My thinking on the opportunities and challenges in the network era.

1. Network Era: Opportunities and Challenges Professor N. VenkatVenkatramanDavid J. McGrath Jr. Professor of Management Boston University School of Management venkat@bu.edu May 10, 2010

2. Overview (c) N. Venkatraman [2010] 2

3. Imagine life without…… (c) N. Venkatraman [2010] 3

4. Towards Network Era:A Brief History (c) N. Venkatraman [2010] 4 1,900,000,000 4,400,000,000 *March 31, 2010

5. A brief history… (continued):YouTube and Hulu generate 2X traffic than the entire Internet in 2000 (c) N. Venkatraman [2010] 5 Source: Cisco

7. 70% outside USA

8. 100 Million access using mobile devices

9. 50% log on in any given day

11. Tweets seem to be purpose-driven (c) N. Venkatraman [2010] 8 Link

12. From 1995 till today.. Developments in information technology have been dramatic and significant Shifts in management practices have been incremental and slow A new business infrastructure is emerging Global Digital Connected (c) N. Venkatraman [2010] 9

13. Towards Global Digital Network Era…. (c) N. Venkatraman [2010] 10

14. Information technology is impacting products.. (c) N. Venkatraman [2010] 11

15. Products linked on all-IP infrastructure Towards40-50 billiondevices 12 (c) N. Venkatraman [2010]

16. Impacting next generation business processes.. (c) N. Venkatraman [2010] 13 video

17. Processes designed for the global All-IP infrastructure Next-generationprocesses 14 (c) N. Venkatraman [2010]

18. ….and service delivery… (c) N. Venkatraman [2010] 15

19. Services delivered on the All-IP infrastructure Next-generationservices 16 (c) N. Venkatraman [2010]

20. The new business infrastructure…. (c) N. Venkatraman [2010] 17 Transact Innovate Live Learn Play Work Connect Consume

21. And.. It is accelerating compared to other technologies in the past…. (c) N. Venkatraman [2010] 18 Source: IBM

22. (c) N. Venkatraman [2010] 19 How will IT-enabled capabilities impact business sectors? How should we frame strategies for the network era? ?

23. Sketching out the possibilities… (c) N. Venkatraman [2010] IBM, 2005 20

24. Sketching out the possibilities… (c) N. Venkatraman [2010] 21 IBM, 2005

25. Sketching out the possibilities… (c) N. Venkatraman [2010] 22 IBM, 2005

26. Sketching out the possibilities… (c) N. Venkatraman [2010] 23 IBM, 2005

27. Sketching out the possibilities… (c) N. Venkatraman [2010] IBM, 2005 24

28. Sketching out the possibilities… (c) N. Venkatraman [2010] IBM, 2005 25

29. Sketching out the possibilities… (c) N. Venkatraman [2010] IBM, 2005 26

30. Sketching out the possibilities… (c) N. Venkatraman [2010] IBM, 2005 27

31. The World is ‘Flat’ but Connected… (c) N. Venkatraman [2010] 28 And…connected

32. Let us introduce three technology laws (c) N. Venkatraman [2010] 29

33. And take them together.. (c) N. Venkatraman [2010] “Computer” “Connectivity” “Cloud” 30

34. A working framework to understand how IT impacts business… (c) N. Venkatraman [2010] BandwidthLaw Metcalfe’sLaw Technology Domain Moore’sLaw Process Product Service Business Domain 31

35. Overview (c) N. Venkatraman [2010] 32

36. Setting 1: Computer Industry (c) N. Venkatraman [2010] 33

37. Computer industry [circa 1980] Source: Bill Gates Testimony Source: Bill Gates Testimony 34 (c) N. Venkatraman [2010]

38. Computer industry [circa 2002] Source: Bill Gates Testimony 35 (c) N. Venkatraman [2010]

39. Key ideas… Vertical integration giving way to horizontal layers of specialized capabilities When and how do new layers emerge? When do layers disappear or morph? Can you disrupt an industry by introducing a new layer where you hold an advantage? Winning requires dominating a layer and connecting across layers What’s your pattern of connections across the layers? How do your competitors connect across the layers? 36 (c) N. Venkatraman [2010]

