#Threat of new entrants wearables driver

#Threat of new entrants wearables driver

Perhaps the strongest of the five forces impacting industry competition is the bargaining power of buyers since the biggest driver of digital business comes from the needs and expectations of consumers and customers themselves. Propensity to switch from the traditional model is high due to consumer wait times for taxis, lack of visibility into taxi location and so on. In the taxi services example, customers can easily switch from traditional models to the new model simply by installing an app on their smartphone. The threat of substitutes is high in many industries since switching costs are low and buyer propensity to substitute is high. In addition, the long-term revenue stream from the digital services may be worth far more than the one time sale of the physical product. Taxi services, such as Uber and EasyTaxi for example, provide a hybrid model via a digital app for consumers and taxi drivers, coupled with the physical taxis.Дigital services wrapped around a physical product are another example and can range from one extreme such as the industrial Internet to another such as home automation technologies or personal fitness products. In terms of digital business, this can come from a purely digital substitute or a hybrid digital/physical substitute. The threat of substitutes has to do with the threat of substitute products or services. A digitally based business model requires far less capital and can bring large economies of scale for example. Why can new entrants move in so easily? Digital business changes the rules by lowering the traditional barriers to entry. As an example, whereas 89% of the Fortune 500 went out of business between 19, in recent years, according to R вЂњRayвЂќ WangВ of Constellation Research, 52% have been merged, acquired, gone bankrupt or fallen off the list solely since 2000.

We often think of industry competition as a perpetual battle between the same set of incumbents, but in reality, things are far more dynamic and transitory. In effect, tomorrowвЂ™s leader may not be someone you know. TheyвЂ™re leveraging the familiar social, mobile, analytics and cloud technologies, but are often adding in personas and context, intelligent automation, the Internet of Things, and cybersecurity to further enhance the value proposition of their platform. This is often tech giants and startups that have envisioned and built a new business model from the ground up, powered by a new platform ecosystem for digital business. Today, itвЂ™s not just traditional industry competitors you need to worry about, but new entrants from outside your industry, equipped with new digitally based business models and value propositions. ThereвЂ™s no doubt that digital business is changing the nature of competition.