Will you “like” the facebook car?

The car industry is facing interesting times and the large dinosaurs are starting to realise this. Mary Barra of General Motors is now openly talking about the need for the industry giant to disrupt their own business model.

No doubt the rise of industry rebel Tesla has rattled the dinosaur cages with their very different business model:

  • Year after year they have been voted the most innovative company by their automotive competitors despite their relatively small R&D budget.
  • They have not outsourced their value chain as the rest of the industry
  • They own their very different sales and distribution model.
  • Their cars are platforms that can be upgraded with software rather than recalled.
  • Their core technology is about energy storage - not cars.
  • They are willing to experiment with self-drive despite the warnings from corporate lawyers.

Most car manufacturers are not ignoring Tesla anymore, although they still wonder how a small company like that could be allowed to change the entire industry.

Tesla is however just the start of the monumental battle that the car manufacturers are facing and they share the same fundamental assumptions that the mature companies base their strategy on.

Competing with Tesla might be known as the "good old days" in automotive
The new competition from Google and Apple is likely to be of a very different kind, completely alien to the industry in a number of ways. They might challenge some very basic assumption of the industry - that it is about moving people from A to B and that you want to own a car.

From owners to users?

In most of their activity, Google distinguishes between users and customers and they are likely to include this thinking in their automotive business model. You might not need to own the Google car - it might even be free to use like most of Google's products. It might be paid for by somebody else - somebody that wants to sell stuff to you.

What if it is not about moving people from A to B anymore?
This could transform the industry from transportation to media delivery and ownership of the consumers time while being transported. This is likely why Apple is so interested in getting into automotive: They want to get Siri into the car to be able to influence the user while being transported. The car could be their 4th ecosystem - their 4th starfish business model.

It looks like the car is becoming part of the battle of search - the battle of the first manipulation of the user. Google already knows that browser-based search is coming to an end and that the automated assistants will take over. Their battle is not just with Apple. Amazon prime is now the starting point for over 20% of all search and Facebook has recently introduced "M", their new assistant.

 

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Will you "like" the facebook car?

This could mean that we eventually are going to be introduced to the Facebook Car and maybe the 2nd Amazon Car (Volvo made the first).

 

Apple is conquering the world with starfish

Why is Apple obsessed with starfish and what does starfish has to do with world domination? The answer cannot be found in traditional business models.

The end of Growth for Apple?

Financial analysts and other experts have year after year predicted Apple’s downfall by looking in the rear view mirror. It is not seen possible for Apple to grow in the market they are in, as they are already dominant. Eventually, the experts will be right – no company lives forever. Before burying Apple it is worth understanding a key element of their strategy:

Starfish Model

The starfish business model:

Some of the most successful companies of the current age do not create or own their own products or services. Uber does not own taxi’s, AirBNB doesn't have hotel rooms, Facebook does not create content and Alibaba does not have inventory. These new companies are connectors rather than asset owners. They connect suppliers with users and customers in creative ways that prey on old markets and business models based on manufacturing, asset ownership and competition.

Starfish activity

Companies using the starfish business model can compete if the want to but the primary objective is to connect. Connect users with suppliers, customers with advertisers and connect the starfish to other starfish. Sometimes connecting means competing, other times it means collaborating, killing, cannibalising or whatever is needed to create more connections. Starfish business models hav the potential for exponential growth as the deploying company is not limited by its capability to create or manufacture new products. Where traditional asset owning companies are looking for double-digit growth a year, starfish business models can deliver double-digit growth a week

Exponential growth requires a starfish business model

The first starfish – Apple reborn

When Jobs came back to Apple in 1996, they were in poor shape. Having been run as a traditional company for a few years, they had starved of much of what made them great. Jobs together with John Ive created the new iMac product line that gave them much needed profit to save the company.

In 2001 the Ipod was launched into an already crowded MP3 player market. Although a beautifully designed product with great user experience, nobody saw this as the beginning of world domination for Apple. In 2003 Apple launched their first attempt at world domination, their first starfish business model:

The Itunes store.

