The value of bike sharing services like Hubway heavily depends on bike availability at each of their stations. But how are they able to predict when, where, and how many bikes should be relocated to optimize their network? The solution [...]
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LEGO soon discovered that their incredible fan base not only contributes to their brand reputation, but could also be used in a very different way: Through crowdsourcing LEGO gets new product ideas directly from children's (and adult's) rooms, where millions [...]
For almost 15 years the success of Apple’s devices and iTunes services has been primarily based on indirect network effects. Now the rapid growth of music streaming services shifts the focus towards direct network effects.
Among all industries transformed by the digitization of our economy, the retail industry has been among the first and most heavily affected markets during the last decade. The Information Age spawned many new powerful retailers like Amazon – and caused [...]
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Thanks for the interesting post! I agree with Hauke that visualization (and in particular the features Tableau introduced) plays a very important role these days. In many companies the main problem is not the actual prediction, but the challenge to understand their data in the first place. Tableau’s features for exploratory data analysis are a beautiful tool which enables decision makers to ask the right questions to their data scientists. And asking the right questions could be a major success factor for data driven-businesses, while computational power and fancy statistical models might rather be tools to exploit the last 10% of a companies analytical capabilities.
Very interesting post! I totally agree with you and the other comments. It’s surprising that many cities seem to struggle with building strong data-driven models around their public transportation services. Although they have a huge infrastructure and the capability to collect huge amounts of data, we see the most innovative use of data only at younger companies like Uber or bike sharing services like Hubway in Boston. Given MTA’s data wealth and all the other data sources that are available in New York City, I believe that there is a lot to do in the future (e.g. dynamic and predictive schedules based on weather, special events, etc.). This smart use of data will probably be one of the most important steps to make the MTA profitable again in the near future.
Great post. I think local community-based service have a huge potential in the next years. Currently there is a bunch of new apps and services that are trying to address certain problems or needs of a local community. A major success factor is probably the focus on a smaller geographical area, which makes it easy to reach the desired network effects and mouth to mouth marketing. You compared this to Facebook’s initial strategy, which is definitely a similar approach. However, I’m wondering if they also follow the Facebook strategy when expanding their business: this would mean that the restrictions (e.g. the registration with a home address) have to be relaxed (e.g. to also allow users from other cities to ask questions about a certain neighborhood, for example if they plan to visit the area etc.). I think it will be interesting to see how Nextdoor’s service will evolve during the next years.
Great post. I think the entire transportation business will be affected much stronger by network effects in the future. Companies like Uber already show the potential of platform-based transportation services and probably we can expect much more in the next years (e.g. delivery services). It’s very interesting that none of the German car manufacturers has been able to reach a tipping point for their respective carsharing service so far. I think the next few years will be crucial to gain the network effects that are needed to survive in this business. Maybe the best strategy would be to cooperate with each other as they did for the Nokia Here acquisition this year. If they do not, I think there is a huge risk that new entrants like Uber will quickly dominate this attractive market.
Very good post. With Apple Music I covered the “other side” in my blogpost (http://d3.harvard.edu/platform-digit/submission/apple-music-locking-customers-in-through-network-effects/). Building on Atima’s point, it will definitely be crucial for Spotify not to lose their content quality. Apple tries to provide users with some exclusive content to prevent “multi-homing” and is even trying to produce own content now. As soon as the big music corporations like Universal Music are not the main song suppliers anymore, the streaming market can easily tip again.
The market for online grocery shopping has definitely a huge potential, perhaps comparable to the impact Amazon had on bookstores a few years ago. However, I think it will be really interesting to observe the different companies entering this market (there are many). Especially the existing e-commerce giants and technology companies like Amazon or Google will try to dominate this market, too (http://www.businessinsider.com/google-and-amazon-enter-food-delivery-2015-9). Although these companies may have enough cash and power to enter the market, I think it will be challenging, since fresh food requires many adjustments such as new local distribution processes.
I agree with you that LinkedIn has a huge potential for further growth in the future. Looking at recent acquisitions (http://www.inc.com/jeremy-quittner/linkedin-buys-online-courses-company-lynda-and-could-purchase-more.html), it seems that LinkedIn tries to build an extensive platform for professional services. Since more and more companies outsource their services (e.g. software development), the potential to become a major contract- or freelance-jobs marketplace sounds very promising to me. In this case LinkedIn can build on a tremendous network effect, so it will probably be a “Winner” for the next years, too.
I think Microsoft faces indeed some very interesting strategic challenges. The last years have shown that they are not able to compete with Apple and Google on the smartphone market (in terms of both hardware and software). However, I agree with your statement that Microsoft has made some important adjustments. They now seem to be more focused on their core capabilities: software development and, in particular, productivity apps. This is well underlined by the appearance of a Microsoft representative presenting their Office apps for iOS at the Apple keynote last week. Although Microsoft lost the smartphone market, they have the chance to win different other markets, build new platforms (as you mentioned it) or sell advanced software to their customers. This WIRED-article from last week predicts a huge potential for their virtual reality technology, too:
http://www.wired.com/2015/09/microsoft-kisses-tim-cook-front-millions/