5.telecom and Internet Innovations-Google Model vs. Apple Iphone Model

Google model
vs. Apple iPhone model

Prof. Dr. Toni Janevski
email: tonij@feit.ukim.edu.mk
Strategic Planning for Telecom and Internet Innovations, Prof. Dr. Toni Janevski
Asymmetric business model
As OTT (Over-The-Top) players put increasing pressure on

traditional telco profit centers, it is tempting to see them as
direct competitors.
Mobile Internet has become an integral part of the digital

services and content ecosystem.
They don't compete for profits, but for control of the value chain
In that context, mobile operators, Internet companies, handset makers,

software vendors and content providers are part of the same value
chain.
Competition is not symmetrical, because unlike carriers, OTTs

do not bear the burden of providing mobile Internet service.
OTT and Telco relations
OTT compete with telco for control, not profits

Core business models are different for mobile and fixed
network providers (Telcos) and OTT service providers
(Google, Apple, etc.)
OTT vs. Telcos comparison
Competition is not symmetrical, because unlike carriers, OTTs do not bear

the burden of providing mobile Internet service.
Connectivity may be as important to their business model as gas to a car, but

it's the telcos part to supply it, not the OTTs themselves.
This asymmetry makes it difficult for telcos to protect the profitability of some
legacy business models.
Business models
While there is a symbiotic relationship between Telcos and

OTTs at the connectivity business layer, the nature of
asymmetry is different at the Telco services layer.
Because connectivity costs are paid by the user, OTT players have
great flexibility in their business models.
OTTs can monetise ads, downloads, analytics or acquisitions, and are
thus able to price their services either free (e.g., Viber), close to free
(e.g., Whatsapp), or even less-than-free (in the case of Google sharing
app revenues with network operators).
The vertically integrated, "all-in-one" telco business model of

bundling connectivity and service costs makes it impossible
for telcos to compete with free or less-than-free OTT
alternatives.
Who is who?
Telco core voice and SMS services are suffering "collateral

damage" in the wake of successful OTT strategies, rather than
suffering as a result of direct competition.
OTTs don't see telcos as competition, but rather as a
complement to their business.
The telco digital business needs to be measured not by direct
revenues, but according to whether it helps to grow and protect
core telco business
by increasing usage, creating user lock-in and driving subscriber

acquisition
Instead of copying OTT initiatives, telco innovations should

leverage unique advantages, in order to create user value that
OTT players cannot match, such as localization, user targeting,
privacy controls or MVNO service customization.
Apple innovation strategy
Apples innovation strategy had changed the way we all think

about the post-industrial enterprise.
Apples platform strategy goes back as far as the first iTunes platform,
which integrated external content with an Apple product.
It evolved into the apps developer community and Apps Store, as
Apple miraculously ramped up a developer community of hundreds of
thousands in the space of two years.
Apple has been criticized for not repeating its disruptive

success with the iPhone, when in fact a platform and
ecosystem model is both a huge risk and a game changer.
Apple innovation model
The platform and the significant investment in seamless integration of

developer and content provider contributions, user access and friction-free
commerce.
Design: in smartphones the iPhone redefined the User Interface
The competitive internal market as teams compete against each other on
select projects
Wearables and the disaggregation of the smartphone, presumably looking
for new ways to exploit the platform and ecosystem
Supply chain management
Radical adjacencies such as retailing and indeed mobile and then watches
Control of all customer experience
Google innovation model
Google is usually associated with a fairly loose innovation

model -the 20% free time its engineers can claim but in fact its
innovations are systematic in the infrastructure. This is a
comment left by Goolge here on ReThinking Innovation:
We are constantly innovating, figuring out new more efficient ways to

remove heat from machines while reducing pollution. We publish our
findings, after they have been vetted. After a few years, our designs
start showing up in other companies datacenters. We only waste 7-8%
of our power on overhead. The norm *used* to be 50-100%.
YouTube was converted to use Google technology. It would not be

what it is without Googles expertise in networking and distributed
computing.
Android was barely more than an idea when Google merged with it.
Google made it what it is.
Google innovation model
It is platform and ecosystem-based in its customer facing

innovations
Continuous improvement in infrastructure
Radical adjacencies to become more integrated (deliveries)
and to look for a new disruption (Glass, driverless cars)
Device innovations, which are proving difficult to generate
along with supply chains that it lacks experience of
Increasingly it is becoming design-centric
Bench-time a factor most companies now deprive their
engineers of
Google and the Internet of Things (IoT)
Aside from wearables and automobiles, the coming Internet of

Things is another advantage Google has over Apple.
The Internet of Things refers to previously "dumb" devices, like a

refrigerator or a shipping container, that will eventually communicate
with other objects around it to improve efficiency and send relevant
information to users.
By 2020, Gartner expects installed base units for the Internet

of Things to be 26 billion, which doesn't include PCs,
smartphones, or tablets.
International Data Corporation went so far to say that the Internet of

Things is "poised to change everything" and will result in $8.9 trillion
in global revenues by 2020.
AT&T, Cisco, GE, IBM and Intel formed Industrial Internet
Consortium for IoT standards at the beginning of 2014
Innovations lead to revenues
Apple and Google are often compared using a variety of metrics, without a
clear understanding of what those metrics mean.
Let look at four metrics and how we can use them to draw conclusions
about these two companies.
The first metric is the revenues.
Revenues strategies of Google and Apple
Google's revenue strategy is still largely dependent

on selling ads.
Apple's revenue spikes wildly around the holiday
season because of their retail operation, but Google's
remains far more stable throughout the year.
Market capitalization comparison of

Google and Apple
When it comes to understanding just how valuable a company really is,

many people will turn to that company's stock price.
However, stock prices are unstable.

