The Tech Giants Growing Behind China’s Great Firewall

The Tech Giants Growing Behind China’s Great Firewall

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Every day, your feeds are likely dominated by the latest news about Silicon Valley’s biggest tech giants.

Whether it’s Facebook’s newest algorithm changes, Amazon’s announcement to enter the healthcare market, a new acquisition by Alphabet, or the buzz about the latest iPhone – the big four tech giants in the U.S. are covered extensively by the media, and we’re all very familiar with what they do.

However, what is less commonly talked about is the alternate universe that exists on the other side of China’s Great Firewall. It’s there that four Chinese tech giants are taking advantage of a lack of foreign competition to post explosive growth numbers – some which compare favorably even to their American peers.

BIZARRO WORLD

Like the “Bizarro Jerry” episode of Seinfeld, the Chinese-based tech giants look recognizably familiar – but markedly different – to the ones we know so well.

ALIBABA

Likely the best known of China’s tech giants, Alibaba is the dominant online retailer in the country. The company had revenues of $25.1 billion in 2017 and is seeing that revenue grow at impressive speeds. In its most recent quarterly results (Q3, 2017), the company noted a 56% jump in revenue.

Amazon’s tough sell: Amazon does exist in the Chinese market, but it just has trouble competing with Jack Ma’s creation. Amazon has less than a 1% share of the e-commerce space in China, after a decade of trying to get a foothold. Further, Alibaba also runs AliCloud, which provides direct competition to Amazon’s AWS.

BAIDU

Baidu is the largest search engine in China and also a leading player in AI. It’s the most visited website in China, and ranks #4 globally. The company will announce 2017 annual results in the coming weeks, after reporting a 29% jump in revenue in Q3 2017.

Google’s searching for a way in: Google was blocked in China in 2010 after refusing to filter search requests. However, since then, the giant has been able to take very small steps in entering the Chinese market – even though its signature search engine is still blocked, Google now has at least three offices in the country.

TENCENT

Tencent has recently been in the news for its rapidly surging stock. The company, which owns the dominant social platform in China (WeChat), is now valued at over $500 billion. For those keeping tabs, Facebook is currently worth $550 billion.

It’s complicated: Facebook remains blocked by China, meaning that Zuckerberg and company can’t take advantage of a 1 billion plus market of people with growing buying power. Even if it found its way in, there are multiple social platforms in China and competition would be stiff.

XIAOMI

Dubbed as “China’s Apple”, Xiaomi is one of the world’s most valuable private companies. Things have been hot and cold for the ambitious smartphone manufacturer, but recently reports have surfaced that Xiaomi will IPO in the second half of 2018 for upwards of $50 billion.

The Four New Rules of Business

Every business is different. But for all their differences, leading digital companies have some things in common that separate them from the rest. Over the five plus years I’ve been researching digital business, my colleagues and I have developed a number of frameworks to highlight these distinctions. In 2017, Ted Schadler and I worked to distill our learning even further. As a result, we revealed four rules of business which we believe will determine the success or failure of every company by 2020.

To explain our research, Ted and I recorded a complimentary Forrester webinar: “Digital Rewrites The Rules Of Business”.  In the webinar, we use the new rules of business to discuss some of the key challenges companies face when trying to digitally transform their business. Ultimately, everything starts with fully understanding your customers’ desires – and using that understanding as your north star throughout the transformation process.

In the Q&A discussion following the webinar, two main themes emerged: the role of ecosystems in digital transformation, and the extent to which digital transformation occurs.

digital business ecosystem graphicDigital business ecosystems

Business transformation is accelerated by, and built upon digital ecosystems: the customer’s personal value ecosystem, digital experience ecosystems, and digital operations ecosystems.

