Success Factors of Mobile Business Ecosystems
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Doctoral Programme in Science Juha Markus Winter Success Factors of Mobile Business Ecosystems From Hardware-Centric to Content and Advertising Based Business Models Licentiate Thesis submitted in partial fulfillment of the requirements for the predoctoral degree of Licentiate of Science in Technology Helsinki, Finland, Sept. 23, 2014 Supervisor: Professor Antti Ylä-Jääski, Aalto University Advisor: Docent Sakari Luukkainen, Aalto University Examiner: Kalle Kivekäs, D.Sc. (Tech.) AALTO UNIVERSITY ABSTRACT OF LICENTIATE THESIS School of Science Author: Juha Markus Winter, M.Sc. (Tech.) Title of thesis: Success Factors of Mobile Business Ecosystems: From Hardware-Centric to Content and Advertising Based Business Models Date: Sept. 23, 2014 Pages: 13 + 232 Research field: Data Communications Software Code: T008Z Supervisor: Professor Antti Ylä-Jääski Advisor: Docent Sakari Luukkainen Examiner: Kalle Kivekäs, D.Sc. (Tech.) For firms operating in a networked economy or business ecosystems, value creation may be highly dependent on the relationships with other firms, which has added a significant amount of complexity particularly to strategic and product-related decision-making. In systems thinking, a firm is seen as part of a wider economic ecosystem and environment where it influences and is influenced by other firms. Within a business ecosystem, firms coevolve capabilities around innovations, working both cooperatively and competitively to support new products, satisfy customers, and incorporate the following round of innovations. Ecosystems are often formed around platforms on which products and complements are built, and platforms may also facilitate transactions between distinct groups of users in a two or multi-sided market. In this study, established theoretical concepts have been brought together to analyze the success factors of mobile business ecosystems in a holistic manner. Addi- tionally, the impact of the historical legacy and path-dependent evolution of a firm’s previous business activities, capabilities, and assets on decisions the firm has made in its ecosystem and platform strategies is studied, and a novel theoretical concept, ‘angle of entry’, is recognized. Through a qualitative multiple case study of three leading companies in the smartphone business and their respective business ecosystems, eight common success factors are identified that have contributed to the disruption of the smartphone business by these three new entrants from the IT world, replacing the incumbents. Based on the results, it can be stated that all three leading ecosystems utilize, at least to a certain extent, closed source code to protect their differentiating or otherwise significantly value-adding software components. Similarly, the product platforms of all three ecosystems offer sufficiently open application programming interfaces so that device manufacturers, accessory makers, and developers are able to create products and apps with meaningful differentiation. Keywords: app store, business ecosystem, mobile, operating system, path dependence, platform, smartphone, strategy, two-sided market, value network Language: English ii AALTO-YLIOPISTO LISENSIAATINTUTKIMUKSEN Perustieteiden korkeakoulu TIIVISTELMÄ Tekijä: Dipl.ins. Juha Markus Winter Työn nimi: Mobiilien liiketoimintaekosysteemien menestystekijät: laitteistokeskeisistä liiketoimintamalleista sisältöön ja mainontaan Päiväys: 23. syyskuuta 2014 Sivumäärä: 13 + 232 Tutkimusala: Tietoliikenneohjelmistot Koodi: T008Z Työn valvoja: Professori Antti Ylä-Jääski Työn ohjaaja: Dosentti Sakari Luukkainen Työn tarkastaja: Tekniikan tohtori Kalle Kivekäs Verkostoituneessa taloudessa tai liiketoimintaekosysteemeissä toimivien yritysten arvonluonti saattaa olla hyvinkin riippuvaista suhteista muihin yrityksiin, mikä on lisännyt erityisesti strategisen ja tuotteisiin liittyvän päätöksenteon kompleksisuutta huomattavasti. Järjestelmäajattelussa yritys nähdään osana laajempaa taloudellista ekosysteemiä ja ympäristöä, jossa se vaikuttaa muihin yrityksiin ja on samalla ym- päristönsä vaikutuksen kohteena. Liiketoimintaekosysteemissä yritykset kehittävät yhdessä kyvykkyyksiään innovaatioiden ympärillä tehden yhteistyötä ja kilpaillen samalla tukeakseen uusia tuotteita, tyydyttääkseen asiakkaita ja ottaakseen käyttöön uusia innovaatioita. Ekosysteemeitä muodostuu usein tuotealustojen ympärille, ja lisäksi alustat voivat välittää transaktioita erillisten käyttäjäryhmien välillä nk. kaksi- tai useampipuolisessa markkinassa. Tässä tutkimuksessa on yhdistetty tunnettuja teoreettisia käsitteitä mobiilialan liiketoimintaekosysteemien menestystekijöiden analysoimiseksi kokonaisvaltaisesti. Lisäksi on tutkittu yrityksen historian ja sen toimintojen, kyvykkyyksien