A Study on the Value Distribution of Business Ecosystem：A Profit Pool Analysis on iPhone Global Supply Chain
Date Issued
2012
Date
2012
Author(s)
Chen, Ce-Yun
Abstract
In the smartphone industry, APPLE iOS and Google Android have become the two mainstream operation systems and they compete as business ecosystems. This research depicts the structure of profit pool of iPhone’s global hardware value chain through our estimation methodology and studies the emergence and competition of business ecosystems. To discuss the underlying causes and structure balance of a profit pool within the context of smartphone competition, we focus on APPLE’s and Google’s business models, platform strategies and ecosystems.
Our results indicate that APPLE captures a large portion of total profit created, not only between the smartphone vendors, but also in its own value chain. Although value distribution is the key factor of robust development in ecosystem, APPLE still outpaces the industry peers under the extremely unequal distribution. The reason leads to such a conflicting situation is due to Android’s open and free license policy. Such a policy gives manufacturers opportunities to entering into the ecosystem, however, it also makes the value chain partners’ Android-based product commoditized as Google still can profit from services, not smartphone. Therefore, there exists interest inconsistency within the Android ecosystem.
Different from the case of Android ecosystem, the interests are aligned between APPLE and its hardware suppliers as the ecosystem is a proprietary system. Additionally, as APPLE almost monopolizes the high-end smartphone segment, competitors are forced to capture opportunities in the medium & low-end segments, which have to rely upon free Android OS to support cost competitiveness. As such, even under an extremely unequal value appropriate structure, suppliers would still like to stay in the APPLE ecosystem. Based on the above-mentioned reasoning, this research proposes the different strategic thinking on business ecosystem management.
Subjects
Business Ecosystem
Value Distribution
Profit Pool
Smartphone Industry
SDGs
Type
thesis
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