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60

Disruption

How Platforms Conquer and Transform Traditional Industries

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G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. (2016). Disruption. In G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. Platform Revolution: How Networked Markets Are Transforming the Economy--and How to Make Them Work for You. W. W. Norton Company, pp. 60-78

61

Even more remarkably, the changes that Uber has already brought are probably just the opening salvo in a barrage of further disruptions that may ultimately transform the entire transportation sector. Combining the platform model with another technology that is rapidly moving from the drawing board to the showroom—the self-driving car—will improve Uber’s already stellar economic model and could lead to a series of cascading impacts that extend beyond the taxi industry. One futurist foresees a time when millions of people will eschew car ownership altogether, instead relying on an instantly deployable fleet of driverless Uber vehicles to take them wherever they want to go at a cost of around fifty cents per mile. Uber cofounder and CEO Travis Kalanick comments, “We want to get to the point that using Uber is cheaper than owning a car.” The ultimate promise: “Transportation that’s as reliable as running water.”

The implications are startling. The major automakers would be devastated by the shrinkage of their market. So would ancillary businesses such as auto insurance, car finance, and parking. On the other hand, the sudden decrease in demand for parking places (since driverless cars can be in virtually continual use) will free up tens of millions of square feet of real estate for development, liberate lanes on practically every city street, and drastically reduce the pollution and congestion caused by drivers cruising the streets in search of a parking spot. If this vision for the next phase of Uber’s growth comes true, the landscape of America may well be rendered unrecognizable.

interesting how Uber is presented as if it's the only way to get the ideal second outcome ... eschewing the possibility of municipal, collectively-owned solutions

—p.61 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago

Even more remarkably, the changes that Uber has already brought are probably just the opening salvo in a barrage of further disruptions that may ultimately transform the entire transportation sector. Combining the platform model with another technology that is rapidly moving from the drawing board to the showroom—the self-driving car—will improve Uber’s already stellar economic model and could lead to a series of cascading impacts that extend beyond the taxi industry. One futurist foresees a time when millions of people will eschew car ownership altogether, instead relying on an instantly deployable fleet of driverless Uber vehicles to take them wherever they want to go at a cost of around fifty cents per mile. Uber cofounder and CEO Travis Kalanick comments, “We want to get to the point that using Uber is cheaper than owning a car.” The ultimate promise: “Transportation that’s as reliable as running water.”

The implications are startling. The major automakers would be devastated by the shrinkage of their market. So would ancillary businesses such as auto insurance, car finance, and parking. On the other hand, the sudden decrease in demand for parking places (since driverless cars can be in virtually continual use) will free up tens of millions of square feet of real estate for development, liberate lanes on practically every city street, and drastically reduce the pollution and congestion caused by drivers cruising the streets in search of a parking spot. If this vision for the next phase of Uber’s growth comes true, the landscape of America may well be rendered unrecognizable.

interesting how Uber is presented as if it's the only way to get the ideal second outcome ... eschewing the possibility of municipal, collectively-owned solutions

—p.61 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago
63

[...] Unlike traditional offline pipelines, online pipelines benefited from low marginal costs of distribution—sometimes as low as zero. This allowed them to target and serve large markets with much smaller investment.

Traditional media companies were the first to feel the pinch. Newspapers were upended by the Internet’s ability to distribute news to a global audience without the traditional distribution costs (printing, shipping, retailing, delivery). An efficient pipeline had eaten an inefficient one. The unbundling of classifieds and other forms of advertising from editorial content then stripped the newspaper model of a crucial monetization mechanism, as the more efficient online method for delivering targeted advertising outcompeted the traditional ink-on-paper method. Again, an efficient pipeline ate an inefficient one.

remarkable how these different pipelines are compared without thought to what other externalities there are or even where the money goes ... the conclusion drawn is the most superficial one you could possibly expect ("efficiency > inefficiency", essentially)

—p.63 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago

[...] Unlike traditional offline pipelines, online pipelines benefited from low marginal costs of distribution—sometimes as low as zero. This allowed them to target and serve large markets with much smaller investment.

Traditional media companies were the first to feel the pinch. Newspapers were upended by the Internet’s ability to distribute news to a global audience without the traditional distribution costs (printing, shipping, retailing, delivery). An efficient pipeline had eaten an inefficient one. The unbundling of classifieds and other forms of advertising from editorial content then stripped the newspaper model of a crucial monetization mechanism, as the more efficient online method for delivering targeted advertising outcompeted the traditional ink-on-paper method. Again, an efficient pipeline ate an inefficient one.

remarkable how these different pipelines are compared without thought to what other externalities there are or even where the money goes ... the conclusion drawn is the most superficial one you could possibly expect ("efficiency > inefficiency", essentially)

—p.63 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago
69

[...] How do you convert a product to a platform in the business-to-business (B2B) arena? Many corporations own massive fixed assets like power generation plants, magnetic resonance imaging (MRI) machines, or tracts of farmland. How do you build platforms around those?

The answer: you de-link ownership of the physical asset from the value it creates. This allows the use of the asset to be independently traded and applied to its best use—that is, the use that creates the greatest economic value—rather than being restricted to uses specific to the owner. As a result, efficiency and value rise dramatically.

this is literally just like the worst thing about financialisation. kinda equivalent in stupidity to making derivatives (skimming off the top without bearing any of the risk ... startup founder's wet dream)

—p.69 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago

[...] How do you convert a product to a platform in the business-to-business (B2B) arena? Many corporations own massive fixed assets like power generation plants, magnetic resonance imaging (MRI) machines, or tracts of farmland. How do you build platforms around those?

The answer: you de-link ownership of the physical asset from the value it creates. This allows the use of the asset to be independently traded and applied to its best use—that is, the use that creates the greatest economic value—rather than being restricted to uses specific to the owner. As a result, efficiency and value rise dramatically.

this is literally just like the worst thing about financialisation. kinda equivalent in stupidity to making derivatives (skimming off the top without bearing any of the risk ... startup founder's wet dream)

—p.69 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago