Products, services and markets¶

How many songs do you own? Not "have on your phone": own, as in bought once and kept forever. Probably none. You pay a monthly fee, or you listen with ads, and the music is never really yours. Twenty-five years ago people bought CDs. The product became a service, and a whole industry changed its way of making money.

That shift was not a fashion. It was made possible by the technologies of the last two lessons: the cloud stores the catalogue, big data and AI learn what you like, and your phone is a connected product that the company improves after you have bought it. This page is about what comes out of the tech tree: new products, new services and markets that would not exist without it. Most of them are software, which is where you come in.

Four ways products change¶

Servitisation is the shift from selling a product to selling it as a service: the customer pays for the use or for the result, and the maker keeps the product working.

Two real cases. Since 1962 Rolls-Royce has offered aircraft engine contracts called Power-by-the-Hour (today TotalCare): the airline pays a fixed price per flying hour that includes maintenance, so the maker only earns while the engine works. That is why Rolls-Royce fills its engines with sensors: when you are paid for hours of flight, a breakdown is your problem. And in May 2013 Adobe announced it would stop developing the boxed Creative Suite and sell its software only by subscription, through Creative Cloud.

In the city-builder, servitisation is like the utility company you rent water from: you do not buy the pipes, you pay for the litres.

Business models¶

A business model is the way a company creates value for its customers and earns money from it.

Enabling technologies made four models very common:

On top of all four there is a fifth idea: data as an asset. Whoever has the usage data of its customers can improve the product, personalise it and decide better than its competitors.

Markets that did not exist¶

Some markets were born with these technologies: cloud services; mobile apps and app stores; wearables and digital health; the connected home; shared mobility; mobile payments and fintech; cybersecurity as a service; and, very close to you, travel tech.

Mallorca has a travel-tech sector made of platform businesses. Two real examples:

Neither is a factory. Their product is a piece of software that puts two sides of a market in touch, and their market did not exist before the internet.

flowchart LR
    T["<b>Technology</b><br>(the upgrade)"] --> P["<b>Product or service</b><br>(the new building)"]
    P --> M["<b>Business model</b><br>(how it earns)"]
    M --> N["<b>Market</b><br>(who pays)"]

In class: business model detective¶

Two parts, handed in on Classroom as one document (class activity, individual). No AI tools.

Part 1 — Read a real pricing page. Pick one real digital product from your company's sector, or one of these: Canva, Google Workspace, Holded (a Spanish cloud ERP), Habitissimo, Hotelbeds.

Prices change: what matters is that your number comes from the real page and says when you read it.

Part 2 — A new product for your company. For each technology of your section of Deliverable 2, write one sentence: which product or service it would enable or improve, and which of the four changes it is. Then, in the last minutes, the group picks the most promising one and writes its pitch in this fixed format:

For (customer), who (need), we offer (product or service), thanks to (technologies), and we charge (business model).

For your project¶

Part 2 gives field 4 of each of your technology sheets in Deliverable 2 (criterion b). The group pitch is the seed of the new market section of the group part (criterion d): does it open a new market for the company, or improve its position in the one it already has? Facts about the company need a source; the product is your proposal, so say clearly that it is one.

Key takeaways¶

• Enabling technologies change products in four ways: connected products, personalisation, faster development and servitisation.
• Servitisation sells the use or the result instead of the product: Rolls-Royce's engines paid per flying hour, Adobe's move to subscription.
• A business model is how a company earns money: subscription, pay per use, platform or freemium, often combined.
• Data about how customers use a product are an asset in themselves.
• New markets were born with these technologies, such as travel-tech platforms in Mallorca.
• Behind almost every new digital business model there is software somebody has to write.

Quick check¶

Technologies make new products possible, but at what cost for the planet, and where in the company do they act? Next: Sustainability, business and plant.