Why Facebook Makes TV and Amazon builds airports

Why Facebook Makes TV and Amazon builds airports

Just in time for Cebit, the topic of digitization comes out of the niche again and occupies the commentators and editorialists. After too much hype about the daily appearances and tweets of Erdogan, Trump and Schulz, the trade fair is heading for the headline d!conomy rightly takes a look at the effects of digitization in our economy.

Autonomous systems, virtual reality and artificial intelligence are the technologies of the moment when it comes to digital transformation. These comprehensive technological innovations (beautifully described with the new keyword “Deep Tech”) are thus coming back into the general public. Reason enough to focus once again on the serious strategic changes that are emerging on the business map of many industries due to the repositioning of American tech players.

Strategic shift into new business areas

The strategic messages of the Internet giants Facebook and Amazon have only recently gone over the news ticker without great media resonance and relatively under the radar. Both now want to expand into completely new fields.

For example, the e – commerce and cloud provider Amazon has announced that it will build its own airport. Almost at the same time, the social network Facebook reports to launch its own TV app. In cooperation with Apple TV, Amazon Fire TV and Samsung Smart TV, the network content is enriched with additional video content. The message behind this is clear. Based on the original core competencies of networking and communication, additional business areas have been built up over time through acquisitions.

Just remember that the Facebook empire includes the instant messenger WhatsApp and the virtual reality glasses provider Oculus in addition to Instagram. The transformation from a social media platform to a holistic media and entertainment company is currently in full swing. Facebook consistently orients itself to our life needs and expands its offerings from the core product network to other industries.

Consumer Behavior Management Platform

In perspective, a platform of Internet – based services combined with the corresponding hardware is knitted together here, which is to relieve the customer of all needs with regard to his information and entertainment consumption. The ratio behind this is clear. Facebook wants to further increase the length of stay in its own service and advertising cosmos. Since the consumption of classic analog television channels is increasingly declining, especially in the target group of digital natives, there are very good business opportunities here.

Originally started as a destroyer of the traditional book trade, Amazon has meanwhile developed as a holistic e-commerce and logistics platform that, like Facebook, is trying to comprehensively address the living needs of customers with ever new services.

One of these directions is also the announced service Amazon Fresh. With the delivery of food, Amazon is trying to get even more into consumers ‘ everyday lives. The order can be easily done with the intelligent “household manager” Amazon Echo. In addition to new revenues, highly interesting customer data can also be collected.

The motto “Tell me what you eat and I’ll tell you who you are” thus offers numerous options for further offers, for example in the areas of fitness, health and leisure. Thus, Amazon also spans a comprehensive network of services in relation to the living needs of living, working and entertainment, thus tapping into one established industry after another.

Attack on the B2B sector as the next step

But business with the end customer is only one side of the coin. In addition to the very profitable offer of storage capacities in the cloud, traditional B2B industries are also to be attacked in the next stage.

The company’s own value chain can be completed with the construction of its own airport and its dependence on other service providers can be further reduced. As a immediate consequence, Amazon has the opportunity to use the learning experiences from operating its own airport to scale this business area internationally with the help of digital glasses and logistics experience. The Berliners will take note of this with particular interest.

While Facebook is ultimately very focused on the end consumer, Amazon’s strategy is a threat to all businesses, both in retail and business.

German companies must find their own role determination in digital ecosystems

If you look at all these examples across the board, one mechanism becomes pretty clear. The strategy of these companies is designed to conquer industry by industry with their own services and, on the basis of strong customer access via corresponding platforms, to take significant market shares from the established companies.

In particular, German corporations and medium-sized companies, which are very focused on product functionality and engineering quality, must find answers as to how they are positioning themselves against this attack or what they have to oppose these initiatives.

The basic prerequisite is the understanding of one’s own role in cross-industry competition for the management of the life needs of customers. To this end, an understanding and mindset for the ecosystem strategy demonstrated by Alphabet, Amazon, Apple, Facebook and Uber must be developed.

Digital revolution also as an opportunity

With all the legitimate respect for the US Internet giants, future development is not only a threat but also an opportunity. If the German economy does its homework and becomes clear about how new technologies will respond to the living needs of customers, then a clear counterpoint can be set here.

The digital revolution is still in full swing, and the initiatives of Amazon, Facebook and Co. will accelerate it further. This makes it all the more important to focus on these strategic effects of digitization in the future. Not only every year at Cebit.

The author is a professor of strategic management at the HTW Berlin and a columnist for BILANZ.

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