E‐commerce

Case Study
GAFAnomics‐New Economy, New Rules

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 22years, the average age of Google, 
Apple, Facebook and Amazon. 22 years 
of frenetic development combined with 
the upheaval brought about by the 
internet, to businesses, our lives and 
our civilization. 
 “thinking outside the box”
 success of GAFA.
 “GAFAnomics” is a means of seeing and 
understanding your industry through 
GAFA eyes
 its core, requires an unwavering 
ambition to make positive changes to 
the customer’s daily life. 
 As big as wealthy countries
 Denmark is 35th in GDP ranking. GAFA generate about the same revenue than 
Denmark, but with 10x less people

 GAFA
 Revenue (2013):
 $316 Bn
 Employees (2013):
 252k
 Denmark
 GDP (2013):
 $330 Bn
 Employed people
 (2013):
 2,674k
 GAFA’s revenue growth exceeds China’s.
 GAFA
 Revenue growth in
 2013:
 12%
 China
 GDP growth in
 2013:
 9%
 Piling up cash
 GAFA have accumulated $123 Bn in cash1 in 2013
 This cash could buy…
 The 50 most valuable
 start‐ups in the world
 72
 Endeavour Space
 Shuttles
 4
 Big Mac for everyone
 on the planet
Spearheading future economic 
growth
 Creating and dominating markets
 Google‐ 90% Share of search.
 Apple‐ 45% Share of Smartphone web 
traffic.
 Facebook‐ 75% Share of social media.
 Amazon‐ 6% Share of online retail sales.
 7 billion customers is their playground
 GAFA radically question the notion of addressable markets.
 When launching a business, they never think of geography 
or culture.
 Any connected human being is a potential customer, and 
any non‐connected human being needs to be.
 They set out to have a monopoly on customers’ attention 
and
 commitment on a large scale.
 How to build a billion‐customer
business?
 Traditional model:
marketing products
 We invest time and money in developing products, 
marketing them and then defending them tooth and nail 
against competition.
Difficulties:
 Barriers to entry are getting lower everyday.
 Customer expectations are higher than ever before.
 customers want experience, not products.
 Google, Apple, Facebook,
Amazon are
customer‐obsessed
 The only thing that is valuable in the long term and deserves 
to be fought for is the customer.
New economy, new rules
1. The “free customer”
 They make no difference between a paying customer and a 
non‐paying one. GAFA set out to make themselves 
indispensable to as many people as possible.
 2. The “utility value model”
 GAFA have redefined value creation. Delivering 
sustainable customer value prevails over short‐term 
profitability.
 3. The “pirate management”
 GAFA have redefined talent management. They created 
an innovationfriendly environment to supercharge 
performance and pioneer the future.
 1. The “free customer”
Redefining the customer concept
 Everyone is a customer, even without money
 GAFA strive to deliver the best possible 
experience to everyone to earn their 
attention.
 In their view, your attention makes you a 
customer… Whether or not you make a 
transaction. By building sustainable 
relationships, they turn attention into 
commitment, and commitment into revenue.
 Customer base is the mother of all 
growth
 It is the path towards revenue
 GAFA build strong and direct relationships with their 
customers, who are hence more eager to transact with them.
 It acts as a barrier to entry
 The larger the base of happy customers they build up, the 
more attractive they become and the harder it is for 
competitors to challenge them.
 It leads to more value
 GAFA leverage economies of scale to cover fixed costs more 
effectively and reflect this by lowering product prices.
 It is an innovation catalyst
 Data processing makes it possible to 
explore and experiment with new 
value pathways: add‐on features, 
product innovation and revenue 
streams. Data paves the way to a new 
era: large‐scale customization.
 2. The “utility value model”
Redefining value creation
 3 concepts:
 1‐Make smart and meaningful things
 Their products & services are all the 
more valuable because they are 
intuitive to use. Reducing product 
adoption friction has enabled GAFA to 
cater for the mass market and has led to 
a high adoption rate and commitment.
 The search journey

 25 TIMES FASTER
Listening to music 70 times faster
Communicating 25 times faster
Buying 3,000 times faster
 2‐Foster value creation rather than 
revenue
 GAFA care so much about meeting customers’ needs that they 
sacrifice short term revenue and profits.
 Enrich experience 
 Free is a lever to bring extra value to an existing experience. It 
helps reach higher retention rates on high services or products.
 Respectively, 91% and 85% of apps are free
 Get customers in
 Free is a powerful trigger to capture attention and build word‐
of‐mouth. It helps reach a critical mass of customers in record 
time.
 “Facebook is free and always will be”
 Cross‐sell products
 Free leads to a positive brand experience. Customers are more likely 
to actually pay for other services and products. Free acts as a loss 
leader and contributes to building a brand habit.
 Apple gave away new U2 albums to get new credit card numbers on 
iTunes.

