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The Rise of Software Dominance in Global Business - Insights from Marc Andreessen

Discover why software (SW) is reshaping industries, from tech giants to traditional players like Amazon, Netflix, and Zynga. With over 2 billion internet users and low startup costs, SW is taking over businesses worldwide. Explore examples like the decline of Borders, rise of Amazon, and disruption in music, video, gaming, and more. SW is transforming businesses, from marketing to telecom, autos, logistics, and defense. Learn why healthcare and education are next in line for SW revolution. Every industry faces the SW challenge, as new players compete against established giants. Master the key to success: building strong cultures, delighting customers, and staying ahead in the SW revolution.

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The Rise of Software Dominance in Global Business - Insights from Marc Andreessen

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  1. Why SW is eating the world Marc Andreessen, 2011 VC that invested in Facebook, Groupon, Zinga, Twitter, Skype, Foursquare, LinkedIn

  2. His View • Internet, SW companies are building real, high growth, high margin, highly defensible businesses • We are in the middle of a dramatic and broad technological and economic shift in which SW companies are poised to take over large swathes of the economy

  3. Trends in biz practices • Major businesses and industries are being run on SW and delivered as online services • Many of winners are Silicon Valley-style entrepreneurial technology companies that invade or overturn legacy industry structures

  4. Why is this happening now? • Computer and Internet technologies have advanced across some threshold • Over 2B people use the broadband Internet • On back-end, SW tools and Internet-based services make it easy to launch a new global SW-powered startups with low start-up cost

  5. Example 1: Book • Fall of Borders • Decline of Barnes and Noble • Rise of Amazon • The world’s largest bookseller • 2001, Borders handed over its online biz to Amazon • Amazon virtually sells everything online • Even books themselves are SW

  6. Example 2: Video • Fall of Blockbuster • Rise of Netflix, Hulu • And more: Amazon Video and iTunes • Other media companies are increasingly more online-service oriented

  7. Example 3: Music • iTunes, Spotify, Pandora • 2% in 2004 to 29% in 2010 • Traditional record companies play a diminishing role as a content provider • They provide content to the above companies

  8. Example 4: Videogame • Fastest growing company is Zynga • Rovio, maker of Angry Birds • Traditional game companies like EA and Nintendo have been stagnating

  9. Example 5: Movie production • Pixar, one of the best movie production companies, is a SW company. • Disney has to buy Pixar

  10. Example 6: photo • Photos in cameras and phones are uploaded to the Internet for archiving and sharing • Shutterfly, Snapfish, Flickr,… • Kodak had been happy with film cameras, and now…

  11. Example 7: marketing • Google • Groupon, Living Social, Foursquare • They use SW to eat the retail marketing companies

  12. Example 8: telecom • Skype: the fastest growing company • CenturyLink (3rd telecom company) has declined fast • AT&T and Verizon have survived by transforming into SW companies, partnering with Apple and smartphone makers

  13. Example 9: recruiting • LinkedIn is the fastest growing company • Employees edit their resumes, which are directly searched by recruiters

  14. Example 10: autos • SW is eating much of the value chain in car industries • SW runs engine, controls safety functions, entertains passengers, guides drivers, … • Hybrid, electric cars will accelerate the shift • Driverless cars?

  15. Example 11: logistics • Wal-mart uses SW to power its logistics and distribution capabilities • FedEx is thought of having the best SW network to which trucks, planes and hubs are attached • Success or failure of airplane companies hinges on SW • Ticket pricing, route optimization,…

  16. Example 12: natural resources • Oil and gas companies use supercomputing for visualization and analysis in exploration efforts • Agriculture is powered by SW; satellite analysis of soils for seed selection

  17. Example 13: finance • Every financial transaction is done in SW • Financial SW companies allows anyone to accept credit card payments with a mobile phone • PayPal allows payments and transfers online

  18. Example 14: defense • National defense is increasingly SW-based • A modern combat soldier is embedded with a web of SW for communications, logistics, and weapons • SW-powered drones launch attacks • Data mining to detect terrorist attacks

  19. What next? • Healthcare & Education • They have been resistant to entrepreneurial change • But fundamental SW-based transformation is coming

  20. Also,… • Companies in every industry need to assume that a SW revolution is coming • Even SW-based companies as well • Oracle and MS are threatened by new SW offerings like Salesforce.com and Android • The battle between incumbent companies and SW-powered insurgents will be epic

  21. Challenges (1/3) • Every new company is being built in the face of massive economic headwinds • A successful company will be strong and resilient and will grow even faster when economy becomes stable

  22. Challenges (2/3) • Many people lack the education and skills to join new SW-powered companies • Every company is starved for people with talent • Qualified SW engineers, managers, marketers, salespeople will be invaluable • While national unemployment will soar • The more SW penetrates the industry, the less employees will be required

  23. Challenges (3/3) • The new companies need to prove their worth • Build strong cultures, delight customers, establish competitive advantages • Justify their rising evaluations

  24. Conclusions • Building a SW-powered company is easy • Making it successful is difficult • Every industry will be transformed by SW • That is the big opportunity

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