Defining the Global Value Chain Ecosystem for the Graphical PC Era
 

The graphical personal computing era, spanning the mid-eighties, nineties, and early 2000s, was defined by a strategic set of PC hardware, PC semiconductor, and PC software standards established by IBM, Intel, and Microsoft. Specifically, this revolutionary era in personal computing was defined by a single device standard, the IBM-compatible personal computer, a single microprocessor standard, the Intel X86 architecture, and single software platform standard, the Microsoft Windows operating system.

 

During the heyday of this era, business and consumer customers would typically buy a new PC made by one of several Microsoft OEM (original equipment manufacturer) partners, such as IBM, Compaq, Dell, Hewlett Packard, Toshiba, Sony, or Lenovo, and powered by an Intel 286, 386, 486, Pentium, or other X86 central processor unit (CPU). The new machine would typically be equipped with a hard disk drive from Seagate, Maxtor, or IBM and random access memory from Micron, Hitachi, or NEC. Customers would purchase these new PCs directly from the OEM or via an authorized retail channel partner, including numerous computer electronics stores, such as CompUSA, OfficeMax, Office Depot, Fry's Electronics, Staples, or Best Buy.

 

With their new PCs up and running, consumers and business IT professionals would typically manually install additional software applications from independent software vendors (ISVs), such as Lotus, Borland, Word Perfect, Corel, Adobe, Real Networks, America Online, Netscape, Electronic Arts, Norton, and Intuit, which were commonly available for purchase from the aforementioned direct and retail channels.

 

From the discussion above, it is clear that the PC era was, and still is, defined by a horizontally integrated global PC value chain ecosystem, spanning the global PC semiconductor value chain, the global PC hardware value chain, the global PC platform software value chain, the global PC application software value chain, and the global PC retail value chain, as depicted in the diagram below entitled the Value Chain System for the Graphical PC Era. For over two decades, this horizontally integrated global PC ecosystem gave rise to tremendous economies of scale and massive product profitability for a small subset of companies within the ecosystem.

Specifically, as illustrated in the diagram above, Intel dominated the PC semiconductor value chain with its x86 family of microprocessors and Microsoft dominated both the PC platform software and PC application software value chains with its Windows operating system and Office application suite, respectively. While Dell dominated the PC hardware value chain and the retail value chain during the 1990s with its direct sales model for both businesses and consumers, the hardware value chain became highly fragmented and intensely competitive once other players adopted Dell's direct model. The PC retail value chain had no dominant player due to pressure from the direct model during the 1990s and pressure from the rise of Internet retailers, such as Amazon in the early 2000s.

Exactly what does this brief jaunt into the history of the PC era mean for the multi-screen post-PC world that we all live in today? We must first ask how is the global post-PC value chain ecosystem defined today? Second, what are the post-PC value chain groups? And third, who is dominating each value chain group? We begin by clearly defining the concept of a multidimensional global ecosystem for the post-PC era.

Defining the Global Value Chain Ecosystem for the Post-PC Era

The macro definition of the global-scale post-PC ecosystem comprises three core components: a) global post-PC ecosystem target markets, b) global post-PC ecosystem device producers, and c) global post-PC ecosystem service producers. Post-PC ecosystem target markets (shown in the center of the framework below) include education markets, consumer markets, government markets, and business markets; post-PC ecosystem device producers (shown as the leftmost chevron in the framework below) include semiconductor producers, system software producers, hardware device producers, and retail distribution producers; post-PC ecosystem service producers (shown as the rightmost chevron in the framework below) include broadband access producers, media content producers, application software producers, and cloud service producers. Post-PC device producers and service producers are structured, organized, and aggregated into post-PC device and post-PC service value chains respectively.

The framework above, called the Multidimensional Grand Macro Value Chain Ecosystem for the Post-PC Era, visually summarizes our formal definition of the global post-PC ecosystem, firmly establishes the macro-level structure of the global post-PC ecosystem, and provides us with a solid starting point to explore and define the substructure of its constituent components, namely the post-PC device value chain (pink chevron in the framework above) and the post-PC service value chain (blue chevron in the framework above).

