This is an aggressive expansion into a new market for Amazon. Photo: Getty
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Amazon's smartphone launch offers a prudent platform for growth

What the launch of Amazon’s smartphone tells us about the company’s future strategy.

Amazon, the e-commerce internet giant, is launching its first smartphone. Media attention is focusing on whether the phone’s features, such as its rumoured 3D interface, are really as cool as portrayed in its trailer video which aims to wow early users. But by entering into the fray of an already hyper-competitive mobile phone industry, Amazon is doing a lot more than adding another gee-whizz feature to a smartphone.

This launch tells us a great deal about CEO Jeff Bezos' strategy for his company – and what it might mean for the future of competition and innovation in our increasingly digital world.

First, let’s ask the obvious questions. Why is Amazon, known for internet retailing and related software development, entering a hardware market where leading incumbents like Nokia have already failed? After all, what does Amazon know about the telecoms business? Can it succeed where Google has failed?

We have seen Google, which has virtually limitless financial resources, enter the mobile phone handset industry by purchasing Motorola Mobile in 2012, only to take a heavy loss after selling it on less than two years later. Even incumbent firms who had a very strong set of phone-making capabilities have taken tough hits in this turbulent market – witness Nokia’s dramatic plunge, which led to a sale of its mobile phone business to Microsoft.

Platform Number 1

You cannot understand Amazon’s move without situating it in the broader context of platform competition. Platforms, these fundamental technologies such as Google search, Facebook and the Apple iPhone, are the building blocks of our digital economy. They act as a foundation on top of which thousands of innovators worldwide develop complementary products and services and facilitate transactions between increasingly larger networks of users, buyers and sellers. Platform competition is the name of the game in hi-tech industries today.

The top-valued digital companies in the world (Amazon, Apple, Google, Facebook) are all aggressively pursuing platform strategies. App developers and other producers of complementary services or products provide the armies that sustain the vibrancy and competitiveness of these platforms by adding their products to them. The more users a platform has, the more these innovators will be attracted to developing for them. The more complements available, the more valuable the platform becomes to users. It is these virtuous cycles – positive feedback loops, or “network effects” – that fuel the growth of platforms and transform them into formidable engines of growth for the companies and developers associated with them.

The smartphone is a crucial digital platform. Achieving platform leader status in this space is a competitive position all the hi-tech giants are fighting for. Google has its ubiquitous Android operating system, Apple has shaped the whole market with the iPhone, Microsoft has purchased Nokia’s phone business, and Facebook has invested $19 billion in WhatsApp among other acquisitions for its growing platform.

In fact, I suppose I should have rephrased my question a little earlier – why hasn’t Amazon already staked its claim to lead this digital space after having launched its Kindle Fire tablet and Fire TV set-top box?

Opening the door

Simply put, the smartphone is the main gateway to the internet today, and, in the hand of billions of users throughout the world, is the physical embodiment of a conduit that links those users to each other and to the whole content of the internet. There are almost 7 billion mobile phones in the world (and only 1 billion bank accounts). And the trend is staggering. Mobile payment transaction value surpassed $235 billion worldwide in 2013, and is growing at 40% a year, with the share of mobile transactions already reaching 20% of all worldwide transactions.

So, while risky, Amazon’s entry into the smartphone business is a classic play: a platform leader entering an adjacent platform market that is also complementary to its primary business. All platform leaders aim to stimulate complementary innovation (think how video game console makers aim to stimulate the provision of videogames), and they often attempt not to compete too much with their complementors in order to preserve innovation incentives. But at some point all platform leaders start to enter these complementary markets themselves. Google has done it through Android, Apple has done it with iTunes, Facebook has done it with Facebook Home.

It happens when platform leaders feel threatened by competition in their core market, or when they want to steer demand, competition and innovation in a particular direction. The idea is to use their own user base as well as their own content and technologies to create an unassailable bundle, one that is difficult for external competitors to break into. Think of it as creating barriers to entry, while expanding the core market.

The reasoning behind entering a complementary market is well known, and related to the benefits of bundling. In the case of hi-tech platforms, the benefits are even stronger. By optimising and controlling the interface between a platform and complements, a company can have a structuring impact on the evolution of the platform ecosystem – and that means on all the innovators around the world that invest and make efforts to develop complementary products and services.

In your hands

So, these are the reasons why Amazon is entering the mobile phone market, despite the difficulties inherent in taking on an über-competitive market. This strategic choice makes a lot of sense.

As to whether Amazon has a fighting chance of succeeding, there are reasons to be optimistic. Beyond its deep financial resources, Amazon has learned something of what it takes in the development and successful commercialisation of various versions of the Kindle. That has given it expertise in hardware, on top of its software background, and should prove a useful training ground to allow it to launch other consumer products such as the smartphone.

But the ultimate judge will be you, gentle readers. Will you be willing to swap your favourite mobile phone for a yet another new kid on the block, even if it does let you browse Amazon’s ever-growing catalogue in splendid 3D?

