business-technology

The State Of Business Technology [2020 Report]

Business technology is the whole new ecosystem spurred by the advancements started with the PC era, going forward the Internet and Web era, which together created new monopolies that just a few decades ago didn’t exist. Those tech monopolies locked in digital distribution in several new industries.

Methodology

In this report, we’ll analyze the current business tech world by looking at five business wars. Based on the outcome of those “wars” new industries will arise, new players will emerge, and old monopolies might fall, while others might emerge.

Before we get to it, one point is important to stress. There is no business analysis that can predict the future. And while this analysis“>analysis itself is plenty of data, and what might seem facts, this is one interpretation of the current business events.

As such, if you like this story, take it just as is, a business story of our times, nothing more. If you’ll get inspired by it to build your next business or to actually take action on your current business, that’s great.

Yet, this is also a story in its own sake. Our times are so interesting because they make use questions many assumptions about the past, and they also make us build new assumptions about the future.

Being part of this dialogue is important so that we can all shape it.

Where do we start?

We’ll look at the current business tech landscape by analyzing six main tech giants who work as gatekeepers to entire industries and can potentially open up whole new markets. We’ll call them FAAMNG a variation of FAANG.

FAAMNG comprises Facebook, Apple, Amazon, Microsoft, Netflix and Alphabet’s Google.

What is the business model?

business-model
A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

On FourWeekMBA I’ve covered hundreds of business models. There is no single definition to it. As with any concept that lives in the real world, business modeling is a dynamic concept.

As an entrepreneur business model frameworks might help you define the key building blocks of your business or the kind of business you might want to build. As business theorist a business model it’s the most important entity

Investors look at business models to help assess the scalability and viability of an organization. As a practitioner, the business model can be any of the concepts above.

In this report, we’ll glance at the business model of each of the FAAMNG players to have a first overview on which we’ll build up the landscape to analyze.

What business wars might shape the future?

For the sake of this report we’ll take into account five wars:

  • Advertising wars
  • Mobile wars
  • Voice wars
  • Streaming wars
  • Cloud wars

Some of those business wars are tied and integrated. Advertising wars can’t be analyzed separately from the mobile wars, as attention is mostly on portable devices and who’ll surf the wave of mobile attention will mostly win the advertising war in the coming years.

Some other wars are also shaping the whole new ecosystems. For instance, the cloud and voice wars are also enhancing the AI Economy, to give rise to the next multi-trillion-dollar economy.

The gatekeepers

The web worked as an open force, that enabled new companies to take over and create a whole new way of doing business. In this era, companies that barely existed previous to the web (except for Microsoft) first unlocked digital distribution, then locked it in. Thus, creating a new center of powers.

Those companies are now the new gatekeepers which consolidated and in a way, locked in the digital distribution pipelines:

Facebook business teardown

facebook-business-model
Facebook is an attention-based business model. As such, its algorithms condense the attention of over 2.4 billion users as of June 2019. Facebook advertising revenues accounted for $31.9 billion or 98.66% of its total revenues. Facebook Inc. has a product portfolio made of Instagram, Messenger, WhatsApp, and Oculus.
facebook-arpu-2010-2019
facebook-profitability-2015-2019
facebook-report-2019

Amazon business teardown

amazon-case-study
Amazon runs a platform business model as a core model with several business units within. Some units, like Prime and the Advertising business, are highly tied to the e-commerce platform. For instance, Prime helps Amazon reward repeat customers, thus enhancing its platform business. Other units, like AWS, helped improve Amazon‘s tech infrastructure.
amazon-business-model
amazon-third-party-sellers-business
amazon-flywheel
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
amazon-aws-business-model-scalability

Apple business teardown

apple-business-model
apple-products-vs-services-business

Microsoft business teardown

microsoft-business-model
Microsoft has a diversified business model spanning across Office products, Windows, Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud and more. 

Netflix business teardown

netflix-business-model
Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.

Google business teardown

how-does-google-make-money
Google has a diversified business model, primarily making money via its advertising networks that, in 2019, generated over 83% of its revenues, which also comprise YouTube Ads. Other revenue streams include Google Cloud, Hardware, Google Playstore, and YouTube Premium content. In 2019 Google made over $161 billion in total revenues.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro is an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here