Defining the Post-PC Device Value Chain

The global value chain system that supplies post-PC devices to post-PC target markets around the world is defined by and referred to as the device value chain system for the post-PC era, and it comprises the following value chain groups:

 

  1. Global post-PC Semiconductor Value Chain
  2. Global post-PC System Software Value Chain
  3. Global post-PC Hardware Device Value Chain
  4. Global post-PC Retail Distributor Value Chain

 

These four core device value chain groups are each lead by a handful of leading, and in some cases dominant, business units or firms as shown in the diagram below.

The diagram above, entitled the Device Value Chain System for the Post-PC Era, clearly depicts the leading firms in each of the value chain groups of the post-PC device value chain, which itself is a core component of the grand macro post-PC value chain ecosystem presented and defined previously.
 
Post-PC Retail Distributor Value Chain Group

Companies and strategic business units in the global post-PC retail distributor value chain group, including Best Buy, Amazon, and Apple, as well as Staples, Target, and Walmart, supply post-PC devices to consumers, businesses, governments, and schools in post-PC target markets around the globe. Leading firms within the retail value chain group have operating profit profiles with high margins in the case of Apple to low margins in the case of Best Buy, as shown by the green and red chevrons, respectively, in the diagram above.

Post-PC Hardware Device Value Chain Group


Companies and strategic businesses units in the global post-PC hardware device value chain group, including Samsung and Apple, as well as Acer, Asus, BlackBerry, Dell, HP, Huawei, Google, HTC, Lenovo, LG, Microsoft, Motorola, Nokia, Sony, Toshiba, and ZTE, supply post-PC hardware devices (such as Apple iPods, Apple iPhones, Apple iPad mini, Apple iPad, Apple TV, Samsung Galaxy smartphones, Samsung Galaxy tablets, Samsung smart televisions, as well as prospective future wearable products, including Internet watches and Internet glasses) directly to post-PC target markets and to post-PC retail distribution partners, who in turn supply post-PC target markets as described previously.

Dominant firms within the hardware value chain group have operating profit profiles with notably high margins as depicted by the two green chevrons for Apple and Samsung in the diagram above, while most of the remaining firms and business units within this group suffer from chronically low margins.

Post-PC System Software Value Chain Group


Companies and strategic business units in the global post-PC system software value chain group, including Google and Apple, as well as Microsoft and BlackBerry, supply post-PC operating system software (such a Google Android, Apple iOS, Microsoft Windows Phone, and Blackberry OS) to post-PC hardware device partners, who in turn load the software onto their post-PC music players, post-PC smartphones, post-PC tablets, post-PC smart high-definition televisions, and post-PC smart ultra HD televisions.


Dominant firms within the system software value chain group have operating profit profiles with high margins, as depicted by the two green chevrons for Apple and Google in the diagram above.

Post-PC Semiconductor Value Chain Group


Companies and strategic businesses units in the global post-PC semiconductor value chain group, including Qualcomm, Taiwan Semiconductor Manufacturing, and ARM Holdings, as well as Altera, Broadcom, Corning, Intel, Micron, Nvidia, NXP Semiconductors, Sandisk, Texas Instruments, and Xilinx, supply post-PC semiconductors (such as wireless modems, central processing units, graphical processing units, and application processors, as well as baseband processors, broadband processors, optical communication processors, near field communication processors, random access memory, and solid-state flash memory) to post-PC hardware device partners, who either directly manufacture, in the case of Samsung, or contract manufacture, in the case of Apple and their contract manufacturing partner Foxconn, post-PC pods, pads, tablets, and televisions.

Dominant firms within the semiconductor value chain group have operating profit profiles with high margins, as depicted by the three green chevrons for Qualcomm, ARM Holdings, and Taiwan Semiconductor in the diagram above.

