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Some say it is the most ambitious tech company. Many Chinese tech companies like Xiaomi and Huawei have grown from start-ups to giants in basically no time, becoming serous competition for well-established companies like Samsung and Apple. It seems like Chinese tech companies are producing some of the most innovative and advanced technology in the world right now. And as such companies are on the rise, there is another interesting company emerging- LeEco. So far it has been known as the Chinese version of Netflix, that has recently bought the American TV maker Vizio for 2 billion dollars. During its start, LeEco was Letv.com- a video steaming site designed to cash in on the online video boom, which earned it the abovementioned nickname of “China’s Netflix”. Earlier this year, the founder and vice-chairman of LeEco announced that the company is planning a significant cooperation with Netflix, with regards to content agreements.

Since its humble beginning LeEco seems to have been working hard in many different fields- from making its own smartphones to creating self-driving cars. It seems like the company is having big plans for the future- earlier this week in San Francisco, LeEco announced a new smartphone that according to some “made new product announcements by Google and Apple look childish”.  The Le Pro3 and Le S3 are both high-end specks phones that cost under 400 dollars. Not only that, but the new phones come with the ExploreVR headset- making its devices a direct competitor of Google’s Pixel. LeEco also makes claims to be the fastest growing phone vendor- it is expecting to see its shipments grow with 500 percent over 2015. A possible challenge for the company could be its plan to sell the new phones directly to customers in the US, however, the vast majority of customers still gets their devices from wireless carriers.

LeEco is also working on the LeSee Pro self-driving car concept which is featured in Transformers 5, however, you won’t be able to buy it any time soon.

According to LeEco, their goal is contrary to what it seems- it’s not to jump from a product to product, but to connect them and create an “ecosystem”, explaining where it name comes from- “Eco” from ecosystem and “Le”, meaning “happy” in Chinese.

Do you think that LeEco is one of the future leaders in building ecosystems, or that ecosystems are a concept people aren’t very interested in?

Sources:

https://www.cnet.com/news/leeco-the-apple-samsung-netflix-tesla-mashup-another-chinese-tech-giant-tries-its-luck-in-the-us/

http://www.forbes.com/sites/jaysomaney/2016/08/07/china-chatter-heating-up-on-netflix/#12c3c0c77d23

http://thehustle.co/leeco-chinese-netflix

http://www.theverge.com/2016/10/19/13333642/leeco-self-driving-electric-car-announces-lesee?mc_cid=4d910e384a&mc_eid=f68ef1a24c

http://www.forbes.com/sites/rahilbhagat/2016/10/03/leeco-the-chinese-giant-thats-in-everything-from-video-streaming-to-electric-cars/#1f201d5677de

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Snap Inc is preparing for an initial public offering (IPO) of 25 billion as early as March, which can make it the highest-profile share debut in years. Snapchat’s business has been growing- the company is expected to meet its 350 million revenue target for this year.

So far, half of the company’s revenue has been generated from its Discover and Stories section, changed to Story Playlist earlier this October. The section features a daily mix of text and video stories of big publishers, like CNN, National Geographic, Cosmopolitan, etc. Up until now, any company interested in advertising on Snapchat had to work directly with their ad sales team. That kept the user experience relatively ad-free, which is always good. However, this has also limited the company’s revenue, which is not very good for Snapchat.

This month, Snapchat officially launched its ads API- application programming interface, allowing third-party partners to plug into the app and deliver ads for brands and agencies. The technology will let Snapchat fill more ad inventory quicker than selling it via a sales team, as until now. This is also known as programmatic advertising, basically the automated buying and selling of ads. Companies like Facebook, Instagram and Twitter are already offering similar APIs.  In terms of targeting- Snapchat has explained that it will allow email matching- this is when Snapchats allows a brand to use its own customer list and find those people when they are using Snapchat. In addition, the company has also been interest in based targeting, as well as the ability to construct models that are used to find similar customers for a specific ad campaign. There is also a rumour that Snapchat is working on other kinds of sophisticated targeting, like sequential messaging. This is a form of retargeting, which sends users new ads, after they had initially been exposed to earlier adds.

The launching of new ways for companies to target Snapchat’s users is opening new opportunities for the company, in terms of growth and revenues. The API adds will allow Snapchat’s business to grow quicker, and reach its target revenue of 1 billion by 2017. In addition, Snapchat’s ads becoming API has also been considered a classic pre-IPO move- the revenue of the company is increasing due to the API, which will consequently make the company more valuable in the eyes of investors.

Possible cause for concern

When a company is considering an IPO, one of the main things investors look at is the competitive landscape. In the case of Snapchat, Instagram Stories can be considered the main direct competitor, as the new functionality offered by Instagram offers essentially the same product as Snapchat. Instagram Stories has around 100 million active daily users, which is more than half of Snapchat’s 150 million daily active users.

