Why Apple is the better Amazon.com

Why W nu ith Ap m up pl ber da Ke e’s s f ted yn W rom Apple 6 / ot W 6/ e D 20 on C 11 is the betterFrom a business model perspective amazon

Since the introduction of the iPod and iTunes, Apple has evolved into a Platform Operator and „Retailer“. On the occasion of the iPad 2 introduction it was interesting for me to compare Apple‘s Business Model with Amazon.com. You might ﬁnd it too...

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS ONLINE RETAIL GLOBAL SHOP CONSUM ER MARKET KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS ONLINE RETAIL GLOBAL SHOP CONSUM ER MARKET KEY RESOURCES CHANNELS THE INTERN ET COST STRUCTURE REVENUE STREAMS Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS ONLINE RETAIL GLOBAL SHOP CONSUM ER MARKET KEY RESOURCES CHANNELS THE INTERN ET COST STRUCTURE REVENUE STREAMS GIN SALES MAR Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS ONLINE RETAIL GLOBAL CUSTOMIZED ONLINE SHOP PROFILES & CONSUM ER RECOMMENDATIONS MARKET KEY RESOURCES CHANNELS THE INTERN ET COST STRUCTURE REVENUE STREAMS GIN SALES MAR Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE CONSUM SHOP PROFILES & ER RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENT KEY RESOURCES CHANNELS THE INTERN ET COST STRUCTURE REVENUE STREAMS GIN SALES MAR Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE CONSUM SHOP PROFILES & ER RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENT KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS GIN SALES MAR Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS GIN SALES MAR Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Great and successful model, so what is the problem?

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP RelativelyS & PROFILE low CONSUM ER PARTNERS value items. RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL Low margins. OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT Very competitive INFRASTR „platform“ is UCT & SOFTW URE limiting the THE ARE sales margin. INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENT Delivering mainly physical goods isAFFILIATES KEY RESOURCES very expensive CHANNELS and shrinking the margin even IT further. INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS Dependent NT GLOBAL FULFILLME on ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC third parties for SHOP PROFILES & CONSUM ER PARTNERS best possible RECOMMENDATIONS MARKET customerIT INFRASTR experience RE UCT & SOFTW U (on-time AR Ddelivery).E EVELOPM ENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Amazon‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T GLOBAL FULFILLMEN ONLINE RETAIL CUSTOMIZED ONLINE LOGISTIC SHOP PROFILES & CONSUM ER PARTNERS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

So how does Apple do better?

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS On Apple‘s iTunes T GLOBAL FULFILLMEN ONLINE RETAIL Plattform ONLINE CUSTOMIZED you LOGISTIC SHOP can PROFILES & seamlessly CONSUM ER PARTNERS discover ENDATIONS RECOMM and buy MARKET IT Music, Movies, INFRASTR Apps, Books, UCT & SOFTW URE Podcast, and A DEVELOP RE alike... MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS On Apple‘s iTunes T ONLINE RETAIL GLOBAL FULFILLMEN Plattform ONLINE CUSTOMIZED you LOGISTIC SHOP FOR can PROFILES & seamlessly CONSUM ER PARTNERS DIGITAL GOODS discover ENDATIONS RECOMM and buy MARKET IT Music, Movies, INFRASTR Apps, Books, UCT & SOFTW URE Podcast, and A DEVELOP RE alike... MENTAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS T ONLINE RETAIL GLOBAL FULFILLMEN CUSTOMIZED ONLINE LOGISTIC SHOP FOR PROFILES & CONSUM ER PARTNERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE Costs for MENT delivering digital goods is marginalAFFILIATES KEY RESOURCES with the Internet CHANNELS as the IT distribution INFRASTR channel. UCT & SOFTW URE THE ARE INTERN ET GLOBAL FULFILLMENT INFRASTRUCTURE COST STRUCTURE REVENUE STREAMS TECHNOL OGY & MARKETING CONTENT GIN FULFILLM SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL ENT CUSTOMIZED ONLINE LOGISTIC DEVELOPM SHOP FOR PROFILES & CONSUM ER PARTNERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE A DEVELOP RE Instead, Apple MENT can focus on developing it‘sAFFILIATES KEY RESOURCES own iDevices to CHANNELS create their own IT platform INFRASTR (market place). UCT & SOFTW URE THE ARE INTERN ET GLOBAL „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL ENT CUSTOMIZED ONLINE LOGISTIC DEVELOPM SHOP FOR PROFILES & CONSUM ER PARTNERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE Using iTunes as „LOCKED A DEVELOP RE your growing IN“ MENT media database and buying moreAFFILIATES KEY RESOURCES and more Apps CHANNELS for the iDevices IT is making it hard INFRASTR to change the UCT & SOFTW URE plattform. THE ARE INTERN ET GLOBAL „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business ModelKEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL E T CUSTOMIZED ONLINE LOGISTIC VELOP is N DEApple M SHOP FOR PROFILES & CONSUM ER PARTNERS controlling the DIGITAL GOODS RECOMMENDATIONS MARKET whole Ivalue T INFRA R chainSTto Cit‘s U T customersURE & SOFTW A „LOCKED ensuringOPMERE DEVEL the best IN“ NT possible customer experienceAFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR UCT & SOFTW URE THE ARE INTERN ET GLOBAL „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS As at Apple they IT have created INFRASTR their own UCT & SOFTW URE platform, they THE ARE control the INTERN ET market place. GLOBAL „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR iTunes UCT & SOFTW URE iDevice + ARE s (iPod, iPhone & iPad GLOBAL ) „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL OG GIN MARKETING DEVELOPM Y SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR iTunes UCT & SOFTW URE iDevice + ARE s (iPod, iPhone & iPad GLOBAL ) „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS Controlling the market place let TECHNOL you control the OG GIN MARKETING DEVELOPM Y margins... SALES MAR ENT Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR iTunes UCT & SOFTW URE iDevice + ARE s (iPod, iPhone & iPad GLOBAL ) „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL 30% OG GIN MARKETING DEVELOPM Y SALES MAR ENT TENT FROM CON Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR iTunes UCT & SOFTW URE iDevice + ARE s (iPod, iPhone & iPad GLOBAL ) „iTunes & „iDevices“ PLATFORM COST STRUCTURE PLUS Apple makes REVENUE STREAMS also money TECHNOL selling the 30% OG HARDWA MARKETING DEVELOPM Y „Platform“ GIN RE (iDevices). SALES MAR SALES ENT TENT FROM CON Inspired by BusinessModelGenera3on.com

