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Published byBruce Wells Modified over 9 years ago
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Why SW is eating the world Marc Andreessen, 2011 VC that invested in Facebook, Groupon, Zinga, Twitter, Skype, Foursquare, LinkedIn
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His View Internet, SW companies are building real, high growth, high margin, highly defensible businesses We are in the middle of a dramatic and broad technological and economic shift in which SW companies are poised to take over large swathes of the economy
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Trends in biz practices Major businesses and industries are being run on SW and delivered as online services Many of winners are Silicon Valley-style entrepreneurial technology companies that invade or overturn legacy industry structures
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Why is this happening now? Computer and Internet technologies have advanced across some threshold –Over 2B people use the broadband Internet –On back-end, SW tools and Internet-based services make it easy to launch a new global SW-powered startups with low start-up cost
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Example 1: Book Fall of Borders –Decline of Barnes and Noble Rise of Amazon –The world’s largest bookseller 2001, Borders handed over its online biz to Amazon Amazon virtually sells everything online Even books themselves are SW
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Example 2: Video Fall of Blockbuster Rise of Netflix, Hulu –And more: Amazon Video and iTunes Other media companies are increasingly more online-service oriented
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Example 3: Music iTunes, Spotify, Pandora 2% in 2004 to 29% in 2010 Traditional record companies play a diminishing role as a content provider –They provide content to the above companies
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Example 4: Videogame Fastest growing company is Zynga Rovio, maker of Angry Birds Traditional game companies like EA and Nintendo have been stagnating
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Example 5: Movie production Pixar, one of the best movie production companies, is a SW company. Disney has to buy Pixar
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Example 6: photo Photos in cameras and phones are uploaded to the Internet for archiving and sharing Shutterfly, Snapfish, Flickr,… Kodak had been happy with film cameras, and now…
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Example 7: marketing Google Groupon, Living Social, Foursquare They use SW to eat the retail marketing companies
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Example 8: telecom Skype: the fastest growing company CenturyLink (3 rd telecom company) has declined fast AT&T and Verizon have survived by transforming into SW companies, partnering with Apple and smartphone makers
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Example 9: recruiting LinkedIn is the fastest growing company Employees edit their resumes, which are directly searched by recruiters
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Example 10: autos SW is eating much of the value chain in car industries SW runs engine, controls safety functions, entertains passengers, guides drivers, … Hybrid, electric cars will accelerate the shift Driverless cars?
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Example 11: logistics Wal-mart uses SW to power its logistics and distribution capabilities FedEx is thought of having the best SW network to which trucks, planes and hubs are attached Success or failure of airplane companies hinges on SW –Ticket pricing, route optimization,…
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Example 12: natural resources Oil and gas companies use supercomputing for visualization and analysis in exploration efforts Agriculture is powered by SW; satellite analysis of soils for seed selection
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Example 13: finance Every financial transaction is done in SW Financial SW companies allows anyone to accept credit card payments with a mobile phone PayPal allows payments and transfers online
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Example 14: defense National defense is increasingly SW- based A modern combat soldier is embedded with a web of SW for communications, logistics, and weapons SW-powered drones launch attacks Data mining to detect terrorist attacks
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What next? Healthcare & Education They have been resistant to entrepreneurial change But fundamental SW-based transformation is coming
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Also,… Companies in every industry need to assume that a SW revolution is coming Even SW-based companies as well –Oracle and MS are threatened by new SW offerings like Salesforce.com and Android The battle between incumbent companies and SW-powered insurgents will be epic
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Challenges (1/3) Every new company is being built in the face of massive economic headwinds –A successful company will be strong and resilient and will grow even faster when economy becomes stable
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Challenges (2/3) Many people lack the education and skills to join new SW-powered companies Every company is starved for people with talent Qualified SW engineers, managers, marketers, salespeople will be invaluable While national unemployment will soar The more SW penetrates the industry, the less employees will be required
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Challenges (3/3) The new companies need to prove their worth Build strong cultures, delight customers, establish competitive advantages Justify their rising evaluations
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Conclusions Building a SW-powered company is easy Making it successful is difficult Every industry will be transformed by SW That is the big opportunity
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