Commentaries: GAFAM by Building Block
Commentaries: GAFAM by Building Block

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of Amazon includes its complete IT structure, customer service center, software development and maintenance, information security, and marketing, as well as all expenses involved in maintaining its physical spaces, such as fulfillment centers, sortation centers, and delivery stations.

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Customer Relationships

Amazon

Amazon’s focus, no doubt, is to have a healthy and long-lasting relationship with its customers. For this reason, they maintain several communication channels open with their consumers — such as reviews and comments on the platform, telephone, online chat, and e-mail contact. Plus, they don’t usually take a lot of days to give feedback.

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Customer Segments

Amazon

The

Amazon Web Services (AWS)

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of Amazon can be divided into basically three groups: sellers, buyers, and developers.

Sellers are all the companies that use Amazon’s e-commerce platform to sell their products to its wide audience.

Developers are all the community involved with

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— Amazon’s cloud computing platform.

As its own website states

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, they are customers and partners “across virtually every industry and of every size, including startups, enterprises, and public sector organizations”.

And the buyers are the millions of people across the world who acquire products and services through Amazon’s channels. Amazon tracks its customers based on some characteristics, such as interest, engagement, and personal information (age, gender, geographical space, language, among others).

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Key Activities

Amazon

Amazon’s

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are all about the development, maintenance, and expansion of its gigantic platform. Therefore, the brand invests in website and app development and management, management of the entire supply chain, storage and logistics, information security on all platforms (including e-commerce, streaming, cloud computing, etc.), production of films, series, and other products for its video platform, as well as marketing for all of its products and services.

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Key Partnerships

Amazon

Amazon’s

back in 2013, Amazon was down for about 40 minutes, which resulted in a loss of more than US$ 5 million in sales

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consist of:

Sellers: Certainly the most important partners of the brand, since they are the generators of Amazon’s first source of revenue. There are approximately 8 million worldwide, which guarantees more than half of the company’s revenue;

Affiliates: Bloggers who earn a commission for any referrals that lead to a sale. In addition to helping with sales, they promote traffic to the platform;

Developers: They are the partners of the AWS segment, or, as Amazon itself defines, “thousands of systems integrators who specialize in AWS services and tens of thousands of independent software vendors (ISVs) who adapt their technology to work on AWS”;

Content creators: Independent authors who can publish their works through

Kindle Direct Publishing

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;

Subsidiaries: They include companies that provide storage spaces, stores, and systems, in addition to brands and products developed by Amazon itself, such as

Amazon Essentials

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Amazon Elements

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, Amazon Elements, Kindle, Alexa, etc.

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Key Resources

Amazon

Hands down, “the one”

Key Resource

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of Amazon is its technological infrastructure, which needs to be broad and very secure, in order to keep the whole chain running without interruption or losses (

⁠

). Aside from that, other key resources include physical spaces of the company, such as offices, warehouses, supply chain structure, and automation, among others. And, of course, human resources are essential for Amazon, which needs to guarantee A-players among its designers, engineers, developers, etc.

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Revenue Streams

Amazon

Amazon’s

revenue streams

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consist of:

One-Time Sales

Commission on Sales

Advertising

Subscriptions (Amazon Prime)

Web Services (AWS)

Licenses

Patents

Pay-Per-Use & Support Subscription

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Value Propositions

Amazon

Jeff Bezos defines that Amazon’s business model is based on three

value propositions

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: low price, fast delivery, and a wide selection of products. However, looking at these three consumer benefits, we can say that Amazon’s greatest value proposition is convenience because the audience understands that, with just the help of a device connected to the internet, they have access to the product catalog of the largest retailer in the world, with a reasonable price and an agile, safe and reliable delivery service.

