DW 2015: Andreas Constantinou - The Business Model Mechanics of Internet Disruptors

Copyright VisionMobile 2015

Updated: 25 October 2015 The Business Model Mechanics of Internet Disruptors Andreas Constantinou | Founder & Director | VisionMobile Digital Winners 2015


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Knowledge. Passion. Innovation.

Andreas Constantinou

@andreascon

© 2015 VisionMobile. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Director & Founder, VisionMobile

Adjunct professor, Lund University


1 2The business model mechanics of Internet disruptors

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Ecosystem �business models

Asymmetric �business models


Ecosystem business models


Developers are conquering… the wrist

Apple Watch

4,000+ apps

Android Wear

4,000+ apps

Pebble

1,400+ apps (excl. watch faces)

Source: Apple, Pebble, Android Wear Center, VisionMobile estimates (Q2 2015) 7


Developers are conquering… the home

There are a lot of things that we’re not going to be able to build. We want to work with developers who bring other great ideas in the mix. […] The iPhone was great - it had 5 apps on it when it shipped. Now it has a million apps on it. The opportunity in the home is going to be pretty close. Tony Fadell

ex-Apple, CEO Nest

https://www.youtube.com/watch?v=377oDvnrk5M&t=20m40s (edited for clarity)

a small selection of Smart Home platforms and APIs

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Developers are conquering… the car

Aftermarket solutions for any car, 250+ OBD apps in Google Play,

growing support from big players

API available by invite only 40 new vehicle models in 2015

API publicly available (Nov 2014) Apps can be published on Google Play (Mar 2015)

First models in 2015

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Developers are conquering… the sky

There are a lot of industrial use cases that DJI can’t build the software for, but developers can come and create software for industrial companies. Developers are already using our SDK to build apps to help control drones for agriculture, construction, and mining. Michael Perry

DJI

http://techcrunch.com/2015/05/06/dji-drone-platform/

“Android for drones”

http://dronekit.io/

Raised $75M to build an industrial UAV developer platform (May 2015)

http://dev.dji.com/

An operating system for commercial drones

http://www.airware.com/developers

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Modern competitive battles are won by attracting developers

Salesforce 1.4M registered devs in 2013 took #1 spot from Oracle in CRM

Apple iOS | Google Android took #1 spot from Nokia and Blackberry in (smart)phones

Under Armour fashion brand uses

developers to engage communities of athletes

Microsoft Windows dominant OS in the 90s and 00s because of superior developer strategy

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Developer-driven business models in 3 steps

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Identify complements to your product in another market

Use developers to boost demand for these complements

Bundle complements with you core business

1 2 3


Apple ecosystem recipe

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The mechanics of Apple iOS ecosystem�ecosystem around iOS platform is designed to drive hardware sales

iOS platform

developers sw publishers

content retailers content owners internet players

brands verticals

operators

subsidies

users and data plans

content, apps and services

contributes App Store to offer $$$ and user engagement

premium product experience

premium $$$

telcos reduce friction for the iPhone business

accessory manufacturers

complements, revenue share

access to market

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contribution

how value is captured


Apple iOS ecosystem�core business – consumer electronics

step how Apple implements it

identify complements in another market content and mobile apps

boost demand for complements create developer ecosystem and app store

bundle with core business iOS apps only available on iDevices

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Copyright VisionMobile 2015 16

Tencent ecosystem recipe


The mechanics of WeChat ecosystem�convert user engagement into an e-commerce business

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mobile operators

$$$

SMS free

messaging and calls

engagement

kills legacy SMS business

user reach $$$

commoditization

how value is captured

e-commerce platform

virt

ual g

oods

gam

es

phys

ical

goo

ds

tran

spor

tatio

n

paym

ents

fligh

ts

mar

ketin

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ic


Example: WeChat messaging app�core business - ecommerce

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step how WeChat implements it

identify complements in another market free comms services

boost demand for complements free messaging, 3rd party service ecosystem

bundle with core business messaging is bundled with Tencent payment and ecommerce services

Copyright VisionMobile 2015 19

Automatic ecosystem recipe

Copyright VisionMobile 2015 https://jawbone.com/marketplace 20

Automatic: an OBD plug as an enabler for distribution platform for insurance and car services�Raised $24M in Q2 2015 from USAA and CDK Global

http://www.reuters.com/article/2015/06/25/ca-automatic-labs-idUSnBw255375a+100+BSW20150625


Automatic: From a standalone product to an innovation ecosystem�connecting drivers to the rest of their life – 320 recipes on IFTTT

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social

service

trip logging

location

smart home

wearables

works with any car through

OBD-II plug

offers selection of own services

for smart car experience


Example: Automatic + IFTTT�core business – automotive services

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step how Automatic implements it

identify complements in another market Integrate the Automatic app with IFTTT

boost demand for complements

Use the IFTTT innovator community to come up with 100s of recipes

bundle with core business Requires the Automatic OBD plug to work. Automotive services are bundled with the

plug.


Diverse companies use developers to extend their business

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value creation

value capture

value delivery

developers as extenders

to new use cases, and partners into

new alliances

developers as distribution

reaching new users & new markets

developers as customers

Source: VisionMobile


Asymmetric Business Models: surprise your competition


Asymmetric Business Models are based on the economics of complements

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increases demand for Google products mobile networks handsets

net neutrality Android

on-line advertising (90+ % of profits)

Closed “Open”

A product consumed with the main product

A product where a business generates profits

commoditise

commoditise

Adjacent products in mobile Google core business

Adjacent product Core product


Asymmetric biz models create & capture value across industries

software handsets e-commerce advertising

Messenger WhatsApp

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telecoms

Google Play

ad sales

Google Fiber Google Fi

Android handsets

Google Wallet

ad sales

devices

App Store

iDevices


Asymmetric biz models create & capture value across industries

value capture value creation

software handsets e-commerce telecoms

profit transfer 27

insurance

Amazon app store e-commerce

Kindle Fire

employee benefits plan

free life insurance

as long as you ‘re a subscriber

free HR software


Google is asymmetrically colonising industry after industry

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ads Search, AdWords

enterprise software Google Apps

mobile Android

PC Chromebook

TV Chromecast, YouTube

home appliances Nest

travel Google Maps, Google Flights

wearables Android Wear

automotive Android Auto


ABMs render industry boundaries meaningless

comms

media

e-commerce

advertising

software

handsets


Knowledge. Passion. Innovation. Andreas Constantinou Director & Founder [email protected] @andreascon

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