Session 15.pdf - Digital Business Models Learning...

Digital Business Models

Learning Objectives

Digital Business Models

Network Effect – Exchange, Staying Power, and Complementary
Benefits

Platform Ecosystem

What prompted us to study new business models?

There are several industries under disruption today

telecommunications industry where apps like WhatsApp and WeChat are offering free messaging and calls to
over a billion users

Transportation, where Uber is replacing taxi companies, couriers and delivery services

Advertising, where Facebook and Google are dominating search and banner advertising

E-commerce where Amazon and Flipkart are taking over market leadership from 50-year-old traditional
retailers
technology is an enabler, while it is business models that are the agent of this change

Traditional management techniques work well for traditional markets and business models that were
defined in the industrial-age

They are not adequate to understand the changes that are taking place in internet markets and business
models

Case of Nokia
Classic management tool such as Michael
Porter's Five Force analysis in 2007, would not
be able to predict the downfall of Nokia

Case of Nokia

What caused the downfall of Nokia was the reason people buy mobile phones

In 2007 people bought phones for their features (for example the top-of-range Nokia N95) or for
the phone’s capabilities

Soon that changed; people were buying phones, not for what the phone did, but what you could do
with the phone; the thousands and eventually millions of applications that can be accessed through
the phone.

This was engineered by Apple and Google who brought the desktop computing business model to
the mobile phone market, that is allowing third parties – software developers – to build
applications and distribute them directly to users

Nokia and BlackBerry tried to copy the recipe. However, Apple and Google were able to defend
their business by having initially thousands and eventually millions of developers creating apps for
their devices

Apple and Google were able to use millions of third party apps to drive demand to their core
business - Apple’s hardware business and Google’s ad business as we shall see