Firm Scope and Angle of Entry

Firm scope here refers to the breadth of the firm’s business activities, such as the products it makes and sells, the services it provides, and to whom and where. In the specific context of mobile smartphone business, I make a distinction between firms that primarily make money through selling CE hard-ware, those that monetize operating systems and commercial applications, and those that offer services or digital content that are either fully paid by cus-tomer, freemium, or advertiser funded. The models of value creation discussed in Sections 2.2.1, 2.2.2, and 2.2.3 offer valuable theoretical concepts and tools for analyzing the process of value creation in different firms.

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Of the concepts mentioned above, the value chain of Porter (1985) remains the best known and most widely used, but it has been criticized for its focus on the unidirectional flow of materials into and out of a firm, largely ignoring other kinds of transactions such as knowledge or information exchange, making the value chain poorly suited for describing many knowledge-based industries such as consulting or services such as insurance, banking, or healthcare. The traditional value chain, when confined into a single firm operating in a single industry, also ignores the role of interfirm relationships as a source of com-petitive advantage and value creation, this being the central argument of the relational view of Dyer & Singh (1998). In line with this view, the analysis framework of this study shall consider the investments firms have made into relation-specific assets, any substantial knowledge exchange between firms, the existence of complementary resources or capabilities enabling the joint creation of new products, services, and technologies, as well as the governance mechanisms resulting in lower transaction costs between firms.

In order to analyze value creation that stems from outside the boundaries of the firm itself, it is relevant to consider the concept of value network, as defined by Christensen (1997) and Stabell & Fjeldstad (1998). Christensen (1997) aptly defined the value network as the “context within which a firm identifies and responds to customers’ needs, solves problems, procures input, reacts to competitors, and strives for profit”. Preceding this definition, Nor-mann & Ramirez (1993) argue that value should be created in any way that is appropriate, without being limited by the organizational boundaries of suppli-ers and customsuppli-ers as in the value chain model, and that the offering of a firm determines the boundary points where different participants come together to co-produce value, which is also compatible with later definitions of two-sided markets and platforms.

In line with Allee (2000), who argues that existing approaches to analyzing and reconfiguring value networks have largely ignored the role of knowledge and intangible value exchange, the analysis framework of this study shall observe, where appropriate, Allee’s framework of the three currencies of value, defining the bases of value exchange between organizations being 1) goods, services, and revenue, 2) knowledge, and 3) intangible benefits.

In reality, various monetization models may be often mixed and employed simultaneously by firms. Nevertheless, when studying the case companies, I am keen to consider the question of monetization and existing capabilities and assets, also from a historical perspective. For this purpose, I use the concept of angle of entry that I first introduced in Section 1.2.2 and discussed in more detail in Section 2.1.2, exploring the related theory of path dependence (David, 1985, 1994, 2001) which appears to support the foundations of this novel concept.

Angle of entry refers to the historical legacy of a firm mainly in terms of its previous business activities, capabilities, and assets which, as is argued, has had an impact on more recent choices the firm has made in its ecosystem and platform strategies. This argument is backed by the central assertion of path dependency theory, i.e., that the set of options in decision making for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be valid or have any relevance.

Mobile (smartphone) business &

ecosystems

Apple (Traditional telecommunications

equipment, pagers, handsets ...)

Software, content, and services orientation Hardware orientation

Emphasis on mobility and universal access

Emphasis on personal computing needs, productivity & entertainment

(Mobile operators)

(Web Browser)

Figure 3.1: Angles of entry into mobile smartphone business (revisited) In the context of this study, angle of entry means that when firms have ex-panded or refocused their business on the rapidly growing mobile sector, they have made strategic choices regarding which roles in the ecosystem or value network they desire to occupy, and also how they intend to capture value, and that these decisions have been influenced, at least partially, by the legacy of these firms, their existing businesses and positions in the markets that they occupied at the time of entry, as well as their capabilities and assets. Thus, firms have been and are in somewhat different positions as they have entered the mobile business arena and consequently stand to capture value from their ecosystems in somewhat different ways, each influenced by their unique angle of entry. For the sake of convenience for the reader, the illustration of the concept has been repeated here in Figure 3.1¹.

1The company/product names and company/product name logos shown in Figure 3.1 are trademarks or registered trademarks of their respective owners.