Defining the Post-PC Service Value Chain

The global value chain system that supplies post-PC services to post-PC target markets around the world is defined by and referred to as the service value chain system for the post-PC era, and it comprises the following value chain groups:

 

  1. Global post-PC Cloud Services Value Chain
  2. Global post-PC Application Software Value Chain
  3. Global post-PC Media Content Value Chain
  4. Global post-PC Broadband Access Value Chain

 

These four core service value chain groups are each led by a handful of leading and in some cases dominant business units or firms, as shown in the diagram below.

The diagram above entitled the Service Value Chain System for the Post-PC Era clearly depicts the leading firms in each of the value chain groups of the post-PC service value chain, which itself is a core component of the grand macro post-PC value chain ecosystem presented and defined previously.

Post-PC Broadband Value Chain Group

Companies and strategic business units in the global post-PC broadband value chain group, including China Mobile,
Comcast, Verizon, and Vodafone, as well as America Movil, AT&T, Bharti Airtel, BT Group, Deutsche Telekom, Dish Network, Nippon Telegraph and Telephone, NTT Docomo, Orange, SoftBank, Telefonica, and Telstra, supply post-PC broadband services to consumers, businesses, governments, and schools using post-PC devices around the globe.

Post-PC broadband services include wireless mobile and high-speed Internet services; wireless, cable, and fiber-optic networking services; digital, premium, high-definition, and on-demand television, movie, sports services; and digital video and HD video recording services. Post-PC broadband devices include wearable bands, watches, and glasses; mobile media players, smartphones, and tablets; and non-mobile smart televisions and high-definition smart TVs.

Leading firms within the broadband value chain group have operating profit profiles ranging from high margins in the case of China Mobile to moderate margins in the case of Verizon, Comcast, and Vodafone, as shown by the green and yellow chevrons, respectively, in the diagram above.

Post-PC Media Content Value Chain Group

Companies and strategic businesses units in the global post-PC media content value chain group, including Disney,
Netflix, Twenty-First Century Fox, and Yahoo, as well as Amazon.com, CBS, Comcast, News Corp, Sony, Time Warner, Viacom, and Vivendi, supply post-PC media content and media content services directly to consumers, businesses, governments, and schools using post-PC devices around the globe. They also supply post-PC media content to post-PC media content distribution partners in the downstream broadband value chain group, who in turn supply post-PC media content services to post-PC target markets.

Post-PC media content includes music, music videos, podcasts, short films, and video clips; digital books, newspapers, and magazines; television shows and movies; news, sports, and other live events. Post-PC media services include streaming radio and video services; digital publication and download services; streaming television and movie services; and streaming live event services.

Leading firms within the media content value chain group have operating profit profiles ranging from moderate margins in the case of Disney and Yahoo to low margins in the case of Fox and Netflix, as shown by the yellow and red chevrons, respectively, in the diagram above.

Post-PC Software Apps Value Chain Group

Companies and strategic businesses units in the global post-PC application software (or apps) value chain group, including Activision, Adobe, Apple, and Microsoft, as well as Amazon, Box, Cerner, Disney, Dropbox, eBay, Electronic Arts, Facebook, Google, LinkedIn, Netflix, NetSuite, Oracle, Pandora, PayPal, Priceline, Salesforce, SAP, Samsung, Sina, Twitter, Workday, Yahoo, Yelp, and Zillow, supply post-PC applications or apps directly to consumers, businesses, governments, and schools using post-PC devices around the globe. They also supply post-PC apps to post-PC application distribution partners in the downstream broadband value chain group, who in turn supply these post-PC apps to their post-PC broadband customers via preinstalled application software bundles on broadband carrier-branded post-PC devices, including post-PC smartphones, tablets, and streaming media players.

Post-PC application software includes apps such as gaming, creative, drawing, photo, lifestyle, music, video, movie, productivity, writing, presentation, and financial apps, as well as reading, shopping, storage, healthcare, synchronization, auction, social networking, search, navigation, communication, video-sharing, media discovery, streaming video, enterprise manufacturing, enterprise financial, enterprise collaboration, radio, electronic payment, travel, lodging, enterprise sales, enterprise marketing, enterprise service, analytics, enterprise logistics, springboard, microblogging, enterprise human capital, news, sports, weather, stock, local, review, and real estate apps.

