We often put labels on organizations to define them: Apple is a hardware company, Amazon is an e-commerce platform, Facebook is a social network. So when those organizations make unanticipated moves outside their traditional trajectories, we find ourselves trying to connect dots.
Remember when Apple launched iTunes and no one knew why the hardware company was investing in music? iTunes became a source of recurring revenues, but more importantly, it strengthened Apple’s business model and raised switching costs for its users. How about when Amazon introduced AWS? It wasn’t clear how selling cloud computing solutions was going to help boost e-commerce sales. AWS didn't, but analysts estimate that this resource-driven innovation is generating billions of dollars for Amazon in 2014.
I felt startled when I first heard about Xiaomi’s intentions of investing in video content development in the Financial Times. The announcement of the Chinese smartphone manufacturer's acquisition of online streaming company Youku Tudou caught my attention. I started sketching their business model to find out how this unexpected move was, in fact, reinforcing Xiaomi's business model. Here's my visualization below, based on the article:
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