Apple‘s Business Model KEY PARTNER KEY ACTIVITIES VALUE PROPOSITION CUSTOMER RELATIONSHIP CUSTOMER SEGMENTS iDevices ONLINE RETAIL GLOBAL GY ENT SHOP FOR CUSTOMIZED ONLINE TECHNOLO DEVELOPM PROFILES & CONSUM ER SUPPLIERS DIGITAL GOODS RECOMMENDATIONS MARKET IT INFRASTR UCT & SOFTW URE „LOCKED A DEVELOP RE IN“ MENT AFFILIATES KEY RESOURCES CHANNELS IT INFRASTR iTunes UCT & SOFTW URE iDevice + ARE s (iPod, iPhone & iPad GLOBAL ) „iTunes & „iDevices“ PLATFORM COST STRUCTURE REVENUE STREAMS TECHNOL 30% HARDWA OG GIN RE MARKETING DEVELOPM Y SALES MAR SALES ENT TENT FROM CON Inspired by BusinessModelGenera3on.com

To run a successful platform you need to create and maintain a network effect. The network effect ensures the „lock in“ of your customers, by this adds value, and keeps your competition at distance.

Not focussing on technology but user experience seems to be Apple‘s key to success.

They have created three blockbuster devices in a row since 2001.

275 M 100 M 25 M(Sep. 2010) (Mar. 2011) 200 M IOS-Devices Source: Apple’s WWDC Keynote on 6/6/2011

By this they‘ve „locked in“ 225 Million iTunes Customers(with their credit cards and I-click purchasing). Source: Apple’s WWDC Keynote on 6/6/2011

These clients downloaded more than 15 billion songs (making Apple the #1 music retailer in the world!) 14 billion apps 130 million books 450 million TV episodes 100 million movies. (Last two numbers from Sep. 2010 Keynote and already outdated!) Source: Apple’s WWDC Keynote on 6/6/2011

Up to now Software developers have earned over$2.5 billion from selling their apps on the App Store. Source: Apple’s WWDC Keynote on 6/6/2011

So, pretty good reasons for content providers and softwaredevelopers to produce and distribute content through this distribution channel.

These are the reasons why I came to the conclusion that Apple is the better Amazon.com.

Although I am a fan of both. :-)

Youve made it this far. Thanks for your attention and sharing! Thorsten Faltings Business Innovation & Development Consultant Happy to help you through todays Business Revolution Any Questions? Twitter: @faltings Email: faltings@ymail.com Featured as „Top LinkedIn: http://de.linkedin.com/in/faltings Presentation of the Day“ Website: http://fa.ltings.de/ on SlideShare.comTo downloadPDF version please...

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Why Apple is the better Amazon.com

by Thorsten Faltings on Mar 03, 2011

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Why Apple is the better Amazon.com — Presentation Transcript