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Copenhagen
Business
School

2017
Program:
MSc
in
Business
Administration
and
E-°©?Business
Course:
Strategic
and
Tactical
Tools

Home
assignment
Hand
in
date:
01/12/2017
Number
of
pages:
7
Number
of
characters:
15.086
(including
spaces)
By:
Simone
Elizabeth
Arend
Jensen
(170594-°©?2508),
Christoph
Fuchsjäger
(250890-°©?4447),
Emma
Vendelboe
Krøis
(261193-°©?2416)
&
Paul
Philipp
Gu?tt
(080795-°©?3117)
Question
1.
What
is
Apple’s
approach
in
increasing
lock-°©?in?
Since
Apple
launched
of
its
first
products,
the
company
has
had
a
targeted
approach
to
increase
lock-°©?in
methods,
which
has
been
further
elaborated
on
as
time
has
passed.
Initially,
Apple’s
products
were
aimed
to
attract
a
broad
audience,
as
they
focused
on
the
desires
of
the
consumer
as
well
as
design.
The
launch
of
the
iPod
similarly
targeted
the
many,
as
it
could
be
used
by
both
Mac
and
PC
users.
In
effect,
this
lured
customers
into
Apple’s
ecosystem.
The
company’s
first
attempt
to
increase
lock-°©?in
was
seen
when
it
launched
iTunes,
which
enabled
its
users
to
purchase
music
online
for
their
devices.
This
was
seen
as
Apple’s
first
integration
between
products
and
thus
also
the
early
development
of
its
integrated
ecosystem.
The
system
grew
with
the
launch
of
the
first
iPhone,
and
later
with
the
release
of
Apple’s
App
Store.
Through
this
platform
consumers
who
wished
to
extend
the
potentials
of
their
iPhone
could
do
so
by
purchasing
and
downloading
apps.
The
App
Store
became
an
additional
revenue
source
for
Apple,
as
it
retained
a
30%
commission
on
the
apps
sold
through
the
service
(Dunn,
et.
al.
2013).
Initially,
the
iPhone
was
sold
for
$199.
This
was
curious,
as
despite
higher
demands
for
Apple’s
products,
the
price
was
considerably
lower
compared
to
the
price
of
rival
models
in
the
market.
Yet,
Apple
could
sell
their
products
at
a
cheaper
rate,
as
it
was
able
obtain
steady
revenue
through
other
sources,
such
as
the
App
Store
and
iTunes.
Therefore,
the
firm
was
able
to
maintain,
as
well
as
extend,
their
customer
base
in
their
integrated
ecosystem
(Dunn,
et.
al.
2013).
According
to
the
three
authors
of
the
case,
Apple
failed
to
win
the
PC
platform
competition.
On
the
other
hand,
the
iPhone
seemed
to
share
a
similar
architectural
structure
with
the
company’s
computer
arrangement,
which
was
described
as
somewhat
closed.
Analogous
to
their
computer
composition,
Apple
made
the
iPhone’s
operating
system,
the
actual
devices
and
controlled
the
distribution
of
third-°©?party
software
through
the
App
Store
and
iTunes
(Dunn,
et.
al.
2013).
Even
though
this
approach
was
not
immensely
effective
when
it
manufactured
the
iMac,
it
was
a
similar
attitude
Apple
had
practiced
with
its
iPod;
which
later
proved
to
be
a
huge
success
and
positively
influenced
the
company’s
financial
status
(Dunn,
et.
al.
2013).
It
is
especially
through
the
iPhone,
that
Apple’s
lock-°©?in
methods
are
visible.
iPhone
users
enjoy
the
integrated
ecosystem
of
other
Apple
products,
like
the
iPod,
Apple
TV
and
the
iMac.
Furthermore,
iCloud
enables
customers
to
share
media
across
all
of
these
devices,
while
the
Apple
TV’s
Airplay
allows
one
to
share
music
and
videos
from
the
devices
using
WiFi.
Finally,
the
difficulty
of
transferring
media
files
to
Amazon
Cloud
Player
or
Google
Play
additionally
discourages
consumers
from
switching
(Canada,
2012).
