How do ecosystem economics shape the mobile competitive landscape, and what are the key performance indicators, and how can you evaluate opportunities? These are the sort of questions it examines.
Andreas Pappas, Senior Analyst at VisionMobile, writes:
The economics and business models of app ecosystems are based on network effects. By connecting users to developers, ecosystems create network effects, that is, they drive demand between users and developers: the more users, the more handsets, and therefore the more developers, the more apps and so more users. It’s a positive feedback loop that gives non-linear growth properties that outcompete traditional linear economies of scale. Network effects take place not just between users and developers, but also between all four sides of app ecosystems, including handset manufacturers, and network operators.
As well as network effects he highlights other “properties of ecosystem economics”, for example external subsidies, exit barriers (lock-in), stored value, non-linear growth and winner-takes-all effects.
It’s the first in a series on ecosystem economics, which looks well worth reading.