 Capture data
 Free multiplies contact points, leading to more data collection. 
Powerful analytics help extract accurate insights to maximize 
customer value and identify new revenue streams.
 Android is a free open source OS for developers
 3‐Doing away with core business
 Commitment is a scarce commodity. 
The magic lies in meeting and 
anticipating customer demands in a 
timely manner, at the risk of letting 
competitors gain a lead.
 GAFA have set out to operate any type 
of business as long as they deliver value.
 Ever‐growing efficiency and 
differentiation
 GAFA increase market size through 
innovations that are appealing to 
customers.
 GAFA grow revenue through cross‐
selling and third‐party monetization.
 GAFA increase retention rates through a 
highly experience (switching costs are 
higher).
 3. “Pirate management”
Redefining execution
 GAFA envision to pioneer the future.
 To achieve this goal, primarily based on 
people and their ability to imagine the 
future, they created a favorable setting 
for freedom of thought and action.
 Technology enhances talent 
performance
 Facebook’s Phabricator:
 Facebook’s Phabricator is the internal code‐review tool 
every engineer there uses, every day. It is integrated with 
Facebook’s Open Graph system.
 Google’s People Analytics:
 Google’s “People Analytics” team
 aims at “bringing the same level of rigor to people 
decisions that is done to engineering decisions.” The team 
launched new tools such as a retention algorithm, a hiring 
algorithm and a research project called “oxygen” that 
identified the DNA of an effective leader base on data.
 Apple’s Switchboard:
 This is the employee‐only App Store 
that Apple employees use to 
download work apps and keep them 
updated.
 Creating innovation‐friendly 
environments
 Amazon Lab126 is the R&D department behind 
Amazon’s innovative consumer electronics products 
or software. Amazon Lab126 produced Fire HDX, 
Amazon FireTV and Amazon Fire Phone.
 Google[x] is a semi‐secret lab dedicated to major 
hardware‐based innovations. Overseen by Sergey 
Brin, the unit has launched many “moonshot” 
projects such as Google Glass, Driverless cars, 
Project Loon or Google contact lenses.
 Launched in early 2014, Facebook 
Connectivity Lab is a research unit that 
works on “new technologies to improve 
connectivity on the ground, in the air 
and in orbit”. World‐class aerospace 
technology experts are part of the team.
 E‐commerce
Case Study
GAFAnomics Season 2
4 Superpowers to Outperform in the Network 
Economy

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 What is GAFAnomics?
 A modern, networked, economic system spurred by the
eponymic GAFA (Google, Amazon, Facebook, Apple) but
also encompassing Unicorns, Chinese tech giants and all
other companies changing our lives through computer
technology.
 Evidence of growth of GAFA
The combined market cap of GAFA has surpassed the old
empire’s index.

The new giants, from all of their 20 years of age in average, are
valued $200Bn higher than the CAC40, composed of the 40
most valued companies on the French Stock Market, among
which the Sanofi, L’Oréal, or the leading commercial aircraft
manufacturer, Airbus.
GAFA have become industrial giants of a new economy,
with its own rules and its own market mechanisms: which
are GAFAnomics, or “rules of GAFA”.
 GROWTH OF GAFA
This year has been an all time
high for the fantastic 4 of the Facebook grew bigger than
tech industry: Google, Amazon, China with 1,55Bn users
Facebook and Apple (GAFA).

Apple and Google, the two

Amazon became the most most valuable brands on the
valued retailer in the world, planet, are pursuing their
leaving Walmart behind. ascension, preempting markets
one after the other.
 Competitors 
Another hint at the existence of this new economy is the
commoditization of GAFA’s model: GAFA are facing an
increasing competition from all around the world, be it from
China (with Alibaba, Baidu, Tencent and Xiaomi) or from
Russia, Japan, Korea and India with their homegrown GAFA
clones
 ENTRY OF NEW COMERS
 Are these new comers really  threatening GAFA’s supremacy?
 Many have entered the GAFA’S legacy like NATU
 They built their success on top of GAFA’s infrastructure and 
wouldn’t have achieved such growth if it wasn’t for the 
services laid out by their predecessors.
 Example uber uses maps and play store 
 The Core of These New Businesses 
 In the networked world, the three most desirable things 
are connections, connections and connections”.
 This really is the secret to the new  companies: they have 
structured themselves as networks that connect users, 
businesses, products and information to one another. This 
structure is at the core of GAFA and their mission 
statement.
 “Basically, their goal is to organize the world’s information 
and to make it universally accessible and useful
 From the Value Chain to the Value Loop
 First of all, companies that structure themselves around
networks create value through a value loop, leaving the
business school value chain behind.
 This is partly due to new markets, called multi‐side markets,
where clients of a company are both individuals and
businesses.
 In the classical economy, value flows through a simple chain,
from suppliers providing raw materials to the corporation
(like Ford) that transforms them into products.
 In the network economy, value is produced inside a value
loop. Every unit of value created by products or users is
captured by corporations, transformed, exploited to
improve products and redistributed to interested users.
 How do GOOGLE make Connections?
 By connecting pieces of information to one another through
their indexation algorithm
 Allowing users to connect to these information through a
simple search engines.
 With time Google enriched its pool of information users
could connect to, adding images, locations and videos. It
also allowed users to connect to each other through services
like Gmail or Google+ and businesses to connect to users
through AdWords.
The Secret to Success of Networked Companies

 Networked companies exhibit 4 superpowers: they’re

magnetic, infinite, real‐time and intimate.
 These powers give them leverage to grow their user base,
capture value where it can be found regardless of its
order of magnitude and redistribute it in accordance with
each user’s needs.
 These superpowers are the cornerstones of GAFAnomics
companies’ power and that they can be replicated by
legacy companies to revive their competitiveness in the
network economy.
 The Magnet Enterprise: Managing 
Very Small Units

