Thoughts on Value Chain Dynamics
and P2P Networking
Professor Charles Fine
Co-Director, Communications Futures Program
Massachusetts Institute of Technology
Cambridge, Massachusetts 02142
January 2008
charley@mit.edu
http://cfp.mit.edu
Tel: 1-617-253-3632, Fax: 1-617-253-6720
P2P: Who are peers? What do they do?
End User “Peers”
•
Interact
–
“real time” communication
•
(or asymmetric or near RT)
Transport “Peers”
•
•
ISPs
Carriers
•
•
Concerned with ROI
“The Network” is my
business.
I want to monetize my
pipes.
voice, email, IM, some games
•
Social networking
–
–
Facebook, etc.
Some gaming environments
•
•
Consume content (push vs pull)
–
–
–
•
•
Downloads
Broadcast
On Demand
Publish content
–
–
•
•
(e.g., 2nd Life)
Individual end users
For-profit
Advertise
“The Network” provides the
“pipes” that enable my
utility/consumption.
I want easy-to-use, low cost and
probably end-to-end simplicity
•
What are platforms? What do they do?
End User Peers
•
•
Interact
–
Aggregators/platforms/frameworks
“real time” communication
•
(or asymmetric or
near RT)
voice, email, IM, some
games
•
Social networking
–
–
Facebook, etc.
Some gaming
environments
•
•
(e.g., 2nd Life)
Consume content (push vs
pull)
–
–
–
Downloads
Broadcast
On Demand
•
•
Publish content
Advertise
•
“The Network” provides
the “pipes” that enable
my utility/consumption.
I want easy-to-use, low
cost and probably end-toend simplicity
•
•
Provide environments that
support end-user utility,
usually using Transport
networks
Some not for profit
– Gnutella, BitTorrent,
•
Some for profit
– Google, eBay,
Facebook, Akamai,
Skype
– Corporations,
Universities, etc.
Transport Peers
•
•
ISPs
Carriers
•
•
Concerned with ROI
“The Network” is my
business.
I want to monetize my
pipes?
•
What are platforms? What do they do?
End User Peers
•
•
Interact
–
Aggregators/platforms/frameworks
“real time” communication
•
(or asymmetric or
near RT)
voice, email, IM, some
games
•
Social networking
–
–
Facebook, etc.
Some gaming
environments
•
•
(e.g., 2nd Life)
– Gnutella, BitTorrent,
•
Consume content (push vs
pull)
–
–
–
Publish content
Advertise
•
“The Network” provides
the “pipes” that enable
my utility/consumption.
I want easy-to-use, low
cost and probably end-toend simplicity
•
•
ISPs
Carriers
•
•
Concerned with ROI
“The Network” is my
business.
I want to monetize my
pipes?
•
Some for profit
– Google, eBay,
Facebook, Akamai,
Skype
– Corporations,
Universities, etc.
Downloads
Broadcast
On Demand
•
•
•
•
Provide environments that
support end-user utility,
usually using Transport
networks
Some not for profit
Transport Peers
Multi-sided platforms
Advertisers
buyers
sellers
eBay
Content
consumers
Content
providers
google
Who creates value in this chain? Who captures value?
Who controls what aspects of the chain?
End User Peers
•
•
Interact
–
Aggregators/platforms/frameworks
“real time” communication
•
(or asymmetric or
near RT)
voice, email, IM, some
games
•
Facebook, etc.
Some gaming
environments
•
•
•
•
•
ISPs
Carriers
•
•
Some not for profit
•
Concerned with ROI
“The Network” is my
business.
I want to monetize my
pipes?
– Gnutella, BitTorrent,
(e.g., 2nd Life)
Consume content (push vs
pull)
–
–
–
Downloads
Broadcast
On Demand
•
•
Publish content
Advertise
•
“The Network” provides
the “pipes” that enable
my utility/consumption.
I want easy-to-use, low
cost and probably end-toend simplicity
•
Provide environments that
support end-user utility,
usually using Transport
networks
Social networking
–
–
•
Transport Peers
Some for profit
– Google, eBay,
Facebook, Akamai
What are the dynamic forces that impact his chain?
How can we create and assess useful future scenarios?
End User Peers
•
Interact
–
“real time”
communication
•
•
(or asymmetric
or near RT)
voice, email, IM,
some games
•
Facebook, etc.
Some gaming
environments
•
•
•
Downloads
Broadcast
On Demand
•
•
Publish content
Advertise
•
“The Network” provides the
“pipes” that enable my
utility/consumption.
I want easy-to-use, low cost
and probably end-to-end
simplicity
Some not for profit
–
(e.g., 2nd Life)
Consume content (push vs
pull)
–
–
–
•
Provide environments that
support end-user utility,
usually using Transport
networks
Social networking
–
–
Transport Peers
Aggregators/platforms/frameworks
•
Gnutella, BitTorrent,
Some for profit
–
•
•
ISPs
Carriers
•
•
Concerned with ROI
“The Network” is my
business.
I want to monetize my
pipes?
•
Corporate
Strategy
Dynamics
Customer
Preference
Dynamics
Technology
& Innovation
Dynamics
Google, eBay, Facebook,
Akamai
Regulatory
Policy
Dynamics
Capital
Market
Dynamics
Industry
Structure
Dynamics
Business
Cycle
Dynamics
THE DYNAMICS OF PRODUCT ARCHITECTURE,
STANDARDS,AND VALUE CHAIN STRUCTURE:
“THE DOUBLE HELIX”
NICHE
COMPETITORS
INTEGRAL PRODUCT
VERTICAL INDUSTRY
PROPRIETARY STANDARDS
MODULAR PRODUCT
HORIZONTAL INDUSTRY
OPEN STANDARDS
INNOVATION &
TECHNICAL
ADVANCES
HIGHDIMENSIONAL
COMPLEXITY
ORGANIZATIONAL
RIGIDITIES
SUPPLIER
MARKET
POWER
PRESSURE TO
DIS-INTEGRATE
INCENTIVE TO
INTEGRATE
PROPRIETARY
SYSTEM
PROFITABILITY
Examples: IBM, Autos, Embraer/Boeing, Nokia, Small Firms
Fine & Whitney, “Is the Make/Buy Decision Process a Core
THE DYNAMICS OF CORE & EDGE
“THE (third) DOUBLE HELIX”
SKYPE
NAPSTER I
FACEBOOK
MSFT
VERIZON
INCREMENTAL
INNOVATION
CENTRALIZED CONTROL
VERTICAL INTEGRATION
PROPRIETARY STANDARDS
OPEN ARCHITECTURES
VIBRANT EDGE
RADICAL
INNOVATIONS
FRUSTRATION AND
SUBTERFUGE AT THE
EDGES
POLICY
TUSSLES
INNOVATOR
MARKET
POWER
PRESSURE FOR
OPENNESS
LOBBY WARS
(e.g., Net
Neutrality)
INCENTIVE TO
INTEGRATE
& LOCK IN
ADVANTAGE
PROPRIETARY
SYSTEM
PROFITABILITY
AMAZON
YAHOO!
GOOGLE
APPLE
Adapted from Clockspeed by C. Fine, Chapter 4, Perseus Books, 1998.