Therefore,
Apple’s
iOS
showed
exceptionally
profitable,
partially
due
to
the
company-°©?owned
and
restricted
app
store
and
to
the
many
apps,
which
are
available
on
the
service.
Question
2.
How
does
the
use
of
open-°©?source
influence
lock-°©?in?
How
does
open-°©?source
help
Android
influence
establish
its
leading
position
in
the
mobile
OS
market?
Lock-°©?in
or
proprietary
lock-°©?in
is
known
as
a
situation
in
which
a
customer,
is
so
dependent
on
a
vendor
of
a
certain
product
or
service
that
switching
to
another
vendor
or
provider
is
not
possible
without
significant
costs.
These
lock-°©?in
situations
can
create
monopolies
and
market
entry-°©?barriers
and
are
especially
relevant
for
enterprises
since
IT
expenses
are
often
significantly
higher
compared
to
end-°©?users.
(Foss
Wiki
(n.d.))
Since
the
late
nineties
Open-°©?source
software
has
been
one
of
the
solutions
to
restrict
lock-°©?in
effects
by
offering
software
that
can
be
modified
and
distributed
to
and
from
anyone,
without
being
tied
to
one
vendor
or
company.
The
advantages
are
simple:
Customers
get
to
maintain
maximum
flexibility
of
choice,
cost
reduction
and
the
ever
increasing
quality
and
quantity
of
open-°©?source
software
products.
(Foss
Wiki
(n.d.))
(Noyes,
K.,
2012))
So
how
did
open-°©?source
software
change
the
enterprise-°©?IT
Landscape?
Open-°©?source
is
by
now
leading
the
pack
when
it
comes
to
the
cloud,
big
data,
mobile
apps,
and
enterprise
mobility.
It
has
lowered
the
acquisition
and
maintenance
costs,
often
provides
better
quality
and
very
important
easy
access
to
source-°©?code.
While
especially
corporations
and
enterprises
often
use
open-°©?source
software
to
avoid
lock-°©?ins
it
also
has
its
disadvantages.
Big
vendors
provide
a
certain
level
of
safety
and
trust,
plus
the
sheer
amount
open-°©?software
products
out
there
makes
due-°©?diligence
inevitable
and
especially
small
to
mid-°©?sized
businesses
often
struggle
to
implement
open-°©?software
and
are
rather
looking
for
a
one-°©?stop-°©?solution.
(Tiwari,
N.,
2014)
One
open-°©?source
software
product
that
has
been
exceptionally
successful
is
the
mobile
operating
system
Android,
an
offshot
of
Linux
OS.
The
California
based
company
acquired
Android,
Inc.
in
2005
and
made
its
first
moves
in
2008
when
granting
manufacturers
such
as
LG,
HTC,
and
Samsung
to
use
the
OS
without
paying
any
fees
to
Google.
Google
decided
to
make
Android
open-°©?source,
which
means
that
others
could
make
changes
to
the
source
code.
One
of
the
biggest
advantages
over
IOS,
Apple’s
OS,
was
the
openness
of
the
OS
where
carriers
could
easily
modify
it
to
their
needs.
The
OS
struggled
to
take
off
in
the
beginning
mainly
due
to
the
fact
that
there
were
many
different
app-°©?stores
available
and
anybody
could
publish
and
sell
apps.
Google
profited
massively
from
the
huge
growth
of
the
OS
through
advertising
sales
and
integrated
an
Android
market
for
the
sale
of
third-°©?party
apps.
Google
and
Android
were
criticized,
because
the
openness
of
the
system
could
not
deliver
the
same
user
experience
to
everyone.
Regardless
Android
is
by
far
the
most
used
mobile
OS
with
a
market
share
of
over
81%.
Largely
due
to
the
facts
that
developers
have
the
freedom
to
create,
increasing
quality
and
lower
price
Android
based
smartphones
and
simply
the
openness
of
the
system.
(Dunn,
et.
al.
2013)
(TOI
Tech,
2013)
Question
3.
Discuss
Microsoft’s
decision
and
strategy
of
entering
the
Mobile
OS
market
from
the
perspective
of
lock-°©?in.
In
2010
Microsoft
released
their
smartphone,
the
Windows
Phone
7
(Dunn,
et.
al.