Should Snapchat be worried about Instagram Stories? Probably not in the time being, as its popularity among millennials has only been increasing in the last 4 years.

 

Sources:

http://www.wsj.com/articles/snapchat-parent-working-on-ipo-that-could-value-company-at-25-billion-or-more-sources-1475778314?mod=djemalertTECH

http://www.forbes.com/sites/kathleenchaykowski/2016/10/06/report-snap-inc-preparing-for-march-ipo/#165f2fdc509b

http://www.recode.net/2016/10/5/13180176/snapchat-advertising-api-revenue?mc_cid=66fe9c0a7d&mc_eid=f68ef1a24c

http://adage.com/article/digital/inside-snapchat-s-ad-delivery-system/306172/

https://www.businessinsider.nl/snapchat-launches-story-playlists-moves-discover-section-2016-10/?international=true&r=US

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This blog will summarize our Digital Transformation Project(DTP) about the opportunities of virtual reality(VR) and augmented reality(AR) within the furniture industry, and more specifically, for the company Lensvelt. Lensvelt sells high-quality furniture, primarily for use in offices and public spaces, but incidentally also sell to individual customers. In this DTP we hope to show that by capitalizing on the current interest in VR and AR, Lensvelt can strengthen its position in the fractured Dutch office furniture market, and increase its profitability.

First some explanation as to what VR and AR are. VR is computer software that generates objects and sensations while letting the user interact with those, in a ‘separate’ space. AR however maintains the user’s connection with the ‘real’ world, and just overlays virtual objects onto real-life objects. Many think this will be the next big thing in technology to disrupt the status-quo, and there is a cross-industry spanning interest in these. Gaming companies were the first to see its potential, and with projects like Oculus Rift by Facebook and SteamVR by Steam, it will have a huge impact on how gaming will be experienced. In the furniture sector, IKEA has been the only one so far realizing the potentials of VR and AR, by starting projects to generate their products in their client’s rooms in either VR or AR.

Lensvelt would be wise to do so as well, and in order implement this smoothly and successfully, we formulated several steps that need to be undertaken. Firstly, a definitive list of requirements for the desired system should be made, and a start should be made with integrating the VR/AR capabilities within the general marketing strategy. Also, a capable IT-company that is capable of fulfilling these wishes should be sought, within the next three months.

After these steps have been completed, a testing version of the VR/AR product should be made, and this version should be tested thoroughly with customers, in order to check whether functions should be added, and whether it functions as supposed. The integration of this product within Lensvelt’s marketing strategy should also be completed, preferably within 9 months. After the testing run, the VR/AR solution should work properly, but Lensvelt should remain in contact with the developer in order to be able to update or add new functions when needed.

We analysed the costs and benefits of such a project, and these warrant the implementation as soon as possible. Even in the worst case, with higher than expected costs and lower than expected sales, the NPV would still be over €150.000. In the case the implementation will progress along more realistic and positive lines, the NPV would be €1.078.760, more than a quarter of Lensvelts annual revenue. We therefore advise the CEO of Lensvelt to start the implementation of this project, as it proves to be positive from both a financial and strategic point of view.

Check out our video here: https://youtu.be/ZuAx5Aw3cy0

Group 65
Lukas Braunschweig 381788
Karim El Mouttaki 384419
Ruben Roel 376930
Gabriela Tomova 382847

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For years, finance has been a preferred major for many graduates, as the returns from working in the field tend to be very generous. This trend continued even after the financial crisis on 2008, however, the financial sector seems to still be having troubles recovering from the crisis. This week, the latest wave of job cuts at European banks was announced. Those European banks have struggled to gain profitability since the crisis, mainly due to the negative interest rates, volatile markets and tougher, though deserved, EU regulations. Banks like Deutsche Bank AG, Commerzbank and ING have announced thousands of job cuts across their offices in Germany, the Netherlands and Belgium . For one of the biggest Dutch banks- ING the employee cuts are estimated to be more than 5000 jobs- 3150 lost full-time jobs in Belgium and 2300 jobs in the Netherlands. The company is expecting to save up to 900 million euros due to the job cuts by 2021. Considering the fact that the Dutch government received a 10 billion euros capital injection from the Dutch state at the height of the financial crisis, the Dutch labour unions and the government do not seem to be happy about the news of the thousands of job cuts ahead.