The customer’s personal value ecosystem is unique to each customer. It’s represented by the unique collection of digital apps each customer assembles with their smart devices. The apps they use most frequently are also the most capable of delivering an outcome of value. For example, I use my Apple TV app to navigate AppleTV because I can never keep a separate remote handy, and navigation is easier using the app because it has a voice interface – so the app saves me time. An analysis of all the apps on my phone that I most often use would reveal a great deal about my personal value ecosystem. Customers like you and me expect better digital experiences because of all the digital apps we use in our day-to-day lives.

Digital experience ecosystems help firms deliver on customers’ desires. DXEs form around specific customer needs and desires. Forrester defines the customer experience (CX) ecosystem as the web of relations among all aspects of a company — including its customers, employees, partners, and operating environment — that determine the quality of the customer experience. The DXE represents both the digital products and services that customers use to achieve their outcomes and the digital operational elements of the CX ecosystem companies use to deliver value to customers. For example, Nike+ not only allows runners to track their distance and calorie count; Nike+ is also part of a wider ecosystem of shops, social media, and even an invite-only celebrity gym that offers influencers, and active Nike+ members, the full fit-lifestyle.

While each company may assume it plays a distinctive role for their customer, from the customer’s perspective value is created when the achieve the outcome they most desire. To get there, they often require products and services from more than one company. When I Autocross my car, I not only engage in the driving experience of my car, I also need to put fuel in the car (I use an app for that), I use the Waze navigation app (even though my car has navigation built into it), I use an app for recording vehicle dynamics and another for video. While these apps are in my personal value ecosystem, they also form a broader digital experience ecosystem, working together to deliver the outcome – a great autocross day. Digital experience ecosystems constantly evolve – retail stores now offer banking services,  airlines offer cruise vacations, agri-businesses offer advice on farm management. When evolving into a digital business, you must consider markets outside of your own immediate business – because the digital leader of those markets will not only shape your customer’s expectations, they may well be competing with you very soon.

Digital operations ecosystems increase operational agility in service of customers. Behind the scenes, businesses assemble myriad capabilities to support their business model — increasingly the digital components of such business capabilities integrate the business with other companies in the market to create an operational ecosystem, with each company dependent upon others for survival. While the ultimate focus of this ecosystem is creating customer value, it’s more immediate effect is to drive operational agility in service of customers. For example, SupplyOn sits at the center of a global supply chain ecosystem, connecting the operational capabilities of thousands of manufacturers to reduce the time it takes to bring complex products to market.

The extent of digital transformation

Many people make the mistake of thinking of digital transformation as a series of projects. But true transformation is a journey, not a destination. Responding to rising customer expectations demands a state of continuous evolution. Each evolution of the experience must deliver a valuable outcome better. Done well, revenue follows. Disruptive innovation happens when a company achieves a breakthrough in delivering a specific outcome – for example when Netflix began streaming movies on-demand.  But even without disruption, there is always room for improvement, and your customers will always show you the way forward.

To succeed, digital transformation must thrive even in the far reaches of your company. You must evolve together as an organization – not just one department.

This article was originally posted on https://go.forrester.com

Amazon and Microsoft’s Move to Blockchain: Centralized Companies Into Decentralized Ecosystem

amazon-microsoft-reuters

Traditional centralized powerhouses like Microsoft and Amazon are almost being forced to take their domination to the decentralised world.
Bitcoin, and the idea of digital cash, has taken hold of the banking sector as banks and financial institutions start to experiment internally with blockchains and cryptocurrencies in order to be at the forefront of these technologies.

This, coupled with the fact that government organisations and even global leadership bodies such as the G20 are looking to regulate cryptocurrencies, again give more legitimacy and longevity to the industry.

The latest wave of adoption is now coming from corporations who, traditionally have come to be successful thanks to their centralized domination over different aspects of the market. Microsoft, in the world of computing, are legendary in driving the world to be digital; then there is Amazon, the pioneers of e-commerce.

These companies are in some manner getting forced towards blockchain technology as it has become apparent that this is the future, and even though it goes against their centralized values, they simply cannot miss out.