Networked companies can detect, organize, and animate very

small units of value. They leverage excess
capacities and externally created value to capture and deliver
micro deals. Their competitive advantage is to deal efficiently with
billions of small transactions and to capture value created outside
their walls.
1- Capturing and redistributing excess capacities
2- Opening up to capture externally created value
The Infinite Enterprise: Shooting for 
the 100% Profit Consumer
Networked companies use highly scalable software and services to achieve zero
cost delivery once critical user mass is achieved. Thanks to network
effects and zero marginal costs, they can grow indefinitely in revenue with
minimal impact on costs. Their competitive advantage is speed of scale and
profitability.
1- Network effects: mother of all growth
2- Programmability: towards zero marginal cost
The Real‐time Enterprise: Instantly 
Tuning Value
 Networked companies use real‐time data feedback to
instantly optimize market fit and improve products’ value.
They use optimum management and work in perpetual
beta to answer user needs in real‐time. Their competitive
advantage is instant fit‐to‐market.
 1- Optimum management and behavioral economics
 2- The perpetual beta and the technical surplus
The Intimate Enterprise: Hospitality is 
the Norm

1- Targeted is the new mass

2- Customized is the new standard
 How to become a networked 
company to win in a world 
dominated by GAFAnomics ?

 In order to do so a 
company can take two 
complementary 
approaches: connecting 
to existing networks 
and/or creating networks 
of its own. These two 
approaches can be 
declined in 5 strategies, 
varying in terms of value 
created and difficulty to 
implement.
 1. Plug in: Limited Value, Easy to Do
 Know how to leverage GAFA’s massive networks
 Many companies see GAFA as a threat to their business. This is often true. But GAFA are 
also infrastructures that can be easily leveraged. There are two main ways to do this:
 Think of GAFA as distribution channels that connect you to the world: Amazon and 
Apple’s digital stores connect you with millions of customers in just a few clicks, while 
Google and Facebook can bring you massive, highly‐targeted traffic .
 Tap into GAFA features to improve your service: for instance, FedEx’s online service is 
built on the Google Maps engine, 
 2. Partner: High Value, Easy to Do
 Deal exclusive partnerships with GAFA to create a
competitive edge
 Some large companies have already implemented this
strategy very successfully. BMW integrated the Amazon
Cloud Player into their cars, Southwest Airlines offers
Apple’s Beats music service for free on their flights,
and Audi partnered with Amazon to test e‐commerce
deliveries into trunks of customers’ vehicles in Munich.
 3. Compete head‐on: Limited Value, Hard to Do
 Unless you think you can create a billion‐member social
network or a better search algorithm than Google, this
strategy is not for you. Many have tried, and many have
failed. Remember when The Wall Street Journal tried to
create its own social network, or when Microsoft tried to
create its own iPod? Even Google itself failed when it tried
to launch its own competitor to Facebook.
 4. Differentiate: High Value, Hard to Do
 Compete by going where GAFA have not been
 This strategy requires a lot of up‐front investment in
technology in order to reach critical mass, but it can
pay off. There are three ways to achieve it:
 Target geographies that are not covered by GAFA:
Baidu in China and Yandex in Russia are both major
search engines in their respective countries.
 Target niche customer segments Leverage your specific
assets and image to differentiate: thanks to its
knowledge of the sports sphere and its strong brand,
Nike launched Nike+ and fuelband, entering the IOT
market.
 5. Co‐innovate: Very High Value, Easy to Do
 Experiment hand‐in‐hand with GAFA
 Legacy companies will find the best returns on their
investments when they work with GAFA to explore new
business horizons. Many companies have leveraged their
core business and seized the opportunity:
 Facebook partnered with Eutelsat, the satellite giant, to
provide internet access in Africa.
 So in GAFAnomics,the companies should rethink their 
strategy, break silos, open and connect to the networks to 
thrive.
 E‐commerce
Case Study
The Powers That Be (Internet Edition): Google, 
Apple, Facebook, Amazon and Microsoft 
(GAFAM)

