25
GOOGLE ARA – BUILDING THE MODULAR SMARTPHONE PRESENTED BY: BRIAN, HARI, KREMY, NACH & VARUN

Google's Modular Smart Phone

Embed Size (px)

DESCRIPTION

These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Google’s Modular Smartphone. Google is planning to provide a few standard exoskeletons and modules for a price of 50USD that enable standard voice calls, messaging and limit downloading of data. Users can pay a higher price for a phones that includes other modules and they can also upgrade the phones at any given time with a wide variety of modules that are expected to be available for this modular smart phone. These slides describe the specific value proposition for various types of final users, service providers, and app developers. The low price of this modular smartphone enables service providers to substantially reduce their subsidies for phones and thus introduce a new method of value capture that includes lower prices for users. This presentation also discusses other aspects of the business model such as scope of activities, and method of strategic control.

Citation preview

Page 1: Google's Modular Smart Phone

GOOGLE ARA – BUILDING THE

MODULAR SMARTPHONE

PRESENTED BY: BRIAN, HARI, KREMY, NACH & VARUN

Page 2: Google's Modular Smart Phone

• Modular Phone Structure

• Market Segmentation

• Value Proposition

• Value Capture

• Scope of Activities

• Strategic Control

CONTENT

Page 3: Google's Modular Smart Phone

PROJECT ARA

• Google’s hardware platform

for modular smartphones

• The Ara phone - skeleton

and interchangeable

modules

• Users can customize

device hardware and look

• Opens up mobile devices

market for parts

manufacturers

Page 4: Google's Modular Smart Phone

MODULAR STRUCTURE

Page 5: Google's Modular Smart Phone

ENDOSKELETON

• Endoskeleton consists of network

circuits and interfaces for

modules

• Electro-permanent magnets

used to attach modules

• Emerging standard “UniPro” for

communication

• Plug and play

• Endoskeleton has slots of

varying sizes

• Made from aluminum

• Comes in three sizes: mini;

medium; jumbo

• Water and dust-proof

Page 6: Google's Modular Smart Phone

MODULES

• A third party ecosystem

• Encase single functionality

• Independent & interchangeable

• Can be swapped between different phones

• Water and dust proof

• Niche tech

Page 7: Google's Modular Smart Phone

MODULE CUSTOMIZATION

• 3D printed module cases

• Customers can select:

• Color

• Material

• Image

• Text

• Inscriptions

• Easily replaceable cases

Page 8: Google's Modular Smart Phone

PRICE

• Price starts at $50!

• Depends solely on modules used

• Google plans to sell “barebones” version at $50 consisting of:

• Wi-Fi chip

• Processor

• Screen

• Battery

• Ara is versatile

Page 9: Google's Modular Smart Phone

PRICE

Nokia Lumia ~ $140 Samsung Galaxy Y,

Ace, Mini ~ 110$+

Sony Xperia E ~ $105 Xiomi Redmi ~ $160

Page 10: Google's Modular Smart Phone

TARGET

CUSTOMERS

ARA CAN PENETRATE THE

MARKET!

Survey of 50,000

respondents in 25 countries

state that Battery Life,

Screen Size, and Camera

Resolution are important

needs in a smartphone.

Google Ara will answer

those needs

http://bgr.com/2014/05/12/best-smartphone-battery-life/

Page 11: Google's Modular Smart Phone

TARGET CUSTOMERS

Cost Conscious Customer

Industry Specific User

Environment Conscious Customer

Developer and Technology Enthusiast

Telecommunication Operator

Module Manufacturer

END USER

Social Conscious

Customer

Page 12: Google's Modular Smart Phone

• Cell phone manufacturers currently targeting “macro segments”.

• Modularity offers great flexibility and customization

serve “micro segments”

• Applies to both high and low ends of market

• Final product price is configured by customers

Types of customers:

• Smart phone users

• Developers and technology enthusiasts

• Module manufacturers

• Telecom companies

VALUE PROPOSITION

Page 13: Google's Modular Smart Phone

Cost Conscious Customer

Industry Specific User

Environment Conscious Customer

VALUE PROPOSITION

SMART PHONE USER

Variable cost, set by user

Easy to repair & longer device life

Easy to upgrade

Average Android phone cost- $335

Modules for specialized work e.g.

measurement related, military,

medical, photography.

