What is meant by the term "creative destruction"? Explain the creative destruction this book review article is talking about in the innovations of Apple, Google and/or Facebook.

Here the article :

The Wall Street Journal, viewed online on August 29, 2016 David Sheppard and Anjli Raval, Oil re-enters bear market, The Financial Times, viewed online on August 29, 2016 Josh Zumbrun, Oil's Plunge Could Help Send Its Price Back Up; Jump in Purchases Less-Fuel-Efficient Vehicles is Expected to Goose Demand, The Wall Street Journal, viewed online on August 29, 2016 James Fontanella-Khan and Arash Massoudi, Coty closes in on $12bn P&G beauty deal, The Financial Times, viewed online on August 29, 2016 Lindsay Whipp and Arash Massoudi, Procter & Gamble sells beauty arm to Coty in complex deal, The Financial Times, viewed online on August 29, 2016 Emiko Terazono, Young Americans turn to tea, The Financial Times, viewed online on August 29, 2016 John Markoff, IBM and Apple team up to launch iPad for the elderly in Japan, The Financial Times, viewed online on August 29, 2016 Hiroko Tabuchi and Danielle Ivory, Takata Is Said to Have Stopped Safety Audits as Cost-Saving Move, The New York Times, viewed online on August 29, 2016 Leslie Josephs and Annie Gasparro, Balance of Power Shifts in Groceries; Natural, organic foods from small producers muscle in on big names, The Wall Street Journal, viewed online on August 29, 2016 Richard Waters and Andy Sharman, Divergent unveils part-3D printed supercar, The Financial Times, viewed online on August 29, 2016 Gina Kolata, Federal Panel Backs Approval of New Drug to Fight Heart Attacks, The New York Times, viewed online on August 29, 2016 Richard Waters and Andy Sharman, Google hopes all or nothing bet on robot cars will pay off soon, The Financial Times, viewed online on August 29, 2016 John Markoff, IBM Discloses Working Version of a Much Higher-Capacity Chip, The New York Times, viewed online on August 29, 2016 Richard Milne, Lego Wins Trademark Case over Minifigures, The Financial Times, viewed online on August 29, 2016 The best digital businesses are platformstechnology-enabled networks that connect consumers and producers and, some of the time, advertisers. The mega-success of platforms like Facebook and Google, not to mention Apple and Amazon, has led to a misconception that this business model inevitably gives rise to the unshakable hegemony of one or two big winners. In truth, platforms are not free from the unruly brawl of competition. Three new books examine the means by which digital companies try to keep their platform adversaries at bayand sometimes succeed. For traditional businesses, economies of scale are the key to competitive advantage: Larger firms have lower average costs. In the digital economy, network effects matter most. In "Matchmakers" (Harvard Business Review, $35), David S. Evans (a consultant) and Richard Schmalensee (a professor of management) highlight two particular forms. Direct network effects occur when additional users make a service more valuable for everyone. If one's colleagues are all on, say, LinkedIn, it will be hard for another professional network to exert a strong appeal. Without the critical mass of LinkedIn, the alternative will have less utility even if its features are better. Indirect network effects arise from positive feedback loops between opposing sides of a market. The value of Rightmove, for instance, the leading online real-estate site in Britain, comes from a matching function: Since each home is unique, buyers prefer the site with the most properties, and real-estate agents favor the site with the most buyers. This virtuous cycle magnifies Rightmove's advantage even though participants on each side of the market compete with one another: More buyers increase competition for the same homes, and agents compete for buyers. This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. http://www.wsj.com/articles/why-facebooks-imitators-failed-1463610874 ARTS BOOKS BOOKSHELF Why Facebook's Imitators Failed If one's coworkers are all on the same platform, any alternative will have less utilityeven if its features are better. | | May 18, 2016 6:34 p.m. ET By JEREMY G. PHILIPS Why Facebook's Imitators Failed - WSJ Page 1 of 7 http://www.wsj.com/articles/why-facebooks-imitators-failed-1463610874 8/29/2016 In "Modern Monopolies" (S t. Martin's, 27.99), Alex Moazed and Nicholas L. Johnson, mobile developers and consultants, argue that "one or two platforms will dominate an industry as a market matures," creating natural monopolies or duopolies. In reality, though, these are rare and depend on a favorable market structure, like the one that exists for smartphones. PHOTO: WSJ PLATFORM REVOLUTION By Geoffrey G. Parker, Marshall W. Van Alstyne & Sangeet Paul Choudary Norton, $27.95 MODERN MONOPOLIES By Alex Moazed & Nicholas L. Johnson St. Martin's, 2s, $27.99 MATCHMAKERS By David S. Evans & Richard Schmalensee Harvard Business Review, , $35 Why Facebook's Imitators Failed - WSJ Page 2 of 7 http://www.wsj.com/articles/why-facebooks-imitators-failed-1463610874 8/29/2016 Buying an iPhone locks one into Apple's iOS platform, and the costs of switching to Google's Android is highnot only the price of a new phone but the loss of interlinked Apple software platforms. So Android and iOS split the market: Android's share of devices is more than 80%, but Apple makes most of the profits. Given that the only path to iPhone users is via the App store, Apple is able to collect monopoly-like rents. Since the two platforms are each large and growing, developers make apps for both. The competing ecosystems both thrive. Still, the dominance of one or two big players is not inevitable. Apple Pay, for example, is an appealing platform, and it has positive feedback loops: More users attract more merchants and vice versa. But consumers carry multiple payment methodscredit cards and cash as well as smartphonesand merchants accept alternative payment methods. So participants on both sides of the platformbuyers and sellersswitch between Apple Pay and its competitors. This dynamic prevents any one player from dominating. In "Platform Revolution" (Norton, , $27.95), the authorsGeoffrey G. Parker and Marshall W. Van Alstyne (professors of engineering and information economics, respectively) and consultant Sangeet Paul Choudarypoint out that "platform businesses rarely charge all their users." Making everyone pay, the authors observe, usually discourages usage and undermines network effects. Instead, one side of a platform typically subsidizes another. Job sites, for instance, are offered up free to consumers to maximize the potential audience, which in turn can be sold to advertisers and recruiters. But the subsidy model works in only limited spheres. At The Wall Street Journal and some other major news outlets, online consumers and advertisers both have to pay. Free accessalthough the predominant online modelcannot generate enough incremental advertising dollars to cover lost subscription revenue. In a novel twist, some startups subsidize all sides of their platforms. The aim is to capture as many users as possible, achieve strong network effects and find a quick path to market dominanceat which point the subsidies recede and profits flow, or so it is hoped. Microsoft built a console gaming business by subsidizing the entire ecosystem at the outsetselling Xbox consoles to consumers below cost and paying developers to make exclusive games. Eventually the company was able to recoup its investment and make money from software royalties and subscriptions. More often, pervasive subsidy provides only a short-term hit: Offering a free lunch will fill all a restaurant's tables but won't stop folks eating across the road the next time around.