Wednesday, November 11, 2015

Competition From "Outside" Now Matters More than Competition from "Inside"

Since 2013, more top executives have been worried about competition from “outside” the domain than from competitors already in the domain, IBM studies have found.

While 29 percent of C-level executives surveyed by IBM expected “more competition” from contestants “within the same industry,” fully 54 percent expected the greatest danger from competitors “in other industries.

Uber--with a completely different business model--is an example of the sort of disruptive outsider threats C-level executives now worry about.

Telecom service providers already are in the second decade of competition from the likes of Skype and Google, which first were concerns because new services from those sort of firms hollowed out the telecom business model, shifting value to itself and away from legacy managed services, essentially turning telcos into providers of simple connectivity.

Over time, Google Fiber has emerged as a direct competitor in the U.S. Internet access business and somewhat less directly or significantly in the form of Google-sponsored municipal Wi-Fi.

Globally, the pattern might be different. When executives from Google and Facebook talk about Google’s Project Loon and Facebook’s unmanned aerial vehicles, the emphasis always is on a wholesale or backhaul role, with retail Internet access supplied by mobile or other Internet service provider partners.

In other domains, “channel conflict” has been an issue as well. Microsoft competes directly with other suppliers of gaming systems and tablets. Amazon markets its own tablets and e-readers, and briefly marketed its own smartphone.

Google has marketed its own Nexus tablets and smartphones for a time. And now there is speculation that Nexus has essentially delivered most of the value Google originally hoped to achieve with a “showcase” device featuring native Android capabilities.

There are rumors that Google is pondering another round of innovation that could be ignited by a branded, manufactured and significantly marketed smartphone.

The concern about competition from “outside” traditional industry boundaries is well placed. Such new forms of competition are a hallmark of development in formerly-monopolized industries that become deregulated.

It now appears technology-driven attacks are an even bigger development. The boundaries of competition are becoming ambiguous,” said Yong Eum Ban, CFO, JoongAng Media Network, South Korea.

Two years ago, executives thought new rivals were as likely to come from their own industry as from others. Today, they’re more worried about outsiders invading their core markets.

The concern is well placed. Though telcos and cable TV firms might face off against each other in many of their core markets, both industries face more long-term threats from “outsiders.”

Skype and Google Fiber were just the start.

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