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March 1, 2015

Author: Venugopal Chepur

App(le)s and appetite for business model

I was talking with my friend John, and he casually said, “Venu, I have put our team dinner photos on our fridge!” and I see them every day”. “You stuck them to the fridge? they were so many, and perhaps all over the fridge, no wonder you don’t miss us?” I said affectionately. “No, my refrigerator allows me to upload photos to the display that play in a sideshow”, he replied. “oh, Okay, by the way, “I sent you three 3 texts messages, I haven’t heard from you? I asked him. “Sorry, but I seldom check phone text messages, mostly use WhatsApp.” he replied. WhatsApp, what? I retorted. “Oh, so you don’t have WhatsApp, I can’t believe you don’t have it? I use only WhatsApp for my texting, and it is cool” he said.

Hmmm… this conversation few months ago triggered my thoughts about where the inflection point to all this phenomenon was – and how it continues to disrupt almost every business model today.

It began with Software escape from Hardware phenomenon! In simple terms, it is like brain broken down in to independent pieces and made to work in several places. The processor (brain) which used to be embedded in one computer (body or hardware) is distributed and planted in several parts to manage jobs independently – so organs work independently without having to receive instructions from brain because it has a brain of its own!

First Chips!

Cheaper chips became stand-alone microprocessors to provide independent capabilities and yet held the hardware unit they were part of as a holistic system. Chips have effectively dissociated intelligence from any hardware and became the root-cause of why and how the computer industry deconstructed itself paving way for many more disruptions. Later on they have been used to control and provide services from stand-alone units sold in numerous consumer electronics (computers, friddge, car, etc.)

Then App(le)s!

Over the last few years Apple has been driving the explosive growth of mobile, and most of us take note only of the number of handsets sold and the key players in the market. A seemingly overlooked byproduct of this exponential growth is Apps. Beyond cell phones, they are disrupting entire software and hardware industries, creating a massive paradigm shift. To put things in perspective,  in less than five years, I read, 45 billion apps have been downloaded. It gave Apple alone over 9 billion from app developer market – a whopping sum from an indirect revenue structure!


Both Apps and embedded Chips have grown to create new capbilities unleashing an unparalleled amount of freedom to own both native and vended apps on equipment housing them – phones, refrigerators, cars and more.

iPhone itself was not a disruption, but the apps are. App has extracted itself from the phone and rendered to every possible application to provide ‘ease of use and smartness’ that enhanced customer experiences to new levels not seen before. This has caused this new capability to view as a technology disruption. And this has been almost comparable to the adoption of the Internet too. The App economy is estimated at US $ 25 Billion in 2013, and growing. Irrespective of the numbers, it is indeed morphing the lifesyles and consequently disrupting business models globally. It is as huge and happening now!

This shift meant everything that is served or serviced, Products or Services, are now seen of value in the light of experiences they provide. This has brought industries such as Insurance and Financial Services too from operating in a product-orientated marketplace to digitally-influenced customer-journeys. And the big challenge for the businesses is to reorganize thier enterprise architectures to enable holistic experiences for their customers.

There is a general agreement in the air that the world has changed its relationship with technology and its driving businesses to embrace experience in lieu of product features. So it diminished appetite for sheer features and associated proprietary pricing. It has also changed how traditional experience-based (e.g. hospitality) industries should redesign their architectures to survive.

The app model is unlike Microsoft putting the operating system outside of computer or Oracle offering data solutions outside the database. It is an open ecosystem with thousands of developers bringing unparallel levels of creativity. So the Apps are disrupting possibly every business, and largely embody the following characteristics:

  • Giving – diluted sense of proprietary, and readiness to collaborate
  • Transparent – openness to apps, ready to share APIs
  • Affordable – low priced (no proprietary pricing), accessible to global consumers

Businesses need a similar mindset, culture and agility to catch up with the pace of changes to survive App-triggered disruptions and thrive!

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