2013,
p.
12).
By
this
time
there
were
already
some
big
players
dominating
the
market,
amongst
these
were:
Apple
with
the
iPhone
and
Google
with
their
Android
OS.
(Dunn,
et.
al.
2013)
Microsoft
was
therefore
not
a
‘first-°©?mover’
creating
a
disruption
in
the
market,
and
thus
they
had
a
lot
to
catch
up
on
already
from
the
beginning.
As
consumers
were
amazed
by
the
iPhone
(Dunn,
et.
al.
2013,
p.
8),
Apple
had
managed
to
create
a
lock-°©?in
ecosystem,
making
switching
costs
high
for
their
customers.
Although
Google’s
Android
OS
could
be
argued
to
not
have
the
same
high
switching
costs
as
Apple,
their
open-°©?ended
operating
system
made
it
easy
and
attractive
for
smartphone
developers
to
modify
the
software
to
fit
their
needs
and
choice
of
hardware.
Thus,
Google
also
created
a
kind
of
lock-°©?in
ecosystem,
as
the
developers
who
chose
to
utilize
Android
OS
could
always
change
the
software
according
to
theirs
needs,
and
therefore
the
developers
would
not
need
to
switch
to
another
software.
These
market
conditions
made
it
a
difficult
task
for
Microsoft
to
enter
the
Mobile
OS,
as
the
market
was
already
locked-°©?in
in
one
way
or
the
other
with
either
Apple
or
Google.
Android
was
still
a
fairly
new
OS
on
the
market,
where
Microsoft
on
the
other
hand
had
many
years
of
success
within
this
field.
It
is
stated
that
Microsoft
was
“hopeful
that
Android’s
position
would
prove
insecure”
(Dunn,
et.
al.
2013,
p.
11),
which
meant
that
they
were
hoping
that
Android
would
fail,
making
Microsoft
the
runner
up
to
Apple.
Microsoft’s
strategy
behind
the
Windows
Phone
7
was
to
license
it
to
different
chosen
OEMs,
but
at
the
same
time
take
an
interest
in
the
development
that
these
OEMs
made,
so
that
Microsoft
could
control
the
quality
of
the
final
products.
(Dunn,
et.
al.
2013,
p.
12)
With
this
strategy
Microsoft
positioned
themselves
in
the
middle
of
Apple
and
Google.
As
the
market
already
had
two
opposite
poles
whom
were
very
different
in
terms
of
developing
and
controlling
their
OS,
it
is
understandable
why
Microsoft
made
the
decision
to
position
themselves
in
the
middle,
as
it
would
be
hard
to
make
a
breakthrough
by
simply
copying
a
market
dominators
strategy.
By
taking
on
this
strategy,
Microsoft
did
not
create
a
lock-°©?in
system
for
their
customers
as
Apple
had,
and
on
the
other
hand
they
did
not
create
the
same
freedom
as
Google
had
created
for
their
developers
either.
It
can
be
argued
that
their
wanted
outcome
was
to
create
a
better
product
for
their
end
customer
by
controlling
who
and
how
it
was
developed.
The
Microsoft
Windows
Phone
7
that
was
released
in
2010
was
given
negative
and
mixed
feedback
on
the
ease
of
use,
both
from
the
development
side
and
the
customer
side.
Apart
from
this
there
was
a
lack
of
available
apps
for
the
smartphone,
and
thus
the
Gartner
Group
predicted
Microsoft’s
market
share
to
fall
in
the
following
years.
(Dunn,
et.
al.
2013,
p.
12)
The
decision
to
release
the
Windows
Phone
7
therefore
seems
to
be
made
a
bit
premature,
although
it
would
probably
not
have
helped
to
wait
because
of
Apple
and
Google
only
growing
stronger.
Microsoft
therefore
decided
to
partner
up
with
Nokia
who
was
the
world
leader
in
phones
in
2011.
As
Nokia
controlled
half
of
the
smartphone
market,
this
could
potentially
give
Microsoft
access
to
a
much
bigger
customer
base,
as
many
of
these
customers
would
potentially
be
loyal
to
Nokia’s
products.
(Dunn,
et.
al.
2013,
p.
