1 post tagged Business Models
We can understand a few things when comparing mobile device business models. Why Apple’s approach seems so successful and create hihgly satisfied buyers? Why Android is winning on market share? From the picture above, here are my observations.
Apple has complete control of every layers. They decide the hardware, they control their operating system so they optimize both to create a very enticing package. Apple sells content though their online stores and offer another layer of integrated services with their devices. Selling they devices is done though their own Apple stores where the Apple experience extends. By doing so, they offer a controlled and fine tuned the message and the experience to the potential buyers.
Amazon’s business model today is pretty much the same as Apple’s. They build devices (Kindles), they sell content (books, music, movies, apps) and have their own retail stores: www.amazon.com. One of the thing that differs from Apple is the fact that Amazon started their operating system effort with Android instead of building their own from scratch. They did put a lot of customization efforts into it though. The advantage of this is that they can differenciate themselves from other Android OEMs. Does the Kindle offers a very optimized user experience to the same degree of the iPad? I’m not quite sure yet.
Microsoft approach in the mobile space is where the model start to be quite different. They don’t have hardware (yet - still nothing on store shelfs) but they own the operating system. They will license it to OEMs but they have design guidelines for their Windows Phone devices and Nokia is responsible to design, build and distribute what I call the reference package. In this space, carriers with their “partners” like Samsung, HTC, etc can ask for specific things for specific devices. But Microsoft is still in control, at least partially.
Google’s business model is very simple because it was built on a specific purpose: to prevent Apple’s monopoly in the mobile device space. So they created Android and flooded the market by giving it away to everybody who asked for it. OEMs are happy because they don’t have to spend months if not years to create their own thing. Carriers still plays a very important role in this model because they can dictate whatever they want to the OEMs who listen and bend to their needs. Content delivery is up to everyone. Google’s offers Google Play to fill this space but it is not limited to this. Many other “app store” or “content store” exists and are controled by their respective owner.
A few observations here:
- Android is winning the mass because of device proliferation. The market is literaly occupied by low priced Android devices. Looking the shelf space occupied by Android phones is very telling of this.
- User satisfaction of Android devices is mediocre. Users pay nothing for their Android phone and their expectations are low. Many are deceived and feel bad about their device.
- Apple is winning the medium to high end. This partly explain why people love their devices and Apple enjoy the highest customer satisfaction year after year.
- Amazon could be the closest competitor to Apple in the tablet space because of their integrated models which works very well.
- The integrated model works so well that Google, with the help of Motorola is looking to morph their model in order to build more integrated offerings. Microsoft is doing the exact same thing but their past business model still hunt them so OEMs could be wary to compete against them.
- In the post-PC era, the best user experience comes from integrated business models.
Where is Research in Motion? RIM is pretty much dead IMHO. You may disagree with me on this but they denied the iPhone advantage for way too long and started to think about something new way to late in the game. We are all the witness of this dying patient.