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 INTRODUCTION:
 As of early 2018, five U.S. technology companies—Google, Apple, Facebook, 
Amazon, and Microsoft—were among the largest companies in the world.
 Similarly, three Chinese technology firms—Baidu, Alibaba, and Tencent, or 
BAT—had emerged as global players due in part to the protection of China’s 
“Great Firewall,”
 Which made it more difficult for foreign companies to compete in Chinese 
markets. 
 As these companies continued to scale by branching into new businesses, 
such as voice AI and self‐driving vehicles, they also faced new and challenging 
questions about user privacy.
 The European Union had recently passed the General Data Protection 
Regulation, a comprehensive set of consumer data protection laws that 
would require technology companies to make significant changes to their 
operating model. 
 Meanwhile, social media giant Facebook was facing allegations that 
Cambridge Analytica, a political data firm, had accessed information on tens 
of millions of Facebook users without their consent.
 Advicing calls for big technology firms to be more strictly regulated
 DATA IN THE MODERN WORLD
 ARPANET adopted TCP/IP in 1983, and from there researchers began to 
assemble the “network of networks” that became the modern Internet.
 With the introduction of WWW in 1991, the users started to create content using 
HTML and easily interconnect web pages and sites using hyperlinks.
 By 2018 internet become an integral part of business and daily life.
 With internet it became easier for companies to collect or to acquire info of 
consumer behavioral from third parties.
 This helps to guide the companies about the business processes.
 Big data describe large collections of data e.g. structured or unstructured.
 Companies use first second and third party consumer data.
 First party data: observed directly by companies
 Second party data: collected by partnerships in which two entities saw value 
in accessing the data.
 Third party data: purchased from third party vendors.
 APPLE, INC
 Founded by Steve Jobs and Steve Wozniak in 1975.
 Built Apple I using $1350, sold 200 units.
 Released APPLE II(PCs), sold 300000 units in four years.
 Went public in 1980.
 Apple III and Lisa did not generate same success.
 In 1984, introduced Mac ( pointing device “mouse”) which had a graphical 
user interface.
 In 1985 jobs resigned and sold his apple shares and founded new company 
“NeXT”.
 Wozniak also left in 1985.
 Job acquired Pixar in 1986 and went public in 1996 at a $1.5 B valuation.
 Apple was struggling, purchased NeXT for $400 M.
 Job became CEO of Apple in 2000.
 In 1998, introduced iMac desktop computers.
 Apple went from $1B loss to $300 M profit.
 In 2001, Apple released iTunes.
 Later in 2001, began selling iPod.
 Also launched a music store on iTunes that sold individual tracks for $0.99.
 Various iterations of the iPod (mini, ultra‐thin iPod nano and the stripped‐
down iPod shuffle) followed over the next years.
 By 2008, Apple controlled 70% of the digital music player market and was the 
largest U.S music retailer.
 In early 2007, Apple launched the iPhone , a “smartphone” with a high‐
resolution color touchscreen as well as iPod touch.
 Both featured IOS.
 Was a success and sold a million units.
 In 2008, apple introduces app store.
 iPhone unit sales were upto 91% and their revenue totaled $20.34 billion
 In 2010 acquired siri and later introduced iPad.
 Sold 19 M.
 After the death of job in 2011, Tim Cook became the CEO of Apple.
 Under his leadership they introduced iCloud.
 They keep making versions of iPhone and iPad.
 Released smartwatch in 2015 which got mixed reviews.
 In 2016, Apple was ordered EC to pay $14.5 B taxes to Ireland.
 Apple cater to customers who desired high‐end, professional‐grade products, 
introducing the iMac pro and iPad pro in 2017.
 Released two new models iPhone 8 and iPhone X which had a faceID feature.
 In early 2018, apple released home pod.
 Amazon.com, Inc.
 In 1994, Jeff Bezos quit his well paid wall street job and made a website for 
selling books online named Amazon.com.
 Entered as a bookseller but later expanded into CDs and DVDs.
 In 2000, opened up the site to third party sellers in exchange of sales 
commission.
 In 2003, amazon expanded to customer electronics and baby care products.
 In 2002, launched Amazon Web Series.
 Its technology development focused on gathering and profiting customer 
info.
 Personalized its site and product suggestions for each user.
 By 2011, each product page on the site called upon 200 to 300 proprietary 
algorithms and systems to assemble a “personalized experience” for each 
individual shopper.
 In 2005, amazon launched prime which improved the economics of amazon’s 
business.
 In 2006, also started selling logistics services called “fulfillment by amazon”.
 In 2012, amazon invested in logistics, acquiring kiva systems for $775 million.
 By 2018 amazon had an estimated 100000 robots working in logistics.
 In 2017 they purchased whole foods for $13.7 B.
 Same day delivery over 8000 cities.
 The company purchased research in drones and cashless convenience stores.
 Also launched ALEXA.
 Built its own film and video production studio.
 Amazon fresh, amazon publishing, amazon app store, amazon maritime, 
shipping with amazon.
 Major force in world economy.
 Third largest retailer by sales.
 $177 B revenue.
 500 m products from video games to wine.
 100 m customers of amazon prime.
 AWS had more market share.
 Almost half of every dollar spent by US household was spent on amazon.
 ALPHABET’S GOOGLE Inc.
 Larry page and Sergey brin ran a computer science phD project that grow to 
become google.
 Their project eased internet navigation by analyzing the links between 
websites for search.
 Google incorporated in 1998 and won contracts for providing search service 
to major web portals including yahoo and AOL.
 It help google to improve its web search algorithm.
 Source of revenue became advertising on Google's own site.