Apple's market cap peaked most recently in Q3 of 2012 with the announcement
of the iPhone 5, then fell quite dramatically over the next year
What is next in Google innovations?
Unlike Apple, whose ability to innovate has come into

question in the post-Jobs era, projects like Glass (wearable
computer with optical head-mounted display), Tango (3D
sensors for smartphones), and Ara (free open hardware
platform for modular smartphones first model scheduled for
January 2015) have shown Google's willingness to take risks.
Glass project
Ara project
Market share for Android and iOS
One has said: "The smartphone market is a basically two-horse race right
now."
While many people try to equate the iOS/Android with Apple/Google, that
is a misguided comparison as each mobile OS does not define its parent
company's revenue stream.
Samsung role in Apple vs. Google

market battle
The initial problem of measuring success by market share sales

is that you are comparing Apple (which created the iOS
software and accompanying hardware) with Google who
created the Android platform, which is mostly distributed
through third-party vendors like Samsung.
A more fitting comparison of market share by sales might be Apple v

Samsung.
In some ways the battles with Samsung are a proxy for battles with
Google.
One shouldn't be measuring success by sales number alone,

but we should also look at how consumers are using these
devices.
OS (Operating System) usage statistics
Apple has seen consistently higher usage than Android, despite capturing
less of the fewer overall shares in 2012 and 2013
These numbers assert that Apple has more engaged customers than
Android does and it sees more mobile usage.
The fact of the matter is that Apple has established itself as a trusted brand.
Example about the trust itself
Possible measure of trust is the number of credit

cards that each company has on file.
US survey has shown that:
Amazon
had 91 million credit cards on file,

In second place was Apple with 41 million cards on file,
Google came in a distant third with 22 million cards on file.
One may conclude that Apple has nearly twice as

many customers who trust them with their financial
data as Google does.
Some conclusions
Apple and Google, or Google and Apple are two current leaders in
innovations, where mobile technologies and clouds are main work areas.
Currently: More people are engaged with their Apple devices, and more
people are spending money on their Apple devices.
However, the trends are constantly changing, because Internet and Telecom
environments are rapidly changing.
The biggest opportunity for Apple is to dramatically expanding the

capabilities and usage of their online services platform.
Google's opportunity is to figure out how to create more of a win-win
between Google and the device makers who use Android today.
Overall, Google has built more momentum in innovation and product
development, while Apple has maintained momentum building a more
profitable business.
Literature
Michael Vakulenko, Asymmetric Business Models

and the True Value of Innovation, February 2013.
Forbes, Who Has The Winning Innovation Model,
Google, Apple, or Samsung?, www.forbes.com,
2013.
TechRepublic, Apple v. Google: The goliath
deathmatch by the numbers in 2014,
www.techrepublic.com, 2014.

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Google model

vs. Apple iPhone model

Asymmetric business model

As OTT (Over-The-Top) players put increasing pressure on

Mobile Internet has become an integral part of the digital

In that context, mobile operators, Internet companies, handset makers,

Competition is not symmetrical, because unlike carriers, OTTs

OTT and Telco relations

OTT compete with telco for control, not profits

OTT vs. Telcos comparison

Competition is not symmetrical, because unlike carriers, OTTs do not bear

Connectivity may be as important to their business model as gas to a car, but

While there is a symbiotic relationship between Telcos and

The vertically integrated, "all-in-one" telco business model of

Telco core voice and SMS services are suffering "collateral

by increasing usage, creating user lock-in and driving subscriber

Instead of copying OTT initiatives, telco innovations should

Apple innovation strategy

Apples innovation strategy had changed the way we all think

Apple has been criticized for not repeating its disruptive

Apple innovation model

The platform and the significant investment in seamless integration of

Google innovation model

Google is usually associated with a fairly loose innovation

We are constantly innovating, figuring out new more efficient ways to

YouTube was converted to use Google technology. It would not be

Google innovation model

It is platform and ecosystem-based in its customer facing

Google and the Internet of Things (IoT)

Aside from wearables and automobiles, the coming Internet of

The Internet of Things refers to previously "dumb" devices, like a

By 2020, Gartner expects installed base units for the Internet

International Data Corporation went so far to say that the Internet of

Innovations lead to revenues

The first metric is the revenues.

Revenues strategies of Google and Apple

Google's revenue strategy is still largely dependent

Market capitalization comparison of

When it comes to understanding just how valuable a company really is,

However, stock prices are unstable.

What is next in Google innovations?

Unlike Apple, whose ability to innovate has come into

Market share for Android and iOS

Samsung role in Apple vs. Google

The initial problem of measuring success by market share sales

A more fitting comparison of market share by sales might be Apple v

One shouldn't be measuring success by sales number alone,

OS (Operating System) usage statistics

Example about the trust itself

Possible measure of trust is the number of credit

had 91 million credit cards on file,

One may conclude that Apple has nearly twice as

The biggest opportunity for Apple is to dramatically expanding the

Michael Vakulenko, Asymmetric Business Models

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