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Channels

Apple

Apple’s

channels

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consist of:

Website

Apple Stores

Third-party Stores

Telecom Companies (Apple’s iPhones are typically bundled with a mobile plan to reduce costs by offering monthly repayment packages)

Resellers

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Cost Structure

Apple

Apple’s

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consists of:

Manufacturing & Distribution

Salaries

Marketing

Platforms Maintenance Fees

Payment Processing Fees

Management & Administration

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Customer Relationships

Apple

Apple’s

customer relationships

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consist of:

Social Media

Customer Service

Apple Stores

Website

Operating Systems

Loyal Community

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Customer Segments

Apple

Apple’s

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consist of:

Product Buyers: These include people that buy their products for their high-end performances and people who use them as their primary devices regardless of performance. A section of their customers also buys their products because of the brand name;

Service Subscribers (most service subscribers overlap as product buyers): These include subscribers of Apple Arcade — their games’ subscription service —, Apple TV+, iCloud+, and their warranty extension services.

App Developers (and music producers): Anyone that would like to sell their apps and music to the Apple user base and monetize through app store or iTunes.

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Key Activities

Apple

Apple’s

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consist of:

Innovation

Design & Manufacturing

Marketing & Sales

Customer Service

Branding

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Key Partnerships

Apple

Apple’s

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consist of:

Hardware Suppliers, such as Qualcomm, Samsung, Cisco, etc.;

Software Providers: cloud service providers, such as Google and Amazon;

Investors/Shareholders

Telecom Companies

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Key Resources

Apple

Apple’s

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consist of:

Brand Name and Recognition

Patents

Employees

Management Team

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Revenue Streams

Apple

Apple’s

revenue streams

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consist of:

Sale of Products

Subscription Services

App Store and in-app purchase percentage cuts

Licensing Fees

Cloud Services

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Value Propositions

Apple

Apple’s

value propositions

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consist of:

Premium High-end Products (with a focus on privacy): Apple offers its customers carefully crafted products with a focus on performance, stability, and privacy, a number of its customers have stayed around because of this.

An ecosystem of interconnected services: Apple’s line-up of services (and products) are well integrated with each other, offering users hassle-free inter-use of their products and services.

Access to iPhone/iPad user base: one of the richest user bases in the world that are willing to spend much more than Google Android user base.

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Channels

Facebook

It’s quite clear that the main

distribution channels

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of Facebook are its own website and app, because that’s where users find each other, and advertisers access their audience. Inside that, the channels can be divided into feed, notifications, direct messages, and stories. Other channels include the app stores, other products of the company, e.g. Instagram and WhatsApp, and, of course, word of mouth power.

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Cost Structure

Facebook

The biggest share of Facebook’s

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revolves around platform maintenance and its billions of users’ data storage. Besides, there is user CAC (cost of acquisition) by delivering tools that foster user engagement, research and development investment, marketing and advertising, customer support, and all the regular general and administrative expenses of a worldwide company.

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Customer Relationships

Facebook

Facebook’s

customer relationship

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is based on its own platform, which is very user-friendly, as it allows users to specify their profile configurations and use them with no hard time. In addition, Facebook has an international sales organization, that works alongside marketing and advertising agencies, to attract advertisers.a

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Customer Segments

Facebook

Users: They are the biggest

customer segment

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of Facebook, and stand for one-third of the world’s population! They are all the people who have their profiles in the network and use them to interact and communicate with friends and other people with similar interests around the globe. They don’t pay Facebook anything and, thus, they are not directly responsible for the business revenue. However, they are the basis that makes Facebook interesting for the ones who do pay;

Businesses and advertisers: This is the segment involved in Facebook’s revenue. It encompasses all the brands and businesses that advertise on the social network. They pay to have ads for their products and services on the platform, which, from its side, offers a more qualified audience. Due to the information that Facebook collects from its users, the company is able to target advertisements on its platform, allowing brands and businesses to have their ads viewed by its target audience. Anyway, although these are the revenue providers, they will only keep their interest as long as the non-paying user base is wide and qualified;

Developers: It’s the smallest customer segment, and it includes the ones who develop apps and games through Facebook’s platform.

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Key Activities

Facebook

Above all

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, it is the platform development and maintenance, in order to ensure a positive experience and avoid negative effects on the social network. Then, besides all the infrastructure that the website demands, to keep it working properly and optimized 24/7, Facebook also needs to invest in good practices and control bad behavior within the network. Furthermore, the company focuses on user acquisition and engagement, data and information storage and security, talent hiring and retaining, and sales and marketing.

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Key Partnerships

Facebook

Content developers, e.g. videos, games, texts, etc.

Developers for compatible operating systems, browsers, and hardware

Digital influencers

Businesses and brands that advertise or directly sell on the platform

Marketing agencies

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Key Resources

Facebook

Within Facebook’s

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, the only tangible one (but essentially digital) is its platform, which demands technological infrastructure. Aside from that, the other key resources are the network users and their content production, and the Facebook brand. The active users are the company’s biggest asset. Because, if there aren’t users, there is no audience to view the ads. And to make them engaged, there must be relevant content, to avoid churn. As for the brand, it’s a very powerful name, still the great synonym for “social network”, indeed.

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Revenue Streams

Facebook

Payment revenues (percentage fees)

Ad revenues (CPM and CPV)

Free

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Value Propositions

Facebook

As Facebook has three diverse customer segments, each segment will perceive the brand’s value differently. That said, let’s divide the

value proposition

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by segment:

For users: The greatest benefit is to keep in touch with family and friends, via text and picture posting, and by interactions through comments and direct messages. This is especially relevant for the ones who travel a lot or live far from their loved ones. Another advantage is the availability of entertainment and information. Facebook is useful both for those who want to get entertained by the lives of their acquaintances and for people who use it as a source of news and current affairs;

For advertisers: The possibility of targeted campaigns, focused on their particular target audience, has been of great value for brands. By achieving greater penetration in its main audience, companies also get greater engagement in their customer segment of interest. Another relevant point, especially for small businesses or young companies is that the tools to advertise on Facebook are quite simple, in the best “do it yourself” style, which reduces the need to hire someone to develop their own advertising content;

For developers: Facebook is an amazing platform for developing apps and games, and it offers a wide range of views and disclosure. Besides, there is a great network of providers for advertisement services.

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Channels

Google

Google’s main

distribution channels

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are certainly its own search engine and apps, such as Android, Chrome, Maps, and Gmail. The company also uses notifications (Gmail, News, Chrome, etc.) and recommendations (YouTube, Play Store, Play Music, etc.) a lot. Google also uses its own ecosystem for its products to advertise to each other.

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Cost Structure

Google

Google’s

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consists of:

Research and development

Traffic acquisition costs (TAC)

Sales and marketing

Data centers

General, administrative, and legal operations

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Customer Relationships

Google

Google is basically self-service. But its

customer relationships

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involve ensuring that search results are organized for accuracy and relevance so that users find what they’re looking for more quickly and with less risk of misinformation. This is also true for ads that are shown according to keywords.

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Customer Segments

Google

Google’s

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are divided into three: advertisers, content publishers, and users.

Advertisers include all entrepreneurs who want to market products and services online, whether they are large or small businesses, advertising agencies, or individuals;

Content publishers are the people or companies that create content to publish on the web in order to monetize it, such as bloggers, news sites, entertainment sites, digital influencers, and more;

Users include everyone who searches Google — me, you, and everyone who wants to find something on the internet. This is the segment that supports Google and the other two segments, after all, without an audience, there is no reason for advertising.

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Key Activities

Google

Google’s

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aim to ensure a good experience for users, avoiding negative network effects. They include:

Crawl and index: Google searches all existing pages on the World Wide Web and indexes them according to their content, in a kind of gigantic worldwide index;

Search, match, and present: It is estimated that there are more than 8 billion pages on the web and Google is responsible for organizing the results of each search by keywords according to the relevance of the matching pages found;

Improve searching: Google tries to understand what the user is looking for, in order to make it easier for them to find what they are looking for. When presenting the most recent high-volume searches, through autocomplete or suggestions, Google believes that it has improved results by more than 30% of searches. For the same reason, Google is always trying to disqualify sites that promote misinformation, spam, and click-baiting;

Build ecosystems: This is the objective when the company promotes the integration and communication between its tools, such as Google Search Engine, Android, Chrome, YouTube, Gmail, etc.;

Marketing: Google also needs to promote its products and services.

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Key Partnerships

Google

Google’s business model is a

multi-sided platform

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, which means that all sides of the equation are important to making the business work. Its

⁠

, therefore, are basically its customers:

Users: Not only from the search engine but from related products, such as Gmail, Maps, Android, etc.;

Content producers: Websites owners, bloggers, influencers, and YouTube publishers, which produce the content to be displayed as a result of searches and which insert Google advertising spaces (such as banners) on their own pages and portals;

Advertisers: Brands and businesses that create their websites (which will be displayed among search results), register with Google My Business, and advertise with Google.

In addition, Google has other partners that guarantee its global infrastructure, such as SEO partners (search engine optimization professionals who work so that companies and content producers attract more and better traffic), shareholders, developers, and manufacturers, in addition to Alphabet, the parent company of Google.

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Key Resources

Google

The biggest

⁠

of Google are not physical, but intellectual property and patents. Besides that, there are the search algorithms and Googlebot (the robot that checks content), the global technology infrastructure, and Android (the mobile operating system).

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Revenue Streams

Google

Free

Cost-per-click

Advertising

Percentage of app sales and subscriptions

Sales of products and services

Subscriptions from YouTube

Monthly/annual fees or per-usage fees

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Value Propositions

Google

Google has a

value proposition

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for each of its customer segments.

For advertisers, the biggest advantage is being able to invest in advertising knowing that they will spend money only on their specific audience. That’s because Google Ads are based on the keywords users are looking for. People often look to buy something. More than 80% of today’s buyers do some research on Google before purchasing a new product. So, advertisers’ ads will be shown to people with purchase intent, which increases the level of advertising accuracy;

For content producers, the value proposition is being able to monetize their work. Generating revenue from the production of content takes a lot of traffic. Google makes it possible for these producers to explore possibilities both for organic traffic and through paid media;

For users, the big benefit is being able to use the largest search engine in the world for free. With Google, they have access to information from around the world, in an organized, fast, simple way, from anywhere (with their phones) and in order of relevance.

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Channels

Microsoft

Microsoft’s

channels

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consist of:

⁠

MSN portal

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Desktop, iOS, and Google Play apps

Sales and marketing team

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Cost Structure

Microsoft

Microsoft’s

⁠

consists of:

Research and development

Human resources

Maintenance and security of data centers and servers

Marketing

Sales

Office and general expenses

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Customer Relationships

Microsoft

Microsoft’s

customer relationships

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consist of:

Software and hardware products are self-service, so, they don’t need much personal interaction with staff;

Corporate products and services, consulting, support, and advertising require personal assistance from the Microsoft team and representatives;

Social networking profiles are used to interact directly with end customers (e.g. Facebook and Twitter).

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Customer Segments

Microsoft

Microsoft’s

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consist of:

Commercial and corporate clients: Server management, IT support, and consulting services, for example, besides the regular tools and solutions, such as cloud computing, Office, and Skype;

General customers: All the common solutions (Office, Outlook, Skype, cloud, etc.) and mobile phone and video game platforms;

Advertising agencies and big brands: Ads at MSN portal and Bing search engine.

Server developers: a suite of development tools.

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Key Activities

Microsoft

Microsoft’s

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consist of:

Developing, licensing, and supporting software products and services;

Designing and selling hardware products;

Delivering online advertising solutions;

Providing IT consulting and support services.

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Key Partnerships

Microsoft

Microsoft’s

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consist of:

Companies that provide app development, data analytics, data management, digital advertising, distribution, internet hosting services, manufacturing, marketing, system integration, telecommunications, etc.;

Resellers and independent software vendors.

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Key Resources

Microsoft

Microsoft’s