40. Setting 2: Automotive (c) N. Venkatraman [2010] 37

41. GM OnStar: The Beginning… (c) N. Venkatraman [2010] 38 1995

42. Automobile– “computers on wheels” (c) N. Venkatraman [2010] 39 ‘Black Box’ Lines of Software Code

43. Automobile– “computers on wheels” (c) N. Venkatraman [2010] 40 “Cost of electronics in cars” (~20--50%)

44. GM OnStar & Telematics (c) N. Venkatraman [2010] 41

45. GM OnStar (c) N. Venkatraman [2010] 42

47. 10,400 Emergency Services

48. 6,000 Good Samaritan Calls

49. 600 Stolen Vehicle Assistance

50. 62,700 Remote Door Unlocks

51. 54,500 Remote Vehicle Diagnostics

52. 3.4 million OnStar Diagnostics E-mails Sent

53. 30,200 Roadside Assistance Calls

54. 961,000 Turn-by-Turn Routes Delivered

55. 29 million OnStar Hands-Free Calling MinutesMonthly data as of 2008Source: OnStar

56. Ford (and Microsoft): Sync (c) N. Venkatraman [2010] 44 In-Car WiFi (2010)

57. My Ford Touch @ CES 2010 (c) N. Venkatraman [2010] 45

58. Further Transformations with Alternative Energy Sources (c) N. Venkatraman [2010] 46 Source: GM

59. Setting 3: Music  Mobile Phones & ? (c) N. Venkatraman [2010] 47

60. Music in the analog era…. CustomerNetwork Albums and tapes borrowed withinfriends communities. Channel Sold in Physical outlets (general and specialty) & Mail-order Catalogs Content(music) Albums offered by record labelsin standard formats (33-45-78 rpm; & cassette tapes) Hardware Turntables, cassette players, tape decks, Sony Walkman etc. (c) N. Venkatraman [2010] 48

61. Music in the digital era….. Precursor to today’s social network? CustomerNetwork P2P file sharing; personal CD burning and sharing with friends Channel Sold in stores (CDs); Rise of Onlinedownloads Digital Rights Management Apple Fairplay; Windows Play For Sure Content(music) Major lables plus rise of independent labels posting music online Software MP3; itunes; Windows Media; Quicktime; Realone etc. Hardware Digital audio players (c) N. Venkatraman [2010] 49

62. Role of iTunes in the music ecosystem (c) N. Venkatraman [2010] 50

63. Apple’s orchestration of the music ecosystem (c) N. Venkatraman [2010] 51 ComplementorNetworks CustomerNetworks Indirect iPodAdoption ContentAvailability Direct

64. Music in the network era…… CustomerNetwork P2P file sharing; personal CD burning; social and automated recommendations Channel Sold in stores (CDs); Online downloads;downloaded to phones; Networked streaming MobileOperators Mobile network for accessing music Content(music) CDS offered by major labels; rise of independent labels; Digital Rights Management Apple Fairplay; Windows Play For Sure:Open Mobile Alliance (OMA) Software MP3; Apple itunes; Windows Media; Quicktime; Realone etc. Hardware Multiple network-enabled devices 52 (c) N. Venkatraman [2010]

65. Network of Linkages in Music (c) N. Venkatraman [2010] 53 Customer Network Mobile Operators Channel Content Applications Operating System Hardware

66. Apple App Store: Extension of iTunes Store (c) N. Venkatraman [2010] 54

67. From iPod to iPhone: Role of iTunes and App Store (c) N. Venkatraman [2010] 55

68. From iPhone to iPad:Role of iTunes and App Store (c) N. Venkatraman [2010] 56

69. Amazon versus Apple (c) N. Venkatraman [2010] 57

70. What should Jeff Bezos do? (c) N. Venkatraman [2010] 58

71. The Evolving Publishing Network (c) N. Venkatraman [2010] 59 Content Channel ‘App’ Software Device

72. Overview (c) N. Venkatraman [2010] 60

74. Vertical Integration

75. Ownership

76. Inside-out

77. Network-centric

78. Virtual Integration

79. Relationships

81. Thank You Very Much Conversation continues.. venkat@bu.edu Twitter: NVenkatraman