Logic PD is a design and engineering firm that has expanded over the decades to include software, electrical engineering, and manufacturing capabilities. The document discusses how the rapid adoption of the Android operating system for smartphones should impact Logic PD's software strategy. It provides an overview of Android and its open source nature. It also discusses concepts from economics like substitutes, complements, and cross-price elasticity of demand. The document concludes that Android could allow for quicker development time and leveraging the developer community, but may not be suitable if strong differentiation is needed or real-time performance is critical.

1. CONFIDENTIAL 1
Android™ Adoption And its Economic
Impacts to Software Strategy
Mark Benson
Director of Software Strategy

2. CONFIDENTIAL 2
About Logic PD
History
• 1960’s Founded as Polivka Logan
• 1980’s Added Mechanical Eng
• 1990’s Added Software, Electrical Eng
• 2000’s Added Products, Manufacturing
Products and Services
• Product Design
• Product Engineering
• Embedded Products
• Manufacturing
Industries
• Industrial, Medical, Aerospace, Military
Employees
• 130 design consultants
• 300 operations staff
Geographies
• Minneapolis, Boston, San Diego

3. CONFIDENTIAL 3
> Android™ is now the most-used smartphone OS in the US*
> 350,000 Android™ devices are activated each day (~4/sec)
* Source: http://money.cnn.com/2011/03/07/technology/android/index.htm, retrieved March 7th, 2011.
Android™ adoption

4. CONFIDENTIAL 4
How should the recent increased rate of Android™
adoption impact your software strategy?
Agenda:
> Android™ Introduction – What’s so interesting?
> Software Strategy – Organizing our thoughts
> Industry Relevance – What does this mean for me?
Problem statement

5. CONFIDENTIAL 5
ANDROID™ INTRODUCTION
What’s so interesting?

6. CONFIDENTIAL 6
> A complete set of software for mobile devices:
+ Operating system (Linux)
+ Middleware (libraries, application framework, runtime)
+ Key mobile apps (dialer, browser, contacts, calendar)
+ Software Development Kit (SDK)
> Differentiators:
+ Open platform (Kernel: GPL; User-space: Apache)
+ Optimized for embedded use (CPU, Power, Memory)
+ Enables fast application development (Eclipse)
+ Includes remote debugger (ADB)
+ Includes unit-test framework (Junit)
+ Can develop with emulator on Windows, Mac, or Linux
What is Android™?

7. CONFIDENTIAL 7
> Many of us are not in the business of designing mobile
phones for the high-volume consumer space (RIM,
Microsoft, Apple, Nokia)
> What if we are in the Industrial, Medical, or Military
industries?
> How should we react to news about the rapid adoption of
Android™?
> First, some economics…
Why should I care?

8. CONFIDENTIAL 8
SOFTWARE STRATEGY
Organizing our thoughts

9. CONFIDENTIAL 9
> From economics, we know:
+ Every product has substitutes and complements
+ The Cross-Price Elasticity of Demand (XED) measures the
responsiveness of the demand for good X to change in the price
for good Y
+ XED essentially measures how the supply and demand curve for
one product reacts to changes in price for something else
> Examples:
+ Hot dogs are a substitute for bratwurst
+ Hot dog buns complement hot dogs
+ Netflix is a substitute for Blockbuster
+ Popcorn complements movie ticket sales
Substitutes and complements

10. CONFIDENTIAL 10
XED of product substitutes
> Two goods that are
substitutes have a positive
XED
> As the price of good Y
(Py) rises, the demand for
good X (Qx) rises
> Examples:
+ Hot dogs / Bratwurst
+ Netflix / Blockbuster
+ iPhone / Blackberry
> Take-away: differentiate!

11. CONFIDENTIAL 11
XED of product complements
> Two goods that
complement each other
show a negative XED
> As the price of good Y
(Py) rises, the demand for
good X (Qx) falls
> Examples:
+ Hot dogs / Hot dog buns
+ Movie tickets / Popcorn
+ iPhone / Apps
> Take-away: leverage!

12. CONFIDENTIAL 12
XED of independent products
> Two goods that are
independent have a zero
cross elasticity of demand
> As the price of good Y
(Py) rises, the demand for
good X (Qx) is constant
> Examples:
+ Hot dogs / Caskets
+ Netflix / Legal Services
+ iPhone / Fish Food
> Take-away: ignore!

13. CONFIDENTIAL 13
> Taking the principles of XED into account, our primary
goals should be to:
+ Differentiate from substitutes
+ Leverage complements where possible
Summary

14. CONFIDENTIAL 14
INDUSTRY RELEVANCE
What does this mean for me?

15. CONFIDENTIAL 15
> What does all this have to do with Android™?
> Questions you may be (or should be) asking yourself:
+ How can Android™ allow me to better differentiate my offering?
+ How can Android™ allow me to leverage complements?
Back to reality

16. CONFIDENTIAL 16
Android™ SWOT analysis
Strengths
> Differentiate with quicker time-
to-market
> Differentiate with higher-quality
UI
> Leverage access to growing
community
> Leverage commoditization of
application development
Weaknesses
> Platform popularity might
weaken ability to differentiate
> Susceptibility to fragmentation
effects
> High learning curve for
platform (kernel) development
> Cost of change
> Not real-time

17. CONFIDENTIAL 17
How should the recent increased rate of Android™
adoption impact your software strategy?
> Use Android™ if you want a nicely-packaged mobile
software suite that enables fast application development
and easy access to a rich developer community.
> Don’t use Android™ if you are worried about
fragmentation effects, are designing a hard real-time
system, or determine that the cost of change is too high.
Concluding remarks

18. CONFIDENTIAL 18
Thank you