Selling individual tunes for 0.99$ it completely redefined the music industry by connecting artist with users bypassing the expensive middle-men. Although a relatively simple model, it gave Apple a formidable weapon: Users that were willing to give Apple their credit card number. Later it expanded to other media types. The total number of credit cards is now approaching 1B leaving everybody else in the dirt. This was the foundation for what was to come.

Apple credit cards

The second starfish – The first universal platform

In 2007, the iPhone was unleashed on an unsuspecting cellphone industry. Although innovative in design, it did not introduce anything that Nokia and colleagues would not have been able to deploy themselves. A massive hit, the Apple sold 1 million "Jesus phones" in 74 days. The cellphone industry saw this as a fashion for a few people. They did not fear Apple's entrance as they knew how to make better connections, better sound and better battery life. The industry was not destroyed by the iPhone, however – it was destroyed by the app store:

The Itunes store

Selling individual tunes for 0.99$ it completely redefined the music industry by connecting artists with users bypassing the expensive middle-men. Although a relatively simple model, it gave Apple a formidable weapon: Users that were willing to give Apple their credit card number. Later it expanded to other media types. The total number of credit cards is now approaching 1B leaving everybody else in the dirt. This was the foundation for what was to come.

 

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The Appstore

The App Store converted your phone to a platform. It was now a computer system in your pocket where you could buy and execute programs without visiting a store and Apple already had your customer details and your credit card number. The apps themselves were small starfish business models. They could connect users to suppliers in an easy way and allowed for business models based on advertising and search. As everybody now knows, the growth has been explosive and the platforms has developed tremendously since then, destroying other industries.

The Apple iPhone and later the iPad is what have brought Apple to where they are today: The most profitable company in the world, dominating the markets they are in, with nowhere to go. This is where Steve Jobs would say:

Just one more thing: The 3rd Starfish

The 3rd starfish

Without too much fanfare the new Apple TV has been launched. Critics says it isn’t new nor is it very impressive. What most are missing is that the new Apple TV is just a kid – not a grownup yet. It is also the foundation for the third starfish business model that potentially can dominate not only the TV but also the entire movie and media industry. Soon we will not need fancy smart TV’s from Samsung – just a simple basic flat screen will do. We will not need to buy expensive cable subscriptions anymore as we can buy programs individually. We have invited Siri into our living room so we don't need Google anymore.

Apple has unleashed their death star on Google: Siri

The age of Siri

Born out of SRI International, a non-profit organisation founded in 2008 to create a new way to interact with your cell phone. By 2010 SRI was part of Apple and Siri was integrated into iPhone 4S. Obsessed with the user experience, Steve Jobs wanted SRI to permeate Apple, not the other way around, tells Adam Cheyer, one of the founders of SRI.

Siri is the battle of the future. When the iPhone is gone, Siri will still be here. When hardware is invisible - we can still talk to Siri. Apple keep acquiring companies in this field: Machine learning, Augmented reality and speech recognition are focus technologies.

Getting Siri into the living room is a major threat to Google. Apple has already stated that Siri will not favour Apple content over others. That does not mean that Siri will not favour advertisers or other companies buying influence. What restaurant will Siri recommend? What product?

The 4th starfish – The car

With Siri in our living room, we see the glimpse of the 4th starfish. Rumors about the Apple car has the entire car industry running around telling us Apple will never be able to win. They do not have the knowledge or the manufacturing capacity to compete in the car industry. Maybe they are right – maybe Apple don’t want to dominate the car industry. Maybe they just want an extra passenger in your car: Siri.

Siri is already on you computer, in your phone and in your home. When Siri takes a seat in your, car Apple will control a significant proportion of the global search and the associated revenue. The interesting question will be how to advertise on an automated assistant? How do you motivate a robot to promote your products?

Apple is still a starfish or two away from extinction

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