Microsoft’s entry

Microsoft has always been one of the biggest companies to give Bitcoin its dues. Back in Dec. 2014, content on the Windows and Xbox stores could be bought in Bitcoin, and this was at a time where Bitcoin’s mainstream adoption and appeal was minimal.

This of course was merely a nod towards alternative payment methods, and Microsoft being flexible to its customers wants and needs. However since then, and since blockchain has grown, Microsoft has been pushing to be in front of the innovative queue.

Microsoft has obviously identified the power of blockchain and its far reaching potential for disruptive applications in the world of enterprise business. The company is now developing blockchain applications — which are not that flashy as some of the solutions put forward by startups, but equally practical.

Microsoft is also looking to build platforms on which businesses can grow their blockchain applications upon, such as the Confidential Consortium (Coco) Framework, an Ethereum-based protocol, which falls under Microsoft Azure, the company’s cloud computing arm.

They have also announced that they are looking into plans to integrate blockchain-based decentralized IDs (DIDs) into its Microsoft Authenticator app.

The latest from the computing giant is that Azure has released its blockchain app creation service, Azure Blockchain Workbench, on May 7. Workbench aims to allow businesses looking to create bespoke blockchain apps to speed up the development process by automating infrastructure setup.

Amazon’s own efforts

Both Microsoft and Amazon have similar origins with their founders — Bill Gates and Jeff Bezos — being driven men with revolutionary ideas. Therefore it is unsurprising to see these two companies pushing to be on the forefront of a new technological wave.

Gates may be spouting some pretty negative things about Bitcoin, and Bezos may be under siege to accept the digital currency on Amazon, but despite what the two founders think of the cryptocurrency space, it is becoming clear that the future is conquering the companies.

Amazon revolutionized the e-commerce space, and is looking to at least be near to top of the pecking order when blockchain technology truly takes a hold. Just like in banking, there is a rush to get blockchain figured out and usable before the rest of the competition gets to market.

Amazon are already in a battle with IBM and Oracle with its own “blockchain-as-a-service” offering. The blockchain framework for Ethereum and Hyperledger Fabric, which is allowing users to build and manage their own Blockchain-powered decentralized applications, is being developed in different forms by all three.

Essentially, users would be able to create their own blockchain applications via the Amazon Web Services (AWS) CloudFormation Templates tool to avoid time-consuming manual setups of their blockchain network.

Oracle and others also entering the space

Oracle, the world’s second-largest software company, also recently unveiled blockchain products, and will be releasing them over the next two months. Again, it was a similar cloud service built on the open-source Hyperledger Fabric project like Microsoft, and equally similar to IBM’s blockchain service, announced a year ago.

Major companies are also jumping on the blockchain bandwagon in different easy, shapes and forms. Huawei is loading its phones with a built-in Bitcoin wallet; Samsung revealed that it will use blockchain for managing its global supply chain; Spanish banking group BBVA became the first global bank to issue a loan on a blockchain, and use-cases continue to grow around the world.

Why the blockchain drive?

It was not long ago that people were calling Bitcoin a fad, a scam, and something that will not last for long. Those voices have been silenced somewhat as even banks, one of the biggest detractors of cryptocurrencies, are realising that they need to be on the forefront of this emerging technology.

The excitement is spreading, and it is creating an arms race even outside banks and the finance sector. Blockchain technology, while intrinsically attached to cryptocurrencies, also has many applications for other sectors. These applications are being explored, and evaluated.

Companies like Microsoft, Amazon, Samsung, Huawei and others, all realize that with all these possibilities, it would be blind to not dive in, and quick.

AWS vice president Jeff Barr explained in a post:

“Some of the people that I talk to see blockchains as the foundation of a new monetary system and a way to facilitate international payments. Others see blockchains as a distributed ledger and immutable data source that can be applied to logistics, supply chain, land registration, crowdfunding and other use cases,. Either way, it’s clear that there are a lot of intriguing possibilities and we are working to help our customers use this technology more effectively.”

