketPC 2003: Windows Mobile 2010: Windows Phone OS Mobile Pla1orm Specifica7on Devices comply with MicrosoK requirements Provides basic funcionality e.g. messages, calendar, photo etc. Office Suite XNA, Silverlight and Visual Basic framework Mobile Services MicrosoK Marketplace (music, videos & apps) Bing Search Maps (merging with Nokia maps) Windows Live Office 365
Agenda Introduc?on Ecosystem Overview Pla6orm Providers Pla6orm Provider Economic Perspec?ve Strategies and Business Models Opportuni?es and Challenges Applica?on Developer Economic Perspec?ve Applica?on Delivery Process Applica?on Pricing Pla6orm Decision EndUser Economic Perspec?ve
Pla6orm Providers Factors Customer lockin How s?cky is the product mix Value capture What services capture value Network Open vs. closed: On what layer of the pla6orm can profit be gained How well is the pla6orm providers network within the ecosystem
Overview Lockin ref: Mar?n Kenney, Bryan Pon: Structuring the smartphone industry, ETLA discussion paper 1238, 3 January 2011. hup://hdl.handle.net/10419/44498
Overview Value Capture ref: Mar?n Kenney, Bryan Pon: Structuring the smartphone industry, ETLA discussion paper 1238, 3 January 2011. hup://hdl.handle.net/10419/44498
Open vs. Closed Android Windows Phone OS ios Almost all parts open source Google applica?ons are closed (e.g. marketplace) Device manufacturers can port the pla6orm Some hardware requirements Open for 3rdparty developers Not open source Device manufacturers need a license to port the pla6orm Tought hardware requirements Requirements for 3rdparty developers Not open source Device manufactorers are not allowed to port Requirements for 3rdparty developers open closed
Summary: Apple Business Model iphone enters highend of the market with a more func?onal product Collapsed boundaries between mobile device and internet Licensing model for network operators pricing power No licensing model for device manufacturers Open enough to auract sokware developers and enlarge the ecosystem Ver?cally integra?on Full integra?on with the apple product line Online Services Offers a variety of adver?sement services Cross device boundaries (icloud) Challenges Closed pla6orm strategy Android is a threat especially with low cost devices Growth in Marketshare decreasing AppStore restric?ons Developers move to Android due to restric?ons and delays High cost strategy Not compe??ve in emerging markets
Summary: Google Business Model Online services Mainly interested in genera?ng more internet traffic to get revenue from adver?sements Generates revenue from other pla6orms when using their online services ShiKing value from the OS to online services Open Handset Alliance Giving the opportunity for device manufacturers to use Android on low cost Strong network and ecosystem Gain marketshare quickly and create network effects Mobile adver?sement AdMob Market leader inapp adver?sement Challenges Diverse product mix Only Search, Gmail and YouTube seem s?cky Low switching cost on other services Search engine Phones with Windows Phone OS will use Bing Apple could be offended by Android and switch to another search engine
Summary: MicrosoK Business Model Licensing Model Pricing power on device manufacturers Collabora?on with Nokia could boost marketshare Online services Moving value capture to the cloud with Bing and Office365 Adver?sement op?ons Office Well integrated office suite OSOffice synergy (e.g. Windows OS) Patents Using patent infringements to increase ecosystem Challenges Late changes on pla6orm Windows Phone OS introduced 3 years aker iphone and Android Market share No strategy on compe??on with Android Mobile services No significant market share
The Nokia Case Outstanding supply chain Symbian Founda?on, Symbian Pla6orm MeeGo 2011 coopera?on with MicrosoK
Challenges and Opportuni?es No market leader is defined yet Since the market is based on technological inven?ons, there is s?ll room for new entrants Due to no leading pla6orm growth of the market could slow down Patents war Increasing amount of lawsuits on patent infringement show impact on the ecosystem Impact on Complementors e.g. Apple vs. Adobe
Agenda Introduc?on Ecosystem Overview Pla6orm Providers Pla6orm Provider Economic Perspec?ve Strategies and Business Models Opportuni?es and Challenges Applica?on Developer Economic Perspec?ve Applica?on Delivery Process Applica?on Pricing Pla6orm Decision EndUser Economic Perspec?ve
Applica?on Delivery Process App Store Pros App Store Cons Customer reach Payment process Image transfer Comission Time to market Compe??on Rejec?on Policy ref: Vision Mobile Ltd.: Developer Economics 2011, VisionMobile Ltd, June 2011. hup://www.visionmobile.com/devecon.php
App Store Comparison ios Android Windows Phone OS Downloads > 15 billions > 6 billions? Inapp Ads Special req. Any Any Approval Special req, < 52 days no req. special req, < 7 days Fees 30% transac?on $ 99 / year 30% transac?on $ 25 registra?on Avg. App Price ca. $ 2.20 ca. $ 2.00? 30% transac?on $ 99 / year Amount Free Apps ca. 25% ca. 60% ca. 20%
App Pricing Payperdownload Fixed price per download Freemium Upgrade possibility with inapp payment Payment by?me period Free app with adver?sement Inapp adver?sement (e.g. AdMob) Free apps Image boost Product / service integra?on
Pla6orm Decision Criteria Interpreta7on Money is more important than technology Pla1orm Specific Pla6orm selec?on criteria differ considerably across developers using different pla6orms ref: Vision Mobile Ltd.: Developer Economics 2011, VisionMobile Ltd, June 2011. hup://www.visionmobile.com/devecon.php
App Examples ios Android Windows Phone OS Angry Birds $ 0.99 free, with ads $ 2.99 Shazam Life?me: $ 5.99 1year: $ 3.99 $ 4.99 $ 4.99 WhatsApp $ 0.99 $ 1.99 / year not available Switching costs Programming language barriers Cost of development tools
Agenda Introduc?on Ecosystem Overview Pla6orm Providers Pla6orm Provider Economic Perspec?ve Strategies and Business Models Opportuni?es and Challenges Applica?on Developer Economic Perspec?ve Applica?on Delivery Process Applica?on Pricing Pla6orm Decision EndUser Economic Perspec?ve
EndUser Network operator vs. reseller Discount on phones bundled with a network operator contract RewardingSystems e.g. W3i rewards users with virtual currency within free mobile applica?ons for installing apps from W3i's adver?sers
Ques?ons?
Discussion Do you think Apple should make the ios more open, so device manufacturers can use it on their devices? What would be the impact on the ecosystem?
Discussion How promising is the collabora?on between Nokia and MicrosoK? Could the strong ecosystem of Nokia boost MicrosoKs marketshare?
Discussion What effect will the patent infringements have on the Android marketshare? Does Google need a more diverse value capture strategy?
Discussion Would it be possible for Facebook to develop a pla6orm and use the strong client base to enter the market?
Discussion Restric?on vs. Reach Does the factor customer reach outpace the restric?ons in the app store?
Discussion To what degree are the app stores business ready? Should pla6orm providers tackle business and private customers in a different way? How could an app developer influence this?
End
Backup: Open vs. Closed ref: Mohsen Anvaari, Slinger Jansen, 2010: hup://dl.acm.org/cita?on.cfm?id=1842775
Backup: Marketshare ref: Gartner, April 2011: hup://macdailynews.com/2011/04/07/gartnermicrosokwindowsphonemarketsharetosurpassapplesiosin2015/