 In 2000 launched AdWords.
 In 2003 launched AdSense 
 Acquire DoubleClick in 2007
 Yahoo saw google as a competition but google continue to expand.
 By 2007 google had 62% of global search volume.
 Developed new online services.
 Launched Gmail in 2004 and google translator in 2006.
 Expanded its services through acquisition.
 Google maps in 2004 and YouTube in 2006.
 Froogle, google print and promote picasa.
 By 2011 youtube: three billion videos
 Gmail: one billion monthly active users in 2015 and maps in 2011
 Some of these services were directly monetized
 In 2007 google paid Mozilla foundation $66 million to make google 
the default search engine in its browser. 
 Developed its own google chrome browser in 2008.
 Google failures
 Orkut in 2002
 Google+
 Google Glass in 2012
 In 2015, google announced its reorganization into a 
conglomerate name “Alphabet”
 This separated the profitable ad‐based businesses from the 
company’s smaller speculative investments.
 The core business retained its name “google” which include 
search, AdWords, AdSense, maps and ad‐tech platform.
 The smaller subsidiaries include r&d‐led initiative, waymo, 
verily, moonshot and project loon.
 By 2018, google service spread across the world.
 Seven products with more than one billion users.
 Held 57% share of the internet browser market and android made nearly 90% of 
smartphones sales.
 By 2017, one billion hours on YouTube.
 And their core product and search was handling trillions of searches per year.
 FACEBOOK
 In 2004, mark Zuckerberg launched Facebook originally limited to 
Harvard students but available to the world in 2006.
 In 2007, Facebook had 30 million registered users
 Introduced app platform that enabled third‐party developers to 
create apps for the site’s users.
 In 2007, Facebook experience a crisis related to user privacy after 
introducing an advertising product called beacon.
 Users filed a lawsuit about violation of privacy and Facebook 
terminated it in 2009.
 Two students from Harvard also claimed that Zuckerberg stole their 
idea.
 The parties reach a settlement that awarded those students $20 M in 
cash and $45 M in Facebook shares.
 In 2008, introduced first version of iPhone mobile app.
 Facebook user base grow from 100 M to 200 M in 2009.
 In late 2011, Facebook introduced timeline.
 In April 2012, Facebook purchased Instagram for $1 billion.
 Facebook went public at a share price of $38 billion.
 In 2014, WhatsApp bought by Facebook for $19 billion.
 Facebook announced connectivity lab team.
 Cambridge Analytica collected data from up to 87 million users.
 Cased was also filed in April 2018.
 Even though its negative image Facebook business remained strong.
 Net income $5 billion
 2.2 million users in 2018
 1.5 billion visit the site each day.
 BAIDU
 Founded in 2000 by robin li and Eric Xu.
 Baidu provided search as a service.
 By 2009, baidu had 60% of the Chinese search market surpassing 
Google's 33%.
 Chinese government grew a web censorship program that actively 
blocked politically undesirable sites.
 In 2010, baidu censor its search results.
 Dominate Chinese search market.
 Monetized in hosting ads.
 $11 billion revenue in 2017.
 Investments in online video, local travel booking, maps and services.
 MICROSOFT
 Founded by Bill Gates and Paul Allen in 1975.
 Aim of developing software and selling to computer companies.
 Licensed its Microsoft disk operating system(MS‐DOS) to IBM.
 Total sales in 1981 : $16 million
 Released its windows operating system in 1985 and went public in 
1986.
 Faced legal challenges as apple sued them, claiming that windows 
OS copied elements of Apple’s Macintosh OS.
 Windows was used on almost 85% of the PCs around the world.
 Released Microsoft CE operating system in 1995.
 Released its internet explorer in 1995.
 Pressure pc makers to preinstall internet explorer on windows 
computer.
 48.35% of the browser market.
 By 2000 its was 95%.
 Established monopoly position in PC software.
 In 2000 Gates stepped down as the CEO and Steve Ballmer was appointed.
 Released 
 Windows XP
 Windows vista
 Windows 7
 Windows mobile
 Xbox gaming console
 Xbox 360
 In 2009 launched the Bing search engine.
 Bing sold ad space
 In 2010, released Microsoft azure and launched windows 
phone.
 Acquired skype in 2011 for $8.56 billion.
 In 2013, released outlook.com and also Xbox one.
 Also introduced Cortana AL.
 In early 2014 acquired Nokia and Mojang.
 In 2015 introduced windows 10.
 In 2016 purchased LinkedIn.
 Struggling to attract third party app developers.
 In 2017 announced that it no longer would be introducing 
new features of  windows phone.
 Revenue was $24.5 billion.
 ALIBABA
 Founded in 1999 by a team led by Jack Ma.
 Internet portal where buyers could use to place orders with Chinese 
wholesalers.
 Expanded to domestic wholesaling.
 In 2003, launched Taobao.
 Aliwangwang, a messaging service and Alipay, digital payment platform.
 In 2017, controlled 51% of Chinese e commerce.
 Ali pay held 55%market share for mobile payments in china.
 Also expanded into financial services,wealth management, loans and 
insurance.
 TENCENT
 Founded by Ma Huateng and friends in 1998.
 Messaging service called QQ.
 Focused on copying products and services.
 Plagiarism king.
 In 2011, released WeChat.
 100 M users by 2012 and 200 M users by 2013.
 Spent 1.7 billion hours a day on TenCent apps.
 Launched payment service “WeChat pay” in 2017.
 Did not rely on advertising but monetized through value added services such 
as games and subscriptions.
 Also invested in Al.
 THE FUTURE OF THE FRIGHTFUL 
FIVE
 Frightful five and BAT become largest and most influential companies.
 Privacy and security was uncertain.
 Under EU’s GDPR, Technology companies have to seek consent before using 
consumer personal data.
 Fines would be high as $20 M or 4% of company’s revenue.
 Companies begun to work on this.
 E‐commerce
Case Study
Baidu Alibaba & Tencent (BAT) ‐ Three 
Kingdoms of Chinese Internet

