What is innovation? The definition has changed a lot in
recent years. Thanks to technology and modern sharp minds. Innovation is now
seen as to be seeking something new. It may be new from existing product or
service or platform. It is often referred as being disruptive.
Alibaba is no doubt an innovative company in above terms. It
was defined as “FOR HELPING CONSUMERS SAVE, SPEND, AND BE ENTERTAINED” in the
list of most innovative companies in 2014 of fastcompany.com. I think this is
what Alibaba does. They are trying to rethink the customer at its core and
their experience and their pain points. This also reflects in Jack Ma’s mission
– “Clients first, employees second and
Shareholders third”.
There are always benefits with being the largest, the
richest, the first and now-a-days most disruptive. With extra equity at hand,
Alibaba is exploring many new areas such as mobile handsets with its own Yun
OS. Alibaba has got a great potential to be disruptive in this area. Let us
examine how they can do it and what impact will have.
To set the tone, let me list a few disruptions Alibaba has
already done:
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Alibaba.com (along with Taobao and Tmall) in
retail
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Alipay in payment
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Aliwangwang in instant messaging
Alibaba has been able to break the image of Chinese
innovation so far and they will continue to do so. Aliyun OS (Yun OS) is
different in its technology in the way that it uses its own virtual machine.
Although it uses some frameworks and tools of Android but these are mostly to
patch users with android apps.
It will definitely have a great impact on players and
industry as whole.
For Google:
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With Google getting a lot of traction from
Chinese android developers, this action of Alibaba can become a huge roadblock.
Yun OS will attract and poach a lot of google minds in China.
-
Google was being very restrictive to warn Acer
of alienation, if they use Yun OS for developing phones. This shows how much
Google is concerned about Alibaba. However, I believe this will not stop
Alibaba. They can definitely partner with other companies such as Meizu or if
not anything else, come up with their own high end mobile handsets (eventually
disrupting that industry as well)
-
Alibaba has all the huge platform to advertise
its offering through its own products, without incurring much cost, a big plus
for them.
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Xiaomi, one of the major Google’s android
partner has already started embedding Yun OS, a word of caution for Google.
For Amazon, Ebay and
other retail giants:
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Although both players are in different
countries, as Alibaba has defeated ebay in China, it can be a caution sign to
Amazon.
-
I see Amazon has an advantage of better GUI as
compared to Alibaba and if they continue (this is very crucial) their services
to customers in same way they are doing, I see no motivation for their users to
go to Alibaba.
-
Another important factor is the relations with
suppliers. This actually accounts for gaining market share.
Alibaba being such a tough challenger, will it sustain in international market?
International market presents an equal ground for Alibaba
and others. There are some observations (for future) and facts here:
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It will be interesting to see how Amazon (and likes)
or Alibaba manage to establish (by adapting to local community) in new
geographies.-
If we see the revenue numbers, Amazon earns 40%
of its revenue from outside North America while Alibaba earns approximately 85%
from China.
Recent News:
An interesting phenomenon happened last month, which can
also provide us some cues on where Alibaba is heading or wants to head.
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Alibaba decided to sell 11main.com, in order on
focus on China (Please refer to the last few links). It will continue to sell
foreign brand on its platform, Tmall in international market.
-
Alibaba is
planning to increase its stake in Paytm in Indian Market – another huge market.
They would like to leverage India’s growing ecommerce.
To conclude, I must say that future will depend on what you
do now. Be updated, be on top and be disruptive. If any of these existing
companies (or even a new startup) can follow this, it will succeed.
Sources: