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Is There a Keystone Business, Dominator and Hub Landlord Business in AR?


It is unclear how and where the business ecosystem framework can be applied as suggested in 2004 by Marco Iansiti and Roy Levien, faculty at Harvard Business School and colleagues of Moore’s, and co-authors of a subsequent treatise entitled The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability.

In his review of Iansiti and Levien’s book, Albert Foer summarized the central thesis of the book as follows:

At the center of each ecosystem is a so-called keystone business. Wise keystone management acts upon enlightened understanding that a keystone’s fate is shared with that of the other members of their business network. Rather than focusing primarily on their internal capabilities (as many of their competitors did), they emphasize the collective properties of the business networks in which they participate, and treat these more like organic ecosystems than traditional supply chain partners.

The authors (Iansiti and Levien) say that a biological ecosystem provides a powerful analogy for understanding a business network:

Like business networks, biological ecosystems are characterized by a large number of loosely interconnected participants who depend on each other for their mutual effectiveness and survival. And like business network participants, biological species in ecosystems share their fate with each other. If the ecosystem is healthy, individual species thrive. If the ecosystem is unhealthy, individual species suffer deeply. And as with business ecosystems, reversals in overall ecosystem health can happen very quickly.

Within the business ecosystem, three classes of company are described: keystone, dominator, and niche player. [GB1] Keystone and dominator strategies can be pursued by firms that occupy important hubs in their business networks. Niche strategies can be pursued by the much larger number of firms that make up the bulk of the ecosystem. They emphasize differentiation by focusing on unique capabilities and leveraging key assets provided by others.

The distinction between keystone and dominator is crucial. A keystone “acts to improve the overall health of the ecosystem and, in doing so, benefits the sustained performance of the firm. It does this by creating and sharing value with its network by leveraging its central hub position in that network while generally occupying only a small part of that network.”

A classic dominator, on the other hand, “acts to integrate vertically or horizontally to directly control and own a large proportion of a network,” capturing most of the value created by the network and leaving little opportunity for the emergence of a meaningful ecosystem. A hub landlord, the most anti-social species of dominator, “eschews control of the network and instead pursues control of value extraction alone,” providing little new value to its network, leaving a “starved and unstable” ecosystem around it.

Foer’s review goes on to question if (and how far) the model of a biological ecosystem is applicable to modern business networks.

The Keystone Concept and AR

To apply the keystone concept to the development of Augmented Reality business strategies, we should begin with the identification of keystone, dominator, and niche players. Is there one or more companies today that act to improve the overall health of the AR ecosystem and, in doing so, benefit the sustained performance of their firms? The group that appears to be investing the most in accelerating the development of AR through research comprises companies that design and manufacture silicon for integration into AR-ready products are Intel, Qualcomm and NVIDIA. Of these, Qualcomm took an early and high-profile position on AR and, by providing Vuforia technology to developers without royalties, contributed to the development of many other Vuforia-based businesses. Value around Qualcomm and in its larger network of companies has grown as a result of Vuforia’s being royalty free.

The AR business that acts to integrate vertically or horizontally to directly control and own a large proportion of the AR ecosystem is Metaio. Metaio has developed a full line of products and services for enterprise AR, including the AR application development software, the core enabling technologies that can be licensed separately, and the reference design for silicon and services for hosting AR experiences. In addition, Metaio is involved in basic and applied research with enterprise partners and generates a significant portion of its revenues from consulting engagements with enterprises that wish to deploy AR into their systems.

For enterprises to feel confident with the integration and adoption of AR in their IT systems, more companies with compatible and complementary technologies will need to emerge and thrive, offering enterprise buyers choices and the security of knowing that if their supplier is unable to meet their existing or future needs, they will be able to continue developing with AR-assisted systems using another provider. One of the requirements for there to be flexibility in IT supplier choice is a well-defined reference model with interfaces among components in the AR architecture.