The ConversationAnnabelle Gawer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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Apple-cervix ears and spinach-vein hearts: Will humans soon be “biohacked”?

Leafy greens could save your life – and not just if you eat them.

You are what you eat, and now bioengineers are repurposing culinary staples as “ghost bodies” – scaffolding on which human tissues can be grown. Nicknamed “biohacking”, this manipulation of vegetation has potentially meaty consequences for both regenerative medicine and cosmetic body modification.

A recent study, published in Biomaterials journal, details the innovative use of spinach leaves as vascular scaffolds. The branching network of plant vasculature is similar to our human system for transporting blood, and now this resemblance has been put to likely life-saving use. Prior to this, there have been no ways of reproducing the smallest veins in the human body, which are less than 10 micrometres in diameter.

The team of researchers responsible for desecrating Popeye’s favourite food is led by bioengineering professor Glenn Gaudette and PhD student Joshua Gershlak at the Worcester Polytechnic Institute (WPI). They were discussing the dearth of organ donors over lunch when they were inspired to use their lunch to help solve the problem.

In 2015 the NHS released figures showing that in the last decade over 6000 people, including 270 children, had died while waiting for an organ transplant. Hearts, in particular, are in short supply as it is so far impossible to perfectly recreate a human heart. After a heart attack, often there is a portion of tissue that no longer beats, and so cannot push blood around the body. A major obstacle to resolving this is the inability to engineer dense heart muscle, peppered with enough capillaries. There must be adequate flow of oxygenated blood to every cell in order to avoid tissue death.

However, the scientists had an ingenious thought – each thin, flat spinach leaf already came equipped with its own microscopic system of channels. If these leaves were stacked together, the resulting hunk of human muscle would be dense and veiny. Cautiously, the team lined the cellulose matrix with cardiac muscle cells and monitored their progress. After five days they were amazed to note that the cells had begun to contract – like a beating heart. Microbeads, roughly the same size as blood cells, were pumped through the veins successfully.

Although the leafy engineering was a success, scientists are currently unaware of how to proceed with grafting their artificial channels into a real vasculatory system, not least because of the potential for rejection. Additionally, there is the worry that the detergents used to strip the rigid protein matrix from the rest of the leaf (in order for human endothelial cells to be seeded onto this “cellulose scaffolding”) may ruin the viability of the cells. Luckily, cellulose is known to be “biocompatible”, meaning your body is unlikely to reject it if it is properly buried under your skin.

Elsa Sotiriadis, Programme Director at RebelBio & SOSventures, told me: “cellulose is a promising, widely abundant scaffolding material, as it is renewable, inexpensive and biodegradable”, adding that “once major hurdles - like heat-induced decomposition and undesirable consistency at high concentrations - are overcome, it could rapidly transform 3D-bioprinting”. 

This is only the most recent instance of “bio-hacking”, the attempt to fuse plant and human biology. Last year scientists at the Pelling Laboratory for Biophysical Manipulation at the University of Ottawa used the same “scrubbing” process to separate the cellulose from a slice of Macintosh red apple and repopulate it with “HeLa” cervix cells. The human ear made from a garden variety piece of fruit and some cervix was intended as a powerful artistic statement, playing on the 1997 story of the human ear successfully grafted onto the back of a live mouse. In contrast to the WPI researchers, whose focus is on advancing regenerative medicine – the idea that artificial body parts may replace malfunctioning organic ones – Andrew Pelling, head of the Pelling Laboratory, is more interested in possible cosmetic applications and the idea of biohacking as simply an extension of existing methods of modification such as tattooing.

Speaking to WIRED, Pelling said: “If you need an implant - an ear, a nose - why should that aesthetic be dictated by the company that's created it? Why shouldn't you control the appearance, by doing it yourself or commissioning someone to make an organ?

The public health agency in Canada, which is unusually open to Pelling’s “augmented biology”, has supported his company selling modified body parts. Most significantly, the resources needed for this kind of biohacking – primarily physical, rather than pharmacological or genetic – are abundant and cheap. There are countless different forms of plant life to bend to our body ideals – parsley, wormwood, and peanut hairy roots have already been trialled, and the WPI team are already considering the similarities between broccoli and human lungs. As Pelling demonstrated by obtaining his equipment via dumpster-diving and then open-sourcing the instructions on how to assemble everything correctly, the hardware and recipes are also freely available.

Biohacking is gaining popularity among bioengineers, especially because of the possibility for even wackier uses. In his interview with WIRED, Pelling was excited about the possibility of using plants to make us sexier, wondering whether we could “build an erogenous interaction using materials that have textures you find pleasing [to change how our skin feels]? We're looking at asparagus, fennel, mushroom...” If he has his way, one day soon the saying “you are what you eat” could have an entirely different meaning.

Anjuli R. K. Shere is a 2016/17 Wellcome Scholar and science intern at the New Statesman

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