Neil Patel, advisor to Kind Ads, a decentralized ad-network that consults companies such as Amazon and Microsoft, reiterates that these major corporations almost have no choice but to embrace blockchain technology as it is being regarded quite openly as the future of technology. Patel told Cointelegraph:

“Microsoft and Amazon have no choice but to focus on blockchain because it is the future. If they don’t, they know that it will hurt their growth in the cloud computing space. Just look at Facebook, they see the value in blockchain so much that they moved around their executive team to put the ex president of PayPal on blockchain projects.”

Patel’s example above makes mention of how David Marcus, the former president of PayPal and the Facebook executive who has been running the company’s Messenger app, is now assembling a team to explore blockchain technology for the social media platform.

Contradicting ideas

Bitcoin, blockchain and cryptocurrencies in general all continue to split opinions. However, the voices in the detracting camps are becoming quieter, especially if they are just single voices.

Jamie Dimon, the head of JP Morgan, called Bitcoin a fraud and spouted much vitriol about cryptocurrencies — and yet, JP Morgan is building its own blockchain, Quorum. The Head of Microsoft is in a similar situation as he says he would bet on Bitcoin collapsing while his company pushes to be a blockchain leader.

So Facebook, Google, Oracle, Microsoft, IBM and Amazon are all evaluating or offering blockchain related products. I don’t think blockchain tech is going to solve world hunger or cure cancer, but if you don’t think it’s here to stay?
— Crypto Bobby (@crypto_bobby) May 8, 2018
https://platform.twitter.com/widgets.js

Many of these older viewpoints about how things were done, the centralized control of a sector and the move to monopolize a service, still reside in the likes of Gates and Dimon, but on the company floor, it is a different story.

Blockchain technology is being touted as the future, and it is not just empty words. The amount of money, time and effort being put into blockchain-based research and development by banks and corporations prove there is something more to it than a passing fad.

Source: Cointelegraph

Has George Soros changed his mind?

World Economic Forum, WEF, in Davos

Back in January 2018, the multi-billionaire announced that cryptocurrencies were a ‘bubble’. He hasn’t been the only one to say this, of course. However, in the last week he seems to have quite radically changed his mind about this, as his ‘family office’, valued at $26 billion, has announced via Bloomberg and other media outlets, that it plans to trade digital assets.

Soros Fund Management, which is based in New York, and its macro investing division headed by Adam Fisher, got the green light internally to trade in digital currencies, although Bloomberg says he has yet to actually make a trade.

When Soros spoke at the World Economic Forum at the beginning of the year, he was scathing about crypto and claimed it could never function as a viable currency. He also said: “As long as you have dictatorships on the rise you will have a different ending, because the rulers in those countries will turn to Bitcoin to build a nest egg abroad.” This is similar to the many, many commentators on cryptocurrencies who have tried to tarnish the reputation of Bitcoin and other altcoins by connecting crypto with either the nefarious dark net, or with those who seek to beat the system in some way.

However, he didn’t predict what would happen to the cryptocurrency in the first quarter of 2018. The precipitous drop in the Bitcoin market cap sent some, like hedge fund manager Mike Novogratz, scurrying away from trading in cryptocurrency. For example, Novogratz decided against setting up a crypto fund, but has pursued links with a merchant bank that focuses on cryptocurrencies and blockchain technology ventures.

But other hedge fund managers in macro investing have been turning towards it as hedge fund profits slide. John Burbank is one example, He closed hi main hedge fund and “plans to raise $150 million for two funds investing in digital currencies,” says Bloomberg.

And Soros has been betting on cryptocurrencies, even if it is by a roundabout route. At the end of 2017, his firm acquired a large stake in Overstock.com, which is an online discount company. It accepts payment in cryptocurrencies and was the first major retailer to do so. Overstock then announced it would launch a digital currency exchange and an ICO, but this awakened the SEC last month, and it is investigating the proposals. Consequently, Overstock’s share price dropped.

Nevertheless, let’s remember that George Soros had, and still has, skin in the game, whilst warning the world that Bitcoin et al, are in a ‘bubble’.