Leading firms within the application software value chain group have operating profit profiles ranging from high margins in the case of Apple, Microsoft, and Activision to moderate margins in the case of Adobe, as shown by the green and yellow chevrons, respectively, in the diagram above.

Post-PC Cloud Services Value Chain Group

Companies and strategic businesses units in the global post-PC cloud services value chain group, including Amazon.com, Facebook, Google, and Salesforce.com, as well as Activision, Adobe, Apple, Baidu, Best Buy, BlackBerry, Box, Cerner, Dropbox, eBay, Electronic Arts, IBM, Infosys, LinkedIn, Microsoft, Netflix, NetSuite, Oracle, Pandora, PayPal, Priceline, Rackspace, Red Hat, SAP, Sina, Splunk, Sony, Teradata, Twitter, VMware, Workday, Yahoo, Yelp, and Zillow, supply post-PC cloud services directly to consumers, businesses, governments, and schools using post-PC devices around the globe.

Post-PC cloud services include commerce, social networking, search and advertising, navigation, video hosting, and enterprise business services, as well as gaming, creative, entertainment, knowledge, communication, synchronization, healthcare, storage, auction, business intelligence, decision optimization, outsourcing, recruiting, enterprise infrastructure, enterprise platform, streaming television, streaming movie, enterprise suite, performance analytics, streaming music, travel, reservation, hosting, open source, in-memory analytics, enterprise process management, big data, media content, marketing analytics, global dispatch, virtualization, systems management, workforce management, daily habits, local commerce, and real estate services.

Leading firms within the cloud services value chain group have operating profit profiles ranging from high margins in the case of Google and Facebook to low margins in the case of Amazon and Salesforce.com, as shown by the green and red chevrons, respectively, in the diagram above.


Apple vs. Google in the Battle to Control the Post-PC Value Chain

Based on our discussion, it is clear that unlike the global PC value chain ecosystem, the global post-PC value chain ecosystem is not horizontally integrated with clear lines of separation between semiconductor manufacturers, hardware manufacturers, software developers, and retail distributors. Instead, in the post-PC era the lines of separation are gone under the first-mover's definition of the post-PC value chain and fuzzy under the fast-follower's definition. The first mover in the post-PC era is Apple (see the section entitled Apple iPod 2001: The Introduction of the Post-PC Archetype), and the fast follower is Google, with its strategic partners, such as Samsung and HTC. Under Apple's definition, the post-PC value chain is vertically integrated, and under Google's definition it is semi-horizontally integrated.

In Apple's vertically integrated post-PC value chain model, Apple itself seeks to accelerate profitable product innovation by controlling or at least strategically orchestrating each value chain element within the total end-to-end post-PC value chain. Whereas, in Google's semi-horizontally integrated model, Google seeks to accelerate profitable advertising innovation by controlling or strategically orchestrating specific value chain elements and leaving other less-strategic value chain elements to post-PC value chain partners.

Specifically, Apple currently controls its post-PC hardware device, system software, and retail distributor value chains, strategically orchestrates its post-PC semiconductor, application software, cloud service, and media content value chains, and leverages strategic partnerships for its broadband access value chain, as well as its retail distributor value chains that are partner owned and operated. In contrast, Google currently controls its post-PC system software and cloud service value chains, orchestrates its post-PC application software and media content value chains, and leverages strategic partnerships for its post-PC semiconductor, hardware device, retail distributor, and broadband access value chains.

Post-PC Era Evolution vs. PC Era Evolution

Before we present and discuss the multidimensional strategic product roadmap for the Apple iPad, it is important to first understand how critical this particular class of products is in terms of defining the future path of global computing technology. In order to properly communicate the central importance of tablet devices and touch-based control paradigms to the future direction and evolution of modern computing, we have constructed the unique and insightful visual diagram below.

