Smartphones, Apps, and Digital Flows

Download or read book Smartphones, Apps, and Digital Flows written by Bryan Pon and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The mobile telecommunications industry is in the process of a dramatic transformation into the smartphone industry, as new firms from the computer and internet sectors have used new technologies and business models to displace the incumbents. The key organizing structure of this new smartphone industry is the software "platform," a model which defined the PC industry for decades but is also present in other industries, such as console video games. Software platforms have distinct economic properties that shape competitive strategy, including the presence of positively reinforcing network effects, which lead to increasing returns to scale and the potential for winner-take-all markets. In the smartphone industry, the platforms by Apple, Google, Microsoft, Amazon, and Xiaomi also function as two-sided markets, bringing together distinct groups (e.g., app developers and end-users) who transact through the platform. In the work that follows, I explore how these and other platform dynamics are exploited by the key firms in their apparent strategies, and the implications for competition in the industry. The analysis shows that new organizational forms such as hybrid platforms, where firms such as Amazon and Xiaomi have appropriated open-source Android for their own proprietary platforms, and nested platforms, where firms such as Line and Facebook build distinct platforms within other platforms, challenge the traditional platform model and our understanding of how firms exercise platform control. I argue that the "bottleneck" or control point of smartphone platforms has moved away from the operating system, and up the stack to cloud-based services. The final part of the analysis studies the app economy, and how the platform-mediated "app stores" are shaping participation and value capture. Using spatial analysis, I map the geography of digital flows of apps between developers and the most lucrative markets, revealing clear patterns of inter-regional trade and insular domestic markets.