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 The Three Kingdoms Of The
Chinese Internet.
 Baidu for search known as ( Google of China)
 Ali baba for e-commerce ( Amazon of China)
 Tensent for games and instant messaging.( Facebook of China)
 Baidu
 Pronounced by “by doo” was a Chinese language search engine founded by
Robi Li and Eric Xu.
 Baidu gained quick popularity, Allowed advertisers to pay to appear at the top
of search results similar to Google ADwords.
 Advertisers could bid on keywords and pay per click on Baidu’s search pages
as well as other website affiliated with Baidu.
 Baidu captured 63% of all PC search traffic in China.
 Baidu also work with Chinese government to censor sensitive information to
block link to controversial political topics.
 Baidu evolved to provide other information related services.
1. Baidu Post Bar
2. Baidu Encyclopedia
3. Baidu MP3 search
 Competition from Domestic Firms
Baidu faced competiton from domestic firms.

Qihoo:
• Antivirus virus software company
• They launch search engine in 2012
• Search engine known as so.com, gained reputation for delivering safe and secure results.
• They growing its business on mobile phone in 2014.
SOHU:
• Another top competitor
• Beijing based internet company that owned SOHU.com
• A new portal and online media destination.
SOGOU.COM
• Third largest search engine in China
• The most dominant keyboard inpit software in China
• Instead of typing words based on their spelling, user can type words based on their pronunciation.
 Alibaba
 Worlds largest e-commerce company in terms of gross
merchandise , volume profit, buyers.
 Alibaba primarily operated through three sites.
 Alibaba.com: B2B trading platform with 10million international
buyers
 Taobao: C2B shopping site with 7 million sellers and 800
million shoppers
 Tmall: B2C site controlling 45% of all online B2c retail sales in
China.
 Alibaba
 China “singles Day”  $9.3 billion orders (24 hours)
 U.S “Cyber Monday” $2.7 billion
 Alibaba developed Alipay, an online payment service to make
e-commerce transactions.
 Only 1% Chinese had credit cards
 Delivered as advertised
 Created trust among their customers.
 Half of Chinese population was living in rural areas
 85% of rural had access to internet
 Competition from JD.COM
 Founded in 1998,JD.com was China second largest e-
commerce company captured 18% of B2C market while
Alibaba owned 49%.
 Alibaba relied on third parties for deliveries and shipments
 While, JD has its own delivery services with its own
warehouse.
 To compete more aggressively with Alibaba, JD formed a
strategic partnership with Tensent.
 Tencent

Tencent was China’s second-largest Internet company in market value behind Alibaba.

Tencent’s digital products includes :

• Instant messaging (IM)
• Social network Qzone
• Gaming platform QQ Games (users could pay for in games upgrades like extra lives
and power ups)
• WeChat ( rather than earning revenue from advertising, first used paid for animated and
custom sticker.)
• User could link their bank account to WeChat and purchase goods in the platform
proceed by TenPay
In 2013 Tencent became the largest company in the global games market with $5.7 billion

Tencent transferred its success with desktop games into mobile as well
 Tencent
 In 2005, Tencent leveraged QQ’s vast user base to build a social
network called Qzone. This site allows users to write blogs , post
photos, and listen to music. It was monetarized by selling various
value added services, like wallpapers and profile customization
 The majority of Tencent’s revenue came from online games. In
general, Tencent adopted free-to-play model across QQ, Qzone,
and QQ Games. The ,multiplayer online games allowed players to
purchase skills like faster movement or increased durability to
help advance through battles and compete with other players.
 WeChat allowed users to hold down the button to record a voice
message. Users could send these voice chats, along with videos,
photos, and text messages, privately to their WeChat friends.
 Competition from Sina Weibo

One of the largest

online news, sports and Alibaba invested $586
An online media
entertainment portals in million to acquire an
company similar to
China with 62 million 18% stake in Sina
Yahoo
daily active users in Weibo
2014
Comparison
 Racing Toward A Mobile Future

Baidu
 Baidu allocating 25% of its R & D budget for mobile
 They paid a large amount of money to pre install its services from
maps to search, on new phones
 Li commented “we prefer buy to build, because it will save us
time” when they acquired online video company.
 In mobile age the goal is to connect the people with services.
 Racing Toward A Mobile Future

Alibaba
 Ali baba also made bold moves to become a mobile contender.
 Alibaba dishes out at least 5 billion in investment and acquisition
ranging from video technology to navigation to sports teams.
 By 2014, 80% of all mobile commerce in China took place on
Alibaba’s mobile platform, which together attracted 217 million
active user.
 Alibaba launched a money market fund called Yu’E Bao, which
collected in 93 billion in assets by June 2014, the largest money
market fund in China.
 Tensent

 Like Alibaba and Baidu, tangent also embarked on an acquisition

spree.
 BAT competitive dynamics changed very quickly.
 It is unclear that which company would achieve long term
monetization success. As a BBC put it, BAT had become, “most
expensive competition in online history.
 E‐commerce
Case Study
Voice War ‐ Hey Google vs. Alexa vs. Siri