ja resurssien polkuriippuvaisen evoluution vaikutuksia sen päätöksiin ekosysteemi- ja tuotealusta- strategioissa. Tämän tuloksena on tunnistettu uusi teoriakäsite, ‘tulokulma’. Kolmesta johtavasta älypuhelinliiketoiminnan yrityksestä ja näiden kunkin ekosysteemistä teh- dyn kvalitatiivisen monitapaustutkimuksen perusteella työssä tunnistetaan kahdeksan yhteistä menestystekijää, jotka ovat auttaneet näitä IT-maailmasta tulleita tulokasyri- tyksiä mullistamaan älypuhelinliiketoiminnan syrjäyttäen alan vanhat johtoyritykset. Tulosten perusteella voidaan todeta, että kaikki kolme johtavaa ekosysteemiä hyö- dyntävät ainakin jossain määrin suljettua lähdekoodia suojatakseen erilaistamista tai muuten merkittävää lisäarvoa tuottavia ohjelmistokomponenttejaan. Samoin kaikkien kolmen ekosysteemin tuotealustat tarjoavat riittävästi avoimia sovellusrajapintoja, jotta laitevalmistajat ja sovelluskehittäjät pystyvät luomaan tarpeeksi erilaistettuja tuotteita ja sovelluksia. Avainsanat: arvoverkosto, kaksipuolinen markkina, käyttöjärjestelmä, liiketoimintaekosysteemi, mobiili, polkuriippuvuus, sovelluskauppa, strategia, tuotealusta, älypuhelin Kieli: englanti iii Acknowledgments This licentiate thesis is a predoctoral dissertation written as a monograph. All research conducted for it is published here for the first time, not in any other forum. This has been sort of a challenge, given the large number of pages and since the thesis has been written over a relatively long period of time. I had the first concrete ideas about the topic in 2008, when I was finalizing the last remaining parts of the theoretical coursework that was required for a Licentiate’s or Doctor’s degree at the Helsinki University of Technology (TKK). At that time, I was leading quite a hectic life, working for Nokia Corporation in the strategic competitive intelligence function, later moving to strategic planning and development where many of the topics discussed in this thesis were my bread and butter. I express my gratitude to my superiors at Nokia Siemens Networks and Nokia who were kind enough to support my postgraduate study efforts by allowing me to dedicate a couple of hours each week for my studies. In the summer of 2009, I met with my advisor Sakari Luukkainen, whom I knew already from the Telecommunications Business major and postgraduate courses at the Department of Computer Science and Engineering. With much enthusiasm and only minor revisions to my old research plan, the work on the thesis was kicked off. I planned the structure of the thesis and started reviewing the key literature that I had already identified earlier, to a large extent at least. As the going got tough and I needed to dedicate more time to my “day job”, the thesis progressed only slowly, occasionally even slowing to a halt. In late 2012, after I decided to take severance from Nokia after almost nine exciting years at the forefront of mobile communications, I finally had more time to work on the thesis, and started revising my earlier writings as well as making some real progress. Then, in early 2013, I got an exciting job opportunity in Germany requiring me to move to the Hanover area in Lower Saxony, an opportunity that I took and have not regretted. The hectic pace of work, all the practicalities of moving to a foreign country, and getting things running smoothly greatly strained my available free time, and so the thesis was unfortunately put on a near-hiatus once again. iv From early 2014, I was gradually able to find more time to continue the re- search and work on the thesis. What you now have in your hands is the result of countless hours of very hard work spanning over a number of years, although the complete thesis has been fully revised and brought up to date during 2014. At last, it is complete. I express my warmest thanks to Professor Antti Ylä-Jääski of the Aalto Uni- versity School of Science who acted as the supervisor for the thesis and en- couraged me on multiple occasions to push through with my postgraduate studies. My deepest gratitude goes to my advisor, Docent Sakari Luukkainen, whose valuable advice, commentary, and continuous encouragement have been crucial to the completion of this thesis. His interesting courses, depth of knowledge, and friendly attitude are what inspired me to pursue postgraduate studies in this field. Dr. Kalle Kivekäs deserves special thanks for his time and going through the effort of acting as the external examiner for the thesis. Finally, I thank my wife Heidi for her support and patience, and my parents Marita and Jouko for their encouragement and support. Helsinki, Finland, Sept. 23, 2014 Juha Winter v Abbreviations and Acronyms AMD Advanced Micro Devices, Inc. AOSP Android Open Source Project (platform) API Application Programming Interface AR Augmented Reality ASL Apache Software License