Monday, January 18, 2016

Technology Firm Business Models So Varied We Sometimes Have Trouble Identifying What a "Tech" Firm Is

An example of the diversity of business models, as well as the shift in technology firm business models, is clear from any look at advertising revenues. For the first time, ever, leading technology firms have advertising-supported or transaction-supported business models.

The other key--and longstanding--observation is the “software is eating the world” adage having serious relevance: more of the value of technology now comes from software, compared to hardware.

Looking only at mobile display advertising, Facebook had in 2015 generated $5 billion in revenue, Google and Twitter nearly $2 billion, with total U.S. mobile-only advertising generating about $19 billion in 2015.

Amazon and Alibaba, meanwhile, show that a big technology company can be built on transaction revenues. Granted, some might not view Amazon or Alibaba as technology firms. But that might be the point: how technology firms create business models is much more varied than ever before.

In that sense, Apple is among the more-traditional firms, with revenue built on device sales.

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