12)
In
theory
and
in
practice
this
was
a
good
fit
between
a
strong
software
and
strong
hardware
developer,
as
their
product,
Nokia
Lumia
800,
was
well
received.
Nonetheless,
as
a
large
amount
of
the
market
share
was
already
locked-°©?in
by
Apple
or
Google
this
collaboration
between
Microsoft
and
Nokia
still
entered
the
market
in
regards
to
being
able
to
attract
developers
and
customers
to
use
their
software
and
smartphone.
Question
4:
How
should
RIM
proceed
to
compete
in
the
mobile
OS
market?
Given
the
information
in
the
previous
questions,
it
is
clear
that
BlackBerry
has
failed
to
follow
Google
(Android)
and
Apple
in
building
a
whole
ecosystem
around
mobile
technology
for
the
mass-°©?market
consumer.
The
global
mobile
OS
market
shares
in
sales
to
end
users
are
confirming
this
statement:
Android
has
nearly
taken
all
the
market
share
with
86.1
%
in
Q1
2017,
followed
by
iOS
(13.7
%)
and
the
rest
(0.2
%)
(Statista,
2017).
The
mobile
technology
market
is
a
highly
competitive
one
with
strong
lock-°©?in
effects
created
by
Android
and
Apple.
Consumers
face
high
switching
costs
consisting
of
inconvenience
of
adapting
to
a
new
system,
no
seamless
integration
with
the
all
user
devices
as
well
as
lacking
know-°©?how
regarding
how
to
transfer
all
the
data,
contacts
and
pictures.
from
one
device
to
a
completely
different
one.
Therefore,
persuading
consumers
to
choose
BlackBerry
over
Android
and
Apple
is
a
very
challenging
task
that
most
likely
requires
heavy
investment
in
marketing,
R&D
as
well
as
the
acceptance
of
important
losses
in
the
first
decade
due
to
the
competitor’s
pricing
power
within
this
duopoly.
On
top
of
that,
it
is
often
not
worth
for
app
developers
to
make
the
effort
and
make
their
apps
compatible
with
BlackBerry
OS
driven
devices
due
to
the
diminishing
client
base.
This
is
again
further
decreasing
BlackBerry’s
appeal
to
consumers
as
their
devices
are
then
unable
to
run
the
most
popular
apps
and
thus
it
all
represents
a
vicious
cycle.
However,
one
can
argue
that
the
mass
market
is
simply
not
attractive
for
BlackBerry
and
that
they
should
rather
benefit
from
their
still
stable
finances
and
liquidity
to
focus
on
their
core
benefit:
being
the
most
secure
end-°©?to-°©?end
mobile
solution
in
the
market.
This
would
narrow
their
target
group
to
government
and
regulated
industry
consumers
with
high
security
requirements.
For
this
specific
target
group
BlackBerry
could
then
develop
their
own
lock-°©?in
effects
with
a
fitting
portfolio
of
services
around
the
topic
of
secure
communication
and
cyber
security.
The
process
would
require
a
restructuring
of
the
firm
and
potential
lay-°©?offs,
but
can
result
in
much
higher
profitability
as
government
and
regulated
industry
consumers
are
much
less
price-°©?sensitive.
As
the
case
“Research
in
Motion”
is
from
2012,
the
development
of
BlackBerry
past
that
date
was
also
evaluated
in
order
to
see
what
strategy
was
actually
followed
by
the
management
and
how
it
impacted
the
company’s
success.
In
2011,
BlackBerry
still
managed
to
sell
more
than
50
million
devices,
while
in
2016
this
number
has
declined
to
4
million
(BlackBerry
Limited,
2017).
The
annual
revenue
of
$
19
billion
has
also
shrunk
dramatically
to
$
1.3
billion
with
a
net
loss
of
$
1.2
billion
in
the
financial
year
ended
28th
February
2017
(BlackBeryy
Limited
II,
2017).
This
might
seem
like
an
extremely
negative
development,
but
this
is
actually
due
to
a
repositioning.
BlackBerry
has
readjusted
their
business
segments
to
Software
&
Services,
Mobility
solutions
and
SAF.
SAF
is
the
legacy
business
consisting
of
still
existing
service
fees
generated
through
users
of
devices
prior
to
BlackBerry
8.
