Innovation Systems and
Business Models in ICT
Kenji E. Kushida
Shorenstein Asia-Pacific Research Center
Stanford University
7/30/2015
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Japan’s Challenge Until the Late 2000s
• “Galapagos” or “Leading Without Followers”
• What is it?
• Rapid improvement along expected technological
trajectories… but without global markets following the
same trajectory
• Why did it happen?
• My argument: traces back to policies of telecom
liberalization  different sets of industry winners and
losers  incompatible dynamics of competition across
countries
• What were the effects?
• Isolated ecosystem, but rise of components firms
•  Then, swept away by iPhone and Android disruptions
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Innovation System (1): Services Transformation
1) The ICT-Enabled Transformation of Services
• When digital tools applied to activities, then can be
unbundled, moved around, transformed  algorithmic
revolution
• Fully automated / Hybrid / Irreducible Services
• Value from Services rather than Products as products
commoditized
• Internet of Things (IoT) or Internet of Everything (IoE) is
latest development along this trajectory
• Value from services  so where can ICT network players
add value? (accelerating commoditization as provider of
connectivity)
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Innovation System (2): Cloud Computing
2) Cloud Computing: From Scarcity to Abundance
• Computing resources = scarce throughout history
• Now, entering an era of computing resource
abundance
•  commoditizes everything that was high end to
optimize for scarce resources
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Innovation System (2) Cloud Computing
Cloud computing delivers computing services—data
storage, computation and networking – to users at
the time, to the location, and in the quantity they wish
to consume, with costs based only on the resources
used
• Dynamic utility, illusion of infinite resources
• Simultaneously an Innovation ecosystem, production
platform, and global market place
• Entering an era of Marginal Cost = 0
• Handful of global-scale providers
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Innovation System (2) Cloud Computing
• With IoT/IoE, cheap sensors everywhere upper bound
of what can be measured is not cost, but imagination
• Dilemmas = US policy concerns, impracticality of nationalscale infrastructure, policy-driven local deployments
• The China Q: not part of the global Cloud fabric, but does
that matter?
• Tools for manufacturing available? Business model
innovations that the rest of the world must adjust to? Or
financial gains from domestic market as spill over into
global markets despite vastly different domestic
ecosystem?
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References
•
Kushida, Kenji E., Jonathan Murray, and John Zysman. 2015. "Cloud Computing: From
Scarcity to Abundance." Journal of Industry, Competition and Trade 15 (1):5-19. doi:
10.1007/s10842-014-0188-y.
http://link.springer.com/article/10.1007/s10842-014-0188-y
•
Kushida, Kenji E. 2015. "The Politics of Commoditization in Global ICT Industries: A
Political Economy Explanation of the Rise of Apple, Google, and Industry Disruptors."
Journal of Industry, Competition and Trade. doi: 10.1007/s10842-014-0191-3.
http://link.springer.com/article/10.1007/s10842-014-0191-3
•
Kushida, Kenji E., Jonathan Murray, Patrick Scaglia, and John Zysman. 2014. The Next
Epoch in Cloud Computing: Implications for Integrated Research and Innovation Strategy.
BRIE Working Paper (2014-4).
http://brie.berkeley.edu/brie/publications/BRIE%20WP%2020144%20Kushida%20Murray%20Scaglia%20Zysman%202014.pdf
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Zysman, John, Stuart Feldman, Kenji E. Kushida, Jonathan Murray, and Niels Christian
Nielsen. 2013. "Services with Everything: The ICT-Enabled Digital Transformation of
Services." In The Third Globalization? Can Wealthy Nations Stay Rich in the Twenty-First
Century?, edited by Dan Breznitz and John Zysman, 99-129. New York, NY: Oxford
University Press.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1863550
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