APIs and Beyond

Open distribution platformsOpen distribution platforms

August 31st, 2010

Martin Tantow,Booz & Company

Martin Tantow

1

� Management consultant with Booz & Company, based in San Francisco� Consumer, Media & Digital practice

� Focus on corporate growth strategies in the digital space (cloud computing, new business models, digital media, etc.)

Co-founder of 3scale networks� Co-founder of 3scale networks� Cloud-based API management solution

� Analysis, management and monetization of Web APIs

� Previously with T-Mobile, Oliver Wyman, Viant, and others

� Blog: http://mtantow.com/

� Twitter: @mtantow

Agenda

2

1. Evolution of Web Service Business Models

2. The Open Computing Value Chain

3. App Stores and the Rise of Social Apponomics

How do I monetize my digital assets?

3

3

Rupert Murdoch, Chairman & CEO,

News Corp

Over the last couple of years we had a simple

answer: Build an API4

Products

& Services

Products

& Services

However,

building an

API is easy,

Open

Web

APIWebsite

One distribution

channel (aka

HTML website)

API ?

API is easy,

but its

distribution to

the customer /

users is not.

110,000 –

100,000

Reaching thousands

of users through an

API, being available

“everywhere”

Not having an API today is like not having a

Web Site in the 90s5

“$7bn worth of items on eBay through APIs”

Mark Carges (Ebay CTO)

5

“The API which has easily 10 times more traffic than the website, has been really

very important to us.”

Biz Stone (co-founder, Twitter)

“The adoption of Amazon's Web services is currently driving more network

activity than everything Amazon does through their traditional Web sites.”

Jeff Bar (Amazon evangelist) / Dion Hinchcliffe (Journalist)

Evolution of Web Service Business Models

6

Web Services

become Open

Platforms

Applications turn Websites have

Websites with

add-on API

API as an additional

access/interface to

their existing data,

e.g. Weatherbug,

Technorati, Yelp

Applications turn

into platformsWebsites have

become web

services

The API IS the product,

e.g. Twilio, Zemanta,

Amazon WS, Strikeiron,

Xignite

The API has

overtaken

website traffic

The API is more

important than the

website, e.g. Twitter,

eBay

Platforms leverage the network effect

7

Open

Web

APIWebsite

Products

& Services

Products

& Services

Pla

tform

s

Open

Platforms

Products

& Services

One distribution

channel (aka

HTML website)

API

110,000 –

100,000

Reaching thousands of

users through an API,

being available

“everywhere”Pla

tform

s

1,000,000s

Collaborating and

sharing with millions

of users and

customers � Ubiquity

Why should enterprises care about?

8

� Being indispensable in this new ecosystem

� Adapt new business models and exploit new

opportunities

� Foster innovation� Foster innovation

� Future model for software acquisition

� Increased customer engagement

The Open Computing Value Chain

9

Content & functionalityprovider / partner

Open APIs

WebsiteDirect

B2C Direct

channelsAPI

Open Distribution Channels

Value ChainSourcing Reach

Open Supply Chain

Social Apponomics

Open APIs

APP

APP

APP

APP

APP

APP

Platforms are creating the required network effect to

succeed in the new distributed ecosystem

Developer Community

Enterprise Platforms / App Store

Consumer App Store / Mobile

Indirect

Mashups

B2B

B2B

B2C

Multi-

channel

Platforms

channelsAPI

Self-serve

Enterprise 2.0

Products &

Services

Back

Front Platforms

Social Networking: Network effect driving

towards consolidated experiences10

� 850+ social networking sites

� 55.6MM adults visit every

monthmonth

� 46%+ ‘Online Adults’ visit

� 9.3% of all internet time

� Facebook winning with adults

- 73% of SN adults have an

account

1-Sep-10 Confidential and For Internal Use Only

New Technology Infrastructure Rapid Spawned

InnovationLife

Cycle

Managem

ent

Custom

er

Serv

ice

Com

pany P

roce

sses Content

Management

Marketplaces Services

Apps

Digital Trends� Web 2.0

11

Deposit InvestSpendSave Borrow

Custom

er

Serv

ice

Mark

eting

Innovation

Com

pany P

roce

sses

Customer Use Cases

Social

Networking

ProductivityPayments

SearchNews

Mobility &Devices

� Apps

� SOA

� Open APIs

� Portals

� Bandwidth

� Device proliferation

Convergence of Cloud Functionality

12

Life

Cycle

Managem

ent

Custom

er

Serv

ice

Com

pany P

roce

sses

Rise of Social Apponomics

Content ManagementMarketplaces

Services

� Connections create

12

Deposit InvestSpendSave Borrow

Custom

er

Serv

ice

Mark

eting

Innovation

Com

pany P

roce

sses

Customer Use Cases

ProductivityPayments

SearchNews

Mobility

Social OS

� Connections create value

� Value from content clusters

� Ubiquity (and Agnostic)

� New digital functionality

� Untethered

13

Domination by 2-3 Networks

Potential 18-Month

Future States

Conce

ntration

The Big Trend is Towards Monetization

None Social Sites as Commercial Portals

E-commerce Hosted on Social

Sites

Handful ofKey

Players

Commercialization

Conce

ntration

Fragmented

“Gold Rush” (like search …)

Brand-Building

Industry Today

Industry 3 years ago

14

2008Earlier Q1/092007 Q2/09 Q4/09Q3/09

Mobile Application Stores Evolution

“Emergence”

Q1/10

Early Pioneers

Q2/10

Apple’s AppStore has been the game changer

“Gold Rush”

“Take off” The game changer

“How can I get

a place in the

game?”

Enterprise Platforms deliver competitive

advantages15

Enterprise Platforms / App StoresEnterprise Platform Enabler

Competitive

Advantages

Abundance of players with different agendas

but competing for the same audiences16

App Store Ecosystem

Vertical players

2

Developers

Software OSvendors

1

Users

PC OEMs4

Mobile OEM’s3

Developers

Developers

Developers

Attract Developers

Attract Customers

IndependentStores

6

ISVs/Carriers5

Key success factors to attract both developers

and customers17

App Stores Virtuous Circle

� Quality Technical

Support

Attract Developers

� Powerful Brand &

Marketing

Attract Customers

� High Reach and

Exposure

� Generous Business

Model

� Broad and Diverse

Offerings

� Quality Storefront

� Easy Payments Engine

More

Customers

More

Developers

Leveraging capabilities and strategic assets to

determine the best strategic play18

Ability to Steer Traffic

� Steer Traffic towards Preferred Stores

Strategic Plays for Mobile Operators

Strategic LeversAsset

EXAMPLE: MOBILE OPERATORS

2 31

Strategic Plays

Local/ Operator-Specific Content

Control of Network Quality

� Provide Own Applications

� Provide Convenient Payment ToolsPayment Tools

� Differentiate Service-level Data Packages

Own App Store

App Store Consortium

3rd Party App Store

Leveraging assets

Key messages

19

� We’ve understood that APIs are important

� APIs are easy to build but distribution is key

� Enterprises need to engage in social networks

� Open platforms deliver the network effect which is � Open platforms deliver the network effect which is

critical to succeed

� B2C and B2B app stores are a preferred digital distribution

model

� Enterprises need to leverage their existing assets and

capabilities

Questions? Thank you!

Blog: http://mtantow.com/

Twitter: @mtantow