Harvard Business Publishing

only one platform
only one standard
and it ain't proprietary
*ahem* it's called the internet.

one example in answer to your question:
ps3,xbox,nintendo: building platform focus
chinese/korean online gameing: creating markets focus

Umair,

Back at BGen you wrote about combining M/N/C's (e.g. Adsense = market + network).

Have you seen anything that successfully combines a community + market?

I'm thinking this may be the route to take to "Democratize Innovation" (Eric von Hippel).

Thanks for a great post!

Ethan

I like your piece, Umair. But the organising world hunger stuff you talked about last time is perhaps more pressing? Not wanting to impose on your creativity, etc., but apple and facebook seem to get a fair amount of comment already.

Do Google's non-search/ad offerings (gmail, etc.) count as bad-strat because they're ad-supported? Or does the fact that Google runs the ad market behind them make it ok?

Is platform thinking holding players back?

I think it's also "stupid thinking about markets" that holds players back (at least when I've pitched these strategies ;-)

Some organizations just can't get laissez-faire enough for a real "market" to work. It's in the DNA, as you've said.

e.g. If Verizon had an AppStore, they would find the idea of ATT making a popular "app" that worked on it's phones an anathema.

Someone who seems to understand the strategy is Better Place, the new electric car company - by leasing batteries instead of selling cars they will break so many value chains that the world will be a better place - for them and us, if not for many oil companies, oil countries, and auto manufacturers.

This isn't intended to be a plug but more of a hopeful critique from wise minds. We are intending to do just this in the financial service space with Banktastic.com. The technology is secondary to the community and industry information. Our hope is when you create a place that allows openness and sharing, that's when innovation happens.

Would love to know your thoughts, feel free to email me at brad[at]banktastic.com.

Thanks!

The idea that Apple opened up the mobile market and Facebook added some walls is definitely sound - but the Apple experience is inherently a closed and restricted one, you either play by Apple's rules or you don't. Would it not be a better eco system if there were multiple devices that could interact with multiple software interfaces? Can Apple win in that scenario?

Can you expand on how Google knows platforms are really markets? From my perspective, they are building out products on top of their platforms and monetising it through their ad networks. Is this what you mean?

Facebook definitely missed out by not monetising their apps, though this could be changed if they wished. Facebook looks like they are building out a social platform layer for the internet - I think they will pull down those walls at some point and expand on Facebook Connect. The question then becomes how do they monetise that. Maybe they need some new thinking to get it right next time ;)

Sorry - in addition to my comment: "Facebook definitely missed out by not monetising their apps, though this could be changed if they wished"

There are free apps on the App store as well, but without the viral effect of Facebook, the vampires etc do not appear to people who have not asked for them. Instead we get $1000 pictures.. what is needed in Facebook is a block option for certain types of apps. If Apple's apps had the viral effect, their monetisation would not stop the vampires and werewolves etc.

Riaz, quick thought:

As to google's platform/market, I just read a post somewhere a couple weeks ago offering up the idea that google's platform these days is really the entire internet. They're an entrypoint to the internet ecosystem, and the value of that ecosystem is what they monetize when they put ads alongside their search results. You can directly see this in how google has treated android--they honestly don't care if they come out on top in the platform wars for mobile devices. They just want to push mobile devices and the mobile internet in a positive direction, then be sure to defend their position (searching google.com, or some other entrypoint they can serve ads alongside) as the entryway. I think that speaks to them seeing the internet ecosystem as a market whose value directly drives their success.

Blake: Yes that makes sense - though that starts to feel like a tactic used by a monopoly to protect their core market.

Nice read.

However, success seems to be bringing out signs of evil in Apple's DNA; case in point: Apple shipped out iPhone 3g where the 3g was defected.

Also, how is Apple + iPhone + App Store any different than MSFT + Windows + Windows Apps?

I know this is off-topic, but I was wondering what Umair and everyone else that frequents this discussion thought of Shai Aggasi's Better Place initiative...

http://www.wired.com/cars/futuretransport/magazine/16-09/ff_agassi?currentPage=0

I'm not saying that my company isn't jumping on the App Store bandwagon, but there are downsides to Apple's play that aren't being discussed. Is it so proprietary that, in the end, it stiffles innovation? I can't even offer a trial version of our software, which in essence limits the price I can charge. Look at the software that's up there now. Most of it is junk... and it is treated just the same as the good stuff. Nearly impossible to filter through it all.

More importantly, it's early. The mobile world now is like the PC world in 1985. Will Apple be a big winner here? Could be, in the long run. But they could also get lapped as someone takes advantage of their blind spots. Or it could be that Apple's strategy -- vertical integration -- was right from the beginning and the PC world (thanks to IBM) was the fluke. I wrote about that one on my own blog:
http://mobilesuccess.infinitysw.com/2008/07/07/opening-the-closed-door/

Here's to Apple, though. Bringing a little excitement and sanity for all of us who have been writing mobile apps through the nuclear winter that has been this decade.

The problem is that Facebook is a Social Network, offering its members the services of being-connected and sharing. Could such a network survive if it became a market(users paying for apps)?
Maybe.. I mean Social Network also exists without the biggest part of the new apps. However, admittedly the new apps add incrimentally to the sharing experience and they are necessary so that they keep it alive and evoluating (so it could become a new market for Facebook). Would the users, however, be willing to pay for "networking"-apps? And if some of them payed their friends should also pay in order to be shared. It should not be neglected that Apple stores' apps are boosted by the revolutionary and powerful platform-device-software iPhone. Are the networking-apps the same attractive? It needs more information to decide that.