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 Synopsis 
 In  2017 Amazon’s Alexa conquered consumer electronic 
show.
 In 2017 Google also mentioned Google assistant. 
 Google Parent company Alphabet had achieved one of the 
highest market value of any public company. 
 Apple launched ‘Siri’ in 2011
 Microsoft launched ‘Cortana’ in 2014 
 Questions
 What strategic moves would allow Google to build out its 
platform to compete with Amazon as well as the growing 
global competition?
 Would voice be a core or ancillary technology for Google 
moving forward? 
 How intelligent assistant works ? 
 Goggle History
 Google Co‐Founder Larry Page and Sergery Brin, They created 
an Algorithm. 
 Mission  was to organize ‘The infinite amount of information 
on the internet’ 
 In 2000, Google built AdWords.
 Goggle launches a successful IPO.
 Google launched new products and made series of 
acquisition, including mobile OS maker Android, online video 
platform YouTube.
 Alphabet Inc was launched in 2015
 Pichai joined Google in 2004. and Said ‘ We will move from 
mobile world to an artificial intelligence First world’
 Pichais biggest decision was to setup new Google divisions
(a)  Cloud computing 
(b) Hardware 
 Google Assistant 
 May 2016, At annual developer conference. Pichai introduces 
Google assistant. 
Intelligent Assistant
 Also known as Virtual or Voice Assistant.
 By Early 2017, 20% of searches by voice through Google 
Assistant instead of Text. 
 By 2020, it is estimated that 50% of all searches would be voice 
search. 
 How intelligent assistant works?
1. Assistant filtered out audio signals. 
2. The request is then converted into text and run through an 
natural language processing algorithm on cloud for analysis. 
3. Natural language processing include the breakdown of 
phrases into intent(what is the request?)
4. These intent use to access database of possible response. 
5. Which is then converted into audio clips.
Three primary technological advancement enabled the 
growth of intelligent assistants. 
(a) Access to data was no longer a hurdle.
(b) Machine learning.
(c) GPU
Google heavily invested in AI, had started building its own 
Tensor processing units (TPUs) to compete with (GPU) 
Graphic processing unit.  
TPU: specific integrated circuit specifically for neural network 
machine learning. 
GPU: specialized electronic circuit designed to rapidly  
manipulate and alter memory to accelerate the creation of 
images. 
Competition in the intelligent assistant 
Google landscape
 In 2016, Launched Messaging app ALLO
 By May 2008, Google assistant accounted for 46% of all 
Smartphone equipped with an IA.
 ‘Actions on Google’
 Sony and Panasonic partnered with Google. 
Apple
 First to market its voice‐activated intelligent assistant ‘Siri’ 
in 2011. 
 By 2016 , Apple opened up its ecosystem to third party 
applications. 
 Apple was known for its strict protecting consumer privacy.
 Siri answered 62.2% of questions correctly while Alexa and 
cortana were all above 80%.
Amazon
 Amazon acquired Evi.  
 Amazon launched Alexa.
 Amazon announced (ASK) Alexa Skills Kit. This open 
platform strategy increased the number of Alexa skills to  
about 5000 by the end of 2016 and over 2500 by the end of 
2017. 
 Alexa had limited availability across phones and tablets.
 Alexa is available over 80 countries and supported by 4 
languages. 
Microsoft
 April 2014, launched its voice enabled digital assistant 
Cortana.  
 In 2015 and 2016 ,expanded Cortana to IOS and Android. 
 In may 2017 , publicly launches the cortana skills kit.
 Also launched Cortana‐powered smart speaker. 
 By January 2018, Cortana had 235 skills, was available in 
13 countries and supported 8 languages. 
Samsung
 Multinational electronic company headquarter in South 
Korea.
 2018, Samsung led the overall global Smartphone market 
with 18% market share. 
 Samsung acquired Viv.
 Samsung further developed its Ai voice assistant renamed 
‘Bixby”
 Bixby became the standard on Samsung High‐end android 
phones.  
Voice Start‐ups
 By 2018, number of smaller players had entered the voice 
market such as X.Ai, Ozlo and Mycroft.
 Competitions grows in china 
 By 2018, china had emerged as the major locus of 
competition to US tech giants. 
 Chinese companies spent aggressively on research and 
development for their versions of voice activated devices. 
 Most common concern to Google were Alibaba, Baidu and 
Tencent. 
Alibaba Group Holdings
 Alibaba publicly announced its intelligent assistant called 
AliGenie in mid 2017.
 Aligenie voiceprint recognition feature offered security by 
only allowing authorizes users to place online orders. 
 Later in 2017,Alibaba launches an open‐development 
platform. 
 AliGenie had over 200 applications of which less than 50 
were developed by Alibaba.
Baidu
 Dominant internet search operator in china.
 In 2015 Baidu launched Duer app, a mobile based virtual AI 
assistant.
Tencent Holdings
 Creator of popular messaging and social media app called 
Wechat.
 AI assistant called  Xiowei. 
 Voice Wars: Intelligent assistants 
move beyond mobile
Smart Speakers
 It represented the major hardware platform for voice 
assistants.
 Amazon launched Echo, a smart speaker. In March 2016, 
Amazon followed up the Echo Dot a smaller version of the 
original Echo.
 In June 2017 Amazon released the Echo Show. 
 In 2016, Google launched its own smart speaker, the 
Google Home. Later released two new sizes: the Google 
Home Mini and the Google Home Max.
 Apple entered the market in February 2018 with the 
HomePod.
 Amazon had 66.6% of the marker , Google 29.5%and other 
players only 8.3%. 
 Later Google announced partnership with higher quality 
sound and smart screen display products made my JBL, 
Lenovo, LG and sonny. 
 2018, Microsoft announced another strategic partnership 
with Xiomi to integrate cortana into yeelight speaker. 
Connected Home.
 Google and its competitors positioned their smart 
speakers as the potential operating system of the broader 
connected home ecosystem. 
 In early 2018 Google home had nearly 600 voice apps 
enabled on the device. 
 Express shopping powered by Google assistant enabled 
users to order items from a range of retailers using simple 
voice commands. 
 Netflix teamed up with Google.
 Like Google Amazon positioned the Echo as the operating 
system that powered the connected home.
 Amazon also acquired Ring, a video doorbell maker.

