Online Ecosystems

Within the last decade the software industry has undergone major changes. From our perspective, perhaps the most important change is that in the past, companies like ours were forced to develop, market, and distribute software products and services by relying primarily on internal resources. Nowadays, after the birth of ”online ecosystems”, we can utilize existing software frameworks, development tools, distribution channels, and markets in our business.

Within the last decade the software industry has undergone major changes. From our perspective, perhaps the most important change is that in the past, companies like ours were forced to develop, market, and distribute software products and services by relying primarily on internal resources. Nowadays, after the birth of ”online ecosystems”, we can utilize existing software frameworks, development tools, distribution channels, and markets in our business.

So what is an online ecosystem? Well, to give some kind of definition for online ecosystem we could say that it is a combination of business ecosystem and software ecosystem consisting of loosely connected entities, such as producers, customers, marketers, and financiers that interact with each other in complex ways. The environment in which these entities operate is built around the unified platform or market created by the ecosystem hub, such as Apple. This environment provides entities with the means to create, distribute, and consume software products and services. It’s fairly easy to name some more examples of these ecosystems such as, Google with Android and its various markets, Nokia and its Ovi store and so on. These ecosystems exist also in traditional web and server side business. If you’re not familiar check for instance Salesforce and force.com and Google with its Apps Marketplace.

How does the existence of these ecosystems affect software business? Well drastically, but to highlight some issues:

The ease of development and low barriers to entry

In traditional software development vendors select and bind frameworks together, choose deployment and delivery models, implement them and of course do some coding for the actual solution as well ? With the aid of ecosystems, this process may be far simpler. Development frameworks and tools often come with the platform, distribution and marketing channels are implemented by the ecosystem hub as well as integrated payment mechanisms and billing solutions. This means that vendors and developers are much closer to the actual task they should be doing – creating value to customer and end user.

Of course the ease of development has led to lower barriers to entry markets since massive upfront investments are not needed anymore to implement certain service or application. This particular issue has been seen for instance in Apple’s ecosystem with its numerous applications created by individuals. Now anyone capable of reading the documentation is able to deliver solutions for mobile users, which in turn affects the competition, but that’s another issue and the topic of future post.

Quality vs. Visibility

An old wisdom tells that people can’t buy what they can’t see. This is especially true for online ecosystems as the number of different applications is vast.  Unfortunately, most ecosystems are filled with low quality applications that were created just because they were easy to create, not because they serve a certain purpose or create value to users. As the marketing becomes constantly harder, people tend to forget the importance of good quality. Fortunately, we here at Qvik believe that there’s yet room for the premium quality apps ? However, we do understand the importance of marketing to make them succeed.

Of course the issues mentioned above present just the top of the iceberg and perhaps I’ll make a deeper dive into online ecosystems later on.