Back up modules for emergencies

Recyclable parts

Less impact on environment due to

replacement of individual modules

Social

Conscious

Customer

Full control over phone specifications

High Customization and

Personalization.

Receive social recognition

Page 14: Google's Modular Smart Phone

Developer and Technology Enthusiast

Telecommunication Operator

Module Manufacturer

VALUE PROPOSITION

Develop new modules

Contribute to development of

technology

Sell apps using specific modules

Change in business model

Access to cheaper phones - lower

subsidy spending

Savings can be rerouted to gain

competitive advantage

Bigger & simpler market - direct sales

to final customer

Lower R&D costs

Access to smartphone market for

virtually any company

Build up brand value & recognition

Page 15: Google's Modular Smart Phone

A CHANGE FOR TELECOMS

• Telecoms worldwide spend a fortune on phone subsidies – nearly $40 Billion in 2011

alone.

• Major operators started cutting subsidies for new users in order to reduce data and

cellular costs because of

• High competition

• Pressure from regulating bodies

• Led to loss of customers

• How does Google Ara change things?

• Access to cheaper high quality

device

• Help reduce subsidy expenses

• Provide alternative to subsidized

phones

• Reroute savings to offer lower

data/call prices

Page 16: Google's Modular Smart Phone

VALUE CAPTURE

Sources of revenue

• Physical Google stores to complement online services

• Online platform to facilitate customization, sale, and resale of

modules

• Licensing fee for Ara modular smartphone technology

• Revenue from New Apps

Page 17: Google's Modular Smart Phone

VALUE CAPTURE

Physical stores displaying various Google products

• Ara endoskeleton and modules

• Real time 3D printing of module covers with custom designs

• Profit from endoskeletons go to Google and from modules goes to

manufacturer

Page 18: Google's Modular Smart Phone

VALUE CAPTURE

Physical stores also facilitate

• Loaning of modules

• Google loans costly modules like high resolution camera modules,

attachment lens for camera module, bar code reader etc.

• Consumers pickup and deliver back the module at the same physical

store to get back their deposit

Page 19: Google's Modular Smart Phone

VALUE CAPTURE

Online platform to facilitate

• Customization, sale, resale and lending of modules

• Ara modules could be sold under devices section of Play Store

• Profit from modules go to manufacturer and from resale go to the

seller

Page 20: Google's Modular Smart Phone

VALUE CAPTURE

Licensing fees

• License the Ara modular smartphone technology to other smartphone

manufacturers and OEMs

• Licensing fee of 5% for every module sold

• Profit from endoskeletons go to Google and profit from modules go to

manufacturer

Page 21: Google's Modular Smart Phone

VALUE CAPTURE

Revenue from New Apps

• Due to Ara modular smartphone technology, addition of a specialized

module may require a specific app to be installed from Google Play

Store

• Revenue from apps are split 90% and 10% between developer and

Google

Page 22: Google's Modular Smart Phone

SCOPE OF ACTIVITIES

R&DEndoskeleton Design

& EngineeringSales & Marketing

Manufacturing

Distribution

Page 23: Google's Modular Smart Phone

STRATEGIC CONTROL

• IP rights on module technology and endoskeleton

• First mover advantage in respect to modular smart phones

• Network effects

• More people using the phone, more people can share modules

• Ara community platform

• For developers

• For users

• Complementary assets

• Google’s communication and distribution channel

• Existing distribution capabilities

• Brand value

• Long tail effect

• Users more willing to buy new modules rather than buy a new

phone

• Enthusiasts/niche market customers to incorporate technology

not available in current phones

Page 24: Google's Modular Smart Phone

DISRUPTIVE INNOVATION

• Modules manufactured by

third party ecosystem

• Do not need intricate

knowledge of phone design

• Require only component

knowledge

• Open innovation encouraged

– new designs

• Competition amongst module

manufacturers

• Resulting in cost reduction

• Phone manufacturers no

longer responsible for entire

design

Page 25: Google's Modular Smart Phone

THANK YOU!