New Business Models & Strategies for Internet Economy strategic management

MARATHA MANDIR’SBABASAHEB GAWADE INSTITUTE OF MANAGEMENT

STUDIES(ACADEMIC YEAR 2014-15)

SUBJECTSTRATEGIC MANAGEMENT

TOPICNew Business Models & Strategies for Internet Economy

PRESENTED TOProf. Ishita Tanna

Roll No. Name

A-3 Dipika Bhagwat

A-16 Hitesh Kathekar

B-1 Abhishek Ayare

B-22 Pawan Punmaji

INTERNET BUSINESS MODELS

• Information Sales

• Service Sales

• Brokerage

• Advertising

• Merchant

• Manufacturer (Direct)

• Affiliate Community

• Subscription

• Utility

THE ECONOMIC POTENTIAL OF THE INTERNET

REVOLUTION• Reducing the cost

• Manage supply chain more effectively

• Easy communication

• Increasing competition

• Making prices more transparent

• Broadening markets for buyers and sellers

• Increasing the effectiveness of marketing and pricing

• Increasing consumer choice, convenience and satisfaction in a variety of ways.

CONTRIBUTION OF INTERNET

• India will overtake the U.S. to become country with the second highest number of Internet users after China.

Current By 2015

GDP $30 billion $100 Billion

Internet Users 120 million 330 million-370 million

Internet Jobs 6 million 22 million

EBAY

• Incorporated in California in 1996

• 1998 IPO in September 1998

• Provides online marketplace for the sale of goods and services, online payment and communication

• Price: $55.20

• Market Cap: 42.40B

• Total Cash: 3.20B

• Total Debt: 0

• P/E: 39.22

PAYPAL & SKYPE

• Revenue: $5.6 billion (2012) ,Acquired @ $1.5 billion in 2002

• April 2000, more than 1,000,000 eBay auctions used the PayPal

service

• In 2008, PayPal's total value of transactions was $60 billion

• Skype: Acquired @ $2.5 billion in 2005

• 75 million members

• Serves 225 countries

• Microsoft agreed to acquire Skype for $8.5 billion in cash in

2011

• Skype is a market leader in VoIP offerings in all countries in

which it does business.

• Core of Communications business: Allow communication

between buyers and sellers over the Internet

HOW DOES EBAY EARNS

• Business Operates in

three segments:

• Communications

• Skype Credit

• Monthly subscription.

• Payments

• Marketplaces

• Insertion fee

• Penalties

• Upgrade fee

• Final value feePaypal Fee Table

under $3000 USD 2.9% + $0.30

$3000.01 to $10,000 2.5% + $0.30

$10,000.01 to $100,000 2.2% + $0.30

over $100,000 1.9% + $0.30

INDIAN EXAMPLE

How does OLX and Quikr Make money

• AdSense

• Premium and featured posting

How does Flipkart make money

• Promoting Product

• Merchandising

• Manufacturer (Direct)

HOW FACEBOOK MAKES MONEY

• Total Revenue for 2013 Q1:$1.46 billion

HOW DOES FACEBOOKMAKE MONEY IF IT'S FREE?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

HOW DOES INSTAGRAMMAKE MONEY?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Before selling to Facebook they were not making money.

HOW DOES GOOGLE MAKE MONEY

• Google generated $9.7 billion of total gross revenue

HOW DOES GOOGLE MAKEMONEY FROM ANDROID?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Google takes a 30% transaction fee for each app sold, plus profits from in-app advertising.

HOW DOES GOOGLE MAKEMONEY FROM DOCS?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Google Apps for Business gives subscribing businesses more control and security of their documents and data stored online. Users can rent additional storage (shared between Picasa, Docs, and Gmail) from 25 GB (US $2.49 / month) to 16 TB (US $799.99 / month).

HOW DOES GOOGLE MAKEMONEY FROM GMAIL?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Gmail is supported with ads from adwords

HOW DOES GOOGLE MAKEMONEY FROM YOUTUBE?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Ads on site and throughout embedded videos.

HOW DOES GOOGLE MAKEMONEY FROM CHROME?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Google Chrome makes money indirectly through Google search advertising. Google.com is the default search engine for the Google Chrome browser.

HOW DOES APPLE MAKE MONEY ON APPS?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

HOW DOES ADOBE MAKE MONEY FROM FLASH?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Adobe sells the flash development software but then does not charge users for the software to play flash on PCs.

HOW DOES FARMVILLE MAKE MONEY FOR ZYNGA?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Depends on how you look at accounting. In-game purchases of virtual goods and in-game advertising are the main sources of revenue.

HOW DOES TWITTERMAKE MONEY?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

HOW DOES TUMBLRMAKE MONEY?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Revenue from premium themes and paid inclusion to their blog directory - not profitable - investor backed.

HOW DOES MICROSOFT MAKE

MONEY FROM XBOX?Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Xbox live charges users $50 annually for subscriptions to their service in addition to the virtual goods that are sold on the service.

HOW DOES LINKEDIN MAKEMONEY ?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

Selling Data - Companies and recruiters are able to pay and gain access to LinkedIn databases.

HOW DOES APPLE MAKE MONEY FROM ITUNES?

Advertising

Subscribers

Lead Gen / Affiliate

Selling Data

Freemium

Royalties

30% of revenue from iTunes sales goes to Apple.