While
SAF
is
not
to
be
continued
and
thus
shows
continuously
declining
revenues,
the
mobility
solutions
segment
is
transformed
completely.
BlackBerry
has
stopped
developing
their
own
phones,
but
outsourced
it
to
the
Chinese
company
TCL
while
licensing
BlackBerry’s
secure
device
software
to
other
mobile
operators
(BlackBeryy
Limited
II,
2017).
The
new
line
of
phones
such
as
KEYone
and
PRIV
is
running
on
Android
combined
with
the
security
technology
of
BlackBerry.
The
new
core
segment
Software
&
Services
offers
a
unified,
secure
mobility
platform
with
applications
and
services
for
any
operating
system.
It
has
been
built
up
through
various
acquisitions
such
as
Good
(secure
mobility
solutions),
Watchdox
(data
security),
AtHoc
(secure,
networked
crisis
communication
solutions),
SecuSUITE
(voice
and
text
messaging
solutions)
as
well
as
through
organic
means
by
for
instance
implementing
a
consultancy
unit
for
professional
cyber
security
services.
The
development
of
this
segment
looks
promising
with
revenues
having
increased
from
$
249
million
for
the
financial
year
ended
28th
February
2015
to
$
652
million
in
2017
with
a
positive
operating
income.
Summarizing,
BlackBerry
has
actually
withdrawn
from
the
consumer
mass
market
like
suggested,
focusing
on
an
attractive
niche
segment
and
transforming
to
a
software
service
provider.
Reference
list
Canada,
A.
(2012)
Take
a
Lesson
from
Apple:
A
Strategy
to
Keep
Customers
in
Your
System.
Retrieved
10/10/2017
from:
https://www.forbes.com/sites/jump/2012/11/12/take-°©?a-°©?
lesson-°©?from-°©?apple-°©?a-°©?strategy-°©?to-°©?keep-°©?customers-°©?in-°©?your-°©?ecosystem/#1b3529453de8
Dunn,
B.
Kemerer,
C.
F.
MacCormack,
A.
(2013)
Research
in
Motion:
the
Mobile
OS
Platform
War.
Foss
Wiki
(n.d.)
Vendor
lock-°©?in.
Retrieved
12/10/2017
from
http://opensource.wikia.com/wiki/Vendor_lock-°©?in
Noyes,
K.
(2012).
Want
Freedom
from
Vendor
Lock-°©?in?
Survey
Says:
Choose
Open
Source.
Retrieved
17/10/2017
from
https://www.pcworld.com/article/256189/want_freedom_from_vendor_lock_in_survey_says
_choose_open_source.html
Tiwari,
N.
(2014).
How
open
sourcing
Android
made
it
a
mobile
market
leader.
Retrieved
09/10/2017
from
https://opensource.com/business/14/7/how-°©?open-°©?sourcing-°©?android-°©?made-°©?it-°©?mobile-°©?
market-°©?leader
TOI
Tech
(2013).
Android
tops
80%
marketshare,
WP
grows
156%
in
Q3:
IDC.
Retrieved
11/10/2017
from
https://cio.economictimes.indiatimes.com/news/mobility/android-°©?tops-°©?80-°©?marketshare-°©?
wp-°©?grows-°©?156-°©?in-°©?q3-°©?idc/25689063
BlackBerry
Limited.
(2017).
Financial
Documents.
Retrieved
7.
10
2017
from
BlackBerry
https://us.blackberry.com/company/investors/documents
BlackBeryy
Limited
II.
(28.
02
2017).
Financial
Report
2017.
Retrieved
7.
10
2017
from
BlackBerry
Limited:
https://us.blackberry.com/content/dam/bbCompany/Desktop/Global/PDF/Investors
/Documents/2017/Q417_Financial_Statements.pdf
Statista.
(2017).
Global
mobile
OS
market
share
in
sales
to
end
users
from
1st
quarter
2009
to
1st
quarter
2017.
Retrieved
7.
10
2017
from
Statista:
https://www.statista.com/statistics/266136/global-°©?market-°©?share-°©?held-°©?by-°©?
smartphone-°©?operating-°©?systems/

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