17 Apr 2014

The Real Challenge for Project Ara

Project Ara - Hardware Modularity

This week, Google held the first developer conference for Project Ara, their initiative to develop a truly modular smartphone. As with any potentially disruptive product, traditional analysts have been skeptical because of the trade-offs in size, weight and power consumption. The flaw with this line of thinking is that it focuses too heavily on high-end customers and today's smartphone users -- most critiques of disruption theory in consumer contexts suffer from the same flaw. In reality, a shift in the basis of competition and, consequently, business model innovation often takes root among non-consumers or low-end customers. The real challenge lies elsewhere.

15 Apr 2014

Facebook, Whatsapp and Mobile Payments

Facebook-Whatsapp Payments

According to recent reports, Facebook is in the early stages of building an electronic payments service. The rumored focus on emerging markets suggests that this service may have a tie-in with Whatsapp. More importantly, an e-payment service could meet one of two possible goals with respect to Facebook's (or Whatsapp's) business model.

10 Apr 2014

Google Glass: Finding Non-Consumers

New Market Disruption - Non-Consumers

In my last post on "field-of-vision" tech, I hypothesized that these products were unlikely to be "good enough" for mainstream usage for at least five years. Initially, their success will not depend on mainstream appeal, but on their value to a certain niche of "non-consumers". The traction seen by Google Glass in sectors like medicine seems to be consistent with this pattern.

7 Apr 2014

Messaging Apps: The Case Against a Tech Bubble

Whatsapp vs. ICQ - Users & Valuation

In 1998 AOL paid $287 million to acquire ICQ, a pre-revenue instant messaging (IM) client with a "massive" base of 12 million users. In just three years ICQ's user base grew to 100 million, but it never seemed to take off as a business. Over the past few months, some observers have drawn parallels between the valuations drawn by dot-com era products like ICQ and smartphone messaging apps -- Whatsapp's $19 billion valuation is usually part of the argument. In reality, there are major differences between the dot-com bubble and what we see today.

3 Apr 2014

Fire TV: Business Model Motivations

Impact of Kindle Ecosystem

23% - That figure alone explains Amazon's goal for Fire TV. In 2013, it was estimated that the Kindle ecosystem was responsible for 11% of Amazon's revenue, but 23% of its operating profit. However, the revenue numbers also include $4.5 billion in Kindle device sales (6% of Amazon's revenue) which were sold at break-even. This means that 23% of Amazon's operating profit came from a business that accounted for just 5% of its annual revenue.

1 Apr 2014

Analyzing Xiaomi's Potential

Xiaomi - Sales Growth

Xiaomi's CEO, Lei Jun, revealed some interesting figures last week that could shed some more light on the potential of their business model. While most of these figures refer to sales volume, we can also use them to gauge the potential of future services revenues -- Xiaomi's core monetization strategy.

27 Mar 2014

Facebook Buys Oculus: Imagining the Next Big Platform

Oculus Rift

Yesterday, Facebook announced its second blockbuster acquisition in less than a month as it purchased Oculus VR for $2 billion. Oculus VR's virtual reality headset was built to focus on immersive gaming experiences, but Facebook aims to eventually expand its use cases. Does this put Facebook in a position to create the next major platform?

25 Mar 2014

Google vs. KakaoTalk: How will App Discovery Evolve?

App Growth by Platform

A few days ago, I came across an interesting report stating that Google has attempted to sway South Korean developers away from KakaoTalk's mobile gaming platform. Assuming the report is factual, let's take a look at Google's motivations in context of the potential threats to their business model.

21 Mar 2014

The iPhone and China Mobile

iPhone 5C in China

When Apple announced their China Mobile deal a few months ago, I commented that the analyst community seemed to lack clarity about the nature of the Chinese market. My hypothesis was based on the identity-utility continuum and the pricing model used by Chinese carriers. Information from China Mobile on initial iPhone sales seems to validate this hypothesis.

17 Mar 2014

The Real Threat to Google's Business Model

WSJ - Smartphone Usage

With Google's stock price hovering near all-time highs, the risks to their business model have become a hot button topic among industry observers. The dramatic shift to mobile computing has the potential to upend every single company and industry. However, few seem to understand Google's business model well enough to gauge its risks. Let's take a look at some oft-repeated arguments and compare them to the real risks facing Google.