Change in user preference from owning to sharing

What is common among Netflix, Spotify, Uber, Amazon and Airbnb platforms. If you are a tech savvy and market analyst, you would say that all these applications provide an ease to connect two-sided market with consumers on one side and suppliers on another. You are right but think about the change in user preference from owning to sharing, a driving force these companies are leveraging.

In the industrial era, Baby boomers and Gex-X were obsessed of owning cars, houses and goods. Efficient manufacturing fuelled the unprecedented growth of goods. Ownership was synonymous to reputation. Now millennials, also known as Gen Y, do not want to stick to materialistic goods as technology makes things more affordable and accessible as services. Let us take a closer look at the entertainment industry. Earlier the albums were released in the form of magnetic tapes and CDs, which later became downloadable from iTunes. Now people prefer to stream it from services such as Spotify and Apple music. Monthly subscription is more popular as few prefers to buy and own media. Buying a DVD has become thing of a past when latest movies can be streamed online. Netflix has repositioned itself from DVD rental company to streaming company. Subscription model is becoming popular instead of owning disks.

Before Uber disrupted the cab industry, few people viewed taxi hailing service as comfortable as click of a button. Uber completely changed the way riders acquired private transportation. After the success of Uber, car industry is foreseeing a future of having the convenience of your own car as a service rather than owning it. With the revolutionary idea of driver less cars, we don’t need to even know the driving and a day is not far when car will become an on-demand service. You pay a monthly fee, like Spotify, tell the app where you are going and get instant access to car on-demand. This shall be more efficient and less risky as compared to driving own car. New York, California, Nevada, and Arizona have already allowed autonomous vehicles testing.

IT expenses are also shifting from capital expenditure to operating expenses. Earlier starting a new company with limited funds and infrastructure was a distant dream. Companies were overwhelmed by the investments in hardware infrastructure. However, digital era of twenty first century is not the same. Having a great idea is good enough to begin a start-up without investing much energy and funds on infrastructure spending. Success of Airbnb, Spotify and Uber is a proxy to the shift in company setup.

Software as the service and cloud as the platform have fuelled the growth of IT industry and proved to be a big boon for startups. Companies such as Airbnb, Dropbox and Netflix are operating their IT Infrastructure through cloud. A decade ago, cloud framework began as a simple idea when Amazon started out sourcing its excess server capacity. Today that idea has become an AWS with more than 40% market share as mentioned by synergy research group. We don’t need to make large upfront investments in hardware and spend a lot of time in managing resources. Instead, you can provision the right type and size of computing resources as per your need, and only pay for what you use. As an experiment, I tried to host a website on Linux server instance over cloud and it took me ten minutes. We can pay for usage instead of buying permanent licenses for software programs. Scalability is another merit you get from cloud without having to worry about fluctuating needs. Salesforce CRM software provided an alternative to on premise CRM systems. IBM, Microsoft and Google are investing heavily on cloud infrastructure as they see a potential for continuous revenue stream from companies who are increasingly planning to move its IT infrastructure on cloud.

Trend is to embrace the idea of sharing instead of owning which is driving the developments in twenty first century.  It can prevent inefficient usage of limited resources. People are less interested in owning, which is fuelling the disruptive trend that is going to define our future.