We refer to the diagram above as The Evolutionary Phases of Competing Computing Eras: Post-PC Era versus PC Era. It is a multidimensional diagram organized into two swimlanes, one swimlane depicting the evolution of the post-personal computing (post-PC) era, as shown along the top row of the diagram, and a second swimlane depicting the evolution of the personal computing (PC) era, as shown along the lower row of the diagram.

The post-PC era swimlane contains a total of five distinct phases, with each phase representing a unique sub-era of post-PC development. Similarly, the PC era swimlane also contains five distinct phases, with each phase representing a unique sub-era of PC development. The two parallel swimlanes are staggered in time, however, with the PC swimlane beginning two phases, or two sub-eras, prior to the post-PC swimlane.

The five phases, or sub-eras, with the post-PC era are the following:

 

  1. Post-PC Thumb-based Input Control Phase
  2. Post-PC Finger-based Input Control Phase
  3. Post-PC Voice-based Input Control Phase
  4. Post-PC Body-based, or Sensor-based, Input Control Phase
  5. Post-PC Eye-based, or Gaze-based, Input Control Phase

 

As seen in the diagram, examples of contemporaneous devices or services within the thumb, finger, voice, body, and eye phases of the post-PC era include the Apple iPod portable media player (and Apple iPhone mobile smartphone), Apple iPad tablet, Apple Siri intelligent voice agent, Samsung Galaxy Gear wearable Internet watch, and Google Glass wearable Internet glasses, respectively. The diagram also visually demonstrates that the post-PC era is clearly on track for a bright future in wearable computing devices and services.

The five phases, or sub-eras, with the PC era are the following:

 

  1. PC Keyboard-based Input Control Phase
  2. PC Mouse-based Input Control Phase
  3. PC Trackpad-based Input Control Phase
  4. PC Finger-based Input Control Phase
  5. PC Voice-based Input Control Phase

 

As seen in the diagram, examples of contemporaneous devices or services within the keyboard, mouse, trackpad, finger, and voice phases of the PC era include the original IBM personal computer, IBM-compatible desktop computers (from IBM, Compaq, Dell, or HP for example), laptop computers (from IBM, Dell, HP, Toshiba, Sony, Lenovo, or Acer for example), Microsoft Surface tablet, and Microsoft Kinect intelligent voice agent, respectively.

Will the Post-PC Era and its Post-PC Value Chain Dominate the Future of Computing?

The post-PC era vs. PC era competitive evolution diagram presented and discussed above raises three fundamental questions related to the future of global computing technology:

 

  1. How will the PC era ultimately adapt and evolve?
  2. Will the Post-PC era ultimately engulf the PC era?
  3. Will the PC era continue to exist in the long run?

 

While definitive answers to these three fundamental questions are unknown at the time of this writing, it is our strong belief that the future of the PC era will firmly depend on the success or failure of its tablet phase, the current predominant phase of the PC era. Microsoft clearly knows this, as do Apple, Google, Samsung, and Amazon. That is precisely why Microsoft adapted quickly and moved forward aggressively with its own tablet products (Microsoft Surface and Surface Pro). It did not risk waiting for its longstanding strategic partners within the PC value chain to develop and deliver a PC tablet product capable of competing with post-PC tablet products from Apple (Apple iPad), Samsung (Samsung Galaxy), Google (Google Nexus), and Amazon (Amazon Kindle).

In short, if Microsoft is successful in designing, producing, and marketing its own proprietary PC Surface tablet product line and its PC value chain partners are also successful in doing the same with their respective PC tablet products and product lines, then and only then will the PC era have an opportunity to continue its evolution into the future. If not, we firmly believe that the post-PC era and its associated post-PC value chain system will disruptively engulf the PC era and its corresponding PC value chain system, thereby placing the future existence of the PC era in jeopardy and the future viability of the entire PC value chain at risk.

 

Multi-Dimensional Strategic Product Roadmap for the Apple iPad
 

The multi-dimensional strategic product roadmap for the Apple iPad from 2013 to 2015 is presented as an integral part of the prospective Apple iFamily Suite of cloud connected smart devices and can be found on the Apple page of the Post-PC Plus website.