However, these job cuts are not only taking place for the sake of reducing costs. The plan of ING is infamously called “Think Forward” and its goal is to digitalize the predominant part of the group’s operations. ING is planning of investing 800 million euros in its technology platform, to be rolled out in the next 5 years in Spain, Italy, France, Austria and the Czech Republic, where the bank is planning to grow mostly via online banking and very few physical stores. This example shows the transition that many industries are facing nowadays- from their traditional ways of operating, to the more and more necessary digitalization of all services. Digital innovation is becoming a must- an analysis from McKinsey shows that digital laggers in the banking industry face up to 35% of net profit erosion, while early adopters may realize a profit increase of up to 40%. In addition, banks are increasingly realizing that in order to succeed digitally, they should adopt the habits of digitally native companies- for example by opening up the banks’ application programming interfaces, pursuing agile development, or hosting hackathons to foster intensive digital collaboration. Banks need to use their digital capabilities to create more value not only for their customers but also for its employees and suppliers, and increase the bank’s connectivity. Moreover, banks need to embrace digitalization if they want to stay competitive in an age that faces the reshaping of banking- a time when FinTech start-ups are disrupting the current financial system and competing with incumbent corporations that rely less on software.

As seen above, the adoption of new technology and digitalization of services is necessary for banks to survive in the post-crisis world of low interest rates and economic stagnation. However, this digital change has to come at a price- the change in operations of banks requires massive job cuts. Nevertheless, we should not forget Schumpeter’s theory of creative destruction- new ways of production replace old and obsolete ones simply because the new ways increase the pace of economic development. In this case, many jobs are being lost but the digital age creates new opportunities and new jobs- ones that also require new skills.

Sources:

https://www.ft.com/content/a0bc5214-8957-11e6-8cb7-e7ada1d123b1

http://www.bloomberg.com/news/articles/2016-10-03/european-banks-cutting-20-000-jobs-as-ing-joins-commerzbank-abn

http://uk.businessinsider.com/ing-group-cuts-7000-jobs-in-major-digital-restructure-2016-10?international=true&r=UK&IR=T

http://economictimes.indiatimes.com/news/international/business/dutch-bank-ing-cutting-7000-jobs-in-digital-transformation/articleshow/54660311.cms

http://www.bbc.com/news/business-37538722

http://www.mckinsey.com/industries/financial-services/our-insights/strategic-choices-for-banks-in-the-digital-age

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Lately, platform-mediated networks have received a lot of attention with companies of the so-called “sharing economy” like Uber and AirBnB. However, platform-mediated networks are actually much older. Traditional examples include the credit card market which brings together cardholders with merchants and the video game industry, providing a platform on which players and game developers interact.

In this blog, we would like to elaborate more on two well-known platform businesses that jointly have transformed the gaming industry by using platform business models: Steam and XBox Live. Both distribute games digitally and therefore connect gamers with game developers. However, both platforms differ, among other key aspects, in their degree of openness and their business models.

Steam is a digital distributor of PC-games, which not only enables users to purchase digital copies of games online, but it also enables game developers to communicate and receive feedback from their users. In addition, one of the most special features of Steam is openness of the platform to gaming developers- while traditional gaming platforms tightly control the available content, Steam has implemented a democratic process called “Greenlight” that allows gamers to vote for games submitted by developers. Therefore, Steam is a two-sided and open platform, and next to the same-side network effects on the user side, there are also significant cross-side effects, as more users attract more developers. Steam’s only sponsor and provider is Valve, a game developing company.

While Steam distributes PC-games, XBox Live sells games for Microsoft’s line of XBox gaming consoles. However, XBox’s business model and features are very similar to Steam’s, including network effects. Furthermore, XBox Live also has only one sponsor and provider, namely Microsoft.

Comparison between Steam and XBox Live

Both companies have similar business models- both enable the interaction between game developers and gamers, while also offering gaming community features. Moreover, both companies generate revenue through a 30% commission on game sales, with XBox Live charging a monthly fee for their multiplayer functionality. However, there are also major differences between the two platforms- Steam’s community has around 125 million active users, while XBox Live has only 48 million, which suggests that gamers derive larger network effects from Steam. In addition, the two platforms differ in their openness- Steam is much more open, as it is free to access, has better backward availability, and is more open with regards to content. However, with its paid subscription XBox Live has a more dedicated community, which indicates that openness can be both a strength or weakness, depending on a firm’s strategy.

Predictions

A clear trend in recent years is the growth of the gaming industry, and especially video gaming. This suggest that both Steam and XBox Live face huge growth opportunities. However, there are also threads- one is the mobile gaming industry that keeps on growing rapidly. In addition, Valve is launching a console, on which gamers can play on Steam, that will compete directly with XBox and XBox Live.

Group 65

Lukas Braunschweig        381788

Karim El Mouttaki             384419

Ruben Roel                      376930

Gabriela Tomova              382847