Cars and other hardware platform
 Android Auto, Hands free interactions during driving. 
Common commands included asking for directions , 
responding to messages and location based reminders. 
 Apple launched CarPlay in 2015. smart dashboard for 
automobiles controlled by Siri.
 In January 2017 , Microsoft and Nissan announced they were 
working together.
 Microsoft and BMW also announced similar partnership.
 Google Pixel Buds 
Enterprise
 Google duplex which helped ‘ connect users to business in 
a good way’
 Apple launched business chat.
 Microsoft announced Cortana integration with LinkedIn
 Amazon , Integration between Alexa and Cortana voice 
assistant.
 Challenges
Privacy concerns 
 Major hacks, leaks and exploitation of personal 
information.
 Voice enabled assistants embedded in smart speakers 
could be controlled by any person who has access to the 
device.
 Anyone could make a purchase using stored information. 
Technology constraints 
 AI enabled voice assistant struggled to distinguish user 
command from background voices.
 Researchers at the Mitsubishi Electric Research laboratory, 
their AI platform managed to distinguished multiple voices 
and reconstruct what each person was individually saying. 
 By 2017 Google had achieved a 95% accuracy rate 
 E‐commerce
Case Study
Uber‐The Transportation Virus

Engr. Dr. Amir Manzoor
Management Sciences Department
Bahria University, Karachi
 UBER: faster, higher, stronger
 Born in 2009
 3 million Trips per day
 1 million Drivers on the UBER platform
 Reaching 1 billion Rides in Total since 
2010

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Spreading all over the world
 UBER is available in 470 cities across 70 
countries, competing directly with local 
transportation actors.
 It is spreading city by city and its biggest 
market is CHINA with 1/3 of its total 
rides.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 The Transportation Virus
Since the beginning Uber is behaving like
a virus. It is infecting hundreds everyday
and taking control of transportation in
our growing metropolises.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 1. Synthesize it
 Identify a poorly‐served market and develop 
a platform to serve it 10 times better.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 A ride at the tap of a button
 Core value proposition in a simple but 
ambitious objective.
 Well – design app
 Eliminate black car & traditional taxi 
markets.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Gaining speed thanks to GAFA’s 
infrastructure
Uber uses the GAFA infrastructure to provide the services 
efficiently and effectively.
 Access to users
 Payment 
 Driver navigation
MVP insight: smartphone + car = connected car

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Unlocking four superpowers
Uber embraces 4 superpowers to optimize its transportation 
network and this network gives a structural competitive 
advantage over traditional taxi companies.
 Magnet enterprise
 Real‐time enterprise
 Infinite enterprise
 Intimate enterprise

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Magnet Enterprise

Uber introduced rating system to 
maintain the standards of service with 
more than 3 million ratings gathered 
everyday.

Turning rides into managers

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Real – Time Enterprise
Always price at the optimum.
 Uber uses gathered data related to rides facilities, local 
transportation offers and user price elasticity.

 REACHING LONG‐TERM MARKET EQUILIBRIUM
 ADAPTING SUPPLY TO DEMAND IN REAL TIME

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Intimate enterprise
 Diversifying to adapt to user’ needs.
 Uber uses diversification to attract every consumer of this 
need.
 24 years: Students are price sensitive and like to go out a 
lot ‐‐‐‐ Uber X & Uber POOL
 45 years: Time sensitive & Experience sensitive ‐‐‐‐ Uber
Black & Uber BERLINE
 30 years: Doctor  price sensitive live far from public 
transport.‐‐‐‐ UberCOMMUTE
• Adapting  ‐ Payment methods
• Tailoring  ‐ types of vehicles
• Developing – extra services
http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan
 Infinite enterprise
 Uber benefits from network effects 
when it reaches to critical mass.
More
demand

Lower More
prices drivers

More
Less driver geographic
downtime coverage /
saturation

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 2. Seed germs
 Find the best environment to incubate
under favorable circumstances. Do things
that don’t scale to kick‐ start your
network and reach liquidity.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 • Uber has spread locally, globally
• GAFAnomics is all about the “first settler advantage”
• Liquidity first, profits later
• Launching the A‐team & supply side aggressively.
• Invest in favourable market conditions
 General data about the city
 Accelerants
 Intensity of rivalry
 Existing demand for Uber

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 3. Become contagious
 Once a strong user base has been 
constituted, leverage it and make 
partnerships to increase virility.

 User evangelism better than TV
• Rider to Rider referral
• Driver to Driver referral

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

  Contagion: A long term investment
 Uber ‘s profit will come in  the long term as they are 
driven by Uber’s strong retention rate.
 Sell an Idea, Not A Product
 Concept  of everything in 5 minutes. An ice cream at a 
tap of a button.
 92% increase in discussion volume on social media.
 The secret of the first universal taxi service
 Uber offers same interface and experience everywhere, 
allowing riders to use the service, even when abroad.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 4. Mutate fast
 Never stop innovating and pivoting to enlarge your 
market and annihilate competition.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 Uber’s evolving vision
 Uber launched many different variants 
in order to cater the market as per the 
need and as per the changing mission 
statement.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan
 • Starting the network: a black car service
• Tuning  the network‐ letting more drivers in.
• Getting more people into fewer cars
• From premium to lower cost
• Extending the network: from transportation to logistics
• With one goal in mind: moving away from car ownership
• From network to industry leader
• What’s next?  (1) the perpetual ride:24/7, 100% of capacity 
used  (2) the autonomous car

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 5. defend
 Protect your market against safeguards and 
competitors or you’ll be replaced.

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

 4 strategies to compete with uber
 In 7 years Uber has conquered the 
world. But will it be able to keep its 
position of power for ever?

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan

http://amirmanzoor.com Engr. Dr. Amir Manzoor, Bahria University, Karachi, Pakistan