Given the nature of Facebook's business, if they could better and more transparently manage the apps, preserving their profits, they could improve their services. Otherwise, the answer would be to keep some basic apps for free and create a new market with additional apps (giving incentives for better apps). It needs a good study and a lot of info to find the balance because its not the same product with iPhone.

What do you think?

Thank you

The problem is that Facebook is a Social Network, offering its members the services of being-connected and sharing. Could such a network survive if it became a market(users paying for apps)?
Maybe.. I mean Social Network also exists without the biggest part of the new apps. However, admittedly the new apps add incrimentally to the sharing experience and they are necessary so that they keep it alive and evoluating (so it could become a new market for Facebook). Would the users, however, be willing to pay for "networking"-apps? And if some of them payed their friends should also pay in order to be shared. It should not be neglected that Apple stores' apps are boosted by the revolutionary and powerful platform-device-software iPhone. Are the networking-apps the same attractive? It needs more information to decide that.

Given the nature of Facebook's business, if they could better and more transparently manage the apps, preserving their profits, they could improve their services. Otherwise, the answer would be to keep some basic apps for free and create a new market with additional apps (giving incentives for better apps). It needs a good study and a lot of info to find the balance because its not the same product with iPhone.

What do you think?

Thank you

Let's not forget the other platform player who gets it: salesforce.com. They monetized the platform with their AppExchange years before Apple.

Umair - how is the payroll of Apple treating you?

Apple has followed a closed strategy of software tied to hardware for its entire life, the Mac, iPod and now iPhone. No doubt they make outstanding products and software. But equally undeniable is their anti-web anti-open approach to products - so it is a bit insulting to hear them heralded as nex-gen open product relative to any web based service. I applaud your chastising of Facebook moving towards a closed environment, but do not insult us by putting the words Apple and "radically open" in the same sentence.

Interesting premise...and one that certainly resonates with me.

For another example of industry transformation, consider the impact of e*Trade on the brokerage industry...

Markets alter the basis of competition

Within an opaque market, the profits flow to those with access and visibility. The basis for competition in such a marketplace is "better access" or "preferential treatment" - and this was certainly the strategy for Merrill Lynch, A.G. Edwards, and other dinosaurs who did not survive (e.g,. EF Hutton, Dean Whitter & Co.).

For a glimpse at this era...
http://www.bizjournals.com/atlanta/stories/2001/10/01/focus10.html?page=1

e*Trade altered the basis of competition by introducing "access" to the marketplace, along with previously unavailable access to the information necessary to make informed decisions. Instead of relying upon the broker for information, a rather expensive channel, the world-wide web provided unfettered access to all sorts of information (remember when EDGAR was a novelty?).

Markets cause strategic domino effects

With the advent of "easy" and "inexpensive" trading, we had huge numbers of individuals who believed that with the information now at their fingertips, they could make their fortune by "day trading" - staying one step ahead of the rest of the marketplace. Indeed, fortunes were made...and they were lost.

Of course, during this era the "bubble" was formed and then burst, teaching expensive lessons to those who believed that markets only moved in one direction.

One lasting impact of this new information was the introduction of new regulations to separate investment analysis from investment banking. Because the markets for information were "open", the retail investor had access to analysis they used to make trading decisions.

Because the underwriters of these same investment banks profited handsomely from IPO participation, many firms were tempted to ignore the danger signals that a more prudent investor might observe. While these conflicts of interest have always existed, the temptations (and consequences) were exponentially increased by the "new" trading markets.

Markets atomize the value chain

So, with the implosion of the Nasdaq in 2000 we had an event which once again altered the financial markets. Day Traders returned to Day Jobs, and the business of investing once again became a long-term responsibility (for most of us).

Nonetheless, the value chain had been irrevocably altered and retail investing will never again be the same. With open access to (most) information and to the trading marketplace, we can still trade stocks for $7.95 per trade (and less). So, the fees available to stock brokers have not returned. However, the importance of a trusted adviser was again recognized.

In the end, Charles Schwab may be the best example of a company that not only survived - but thrived by combining the best of the old with the best of the new. Recognizing that the platform forever altered the dynamics of the industry, Charles Schwab shifted the basis of competition to match the new reality.

Charles Schwab, back from the brink
http://money.cnn.com/magazines/business2/business2_archive/2006/03/01/8370581/index.htm

It's funny, but Umair talks about next-gen strategy as if it's really something that hasn't been done before (no offense, Umair, I love your writing). But I just think this is an artifact of language rather than a fundamental shift in competitive strategy.

Google and Apple's "openness" is just another TACTIC (different from strategy) to gain economies of scale. Scale is the strategy here! The tactics are, API's, platforms, etc. - the goal is to gain distribution!

Because at the end of the day, Google needs to be on as many web sites as possible, used the most for searching for everything (from locations to documents to images), etc. - if they stop gaining scale, they'll lose.

So in my mind, this isn't next-gen anything...the tactics have changed but the game has stayed the same.

umair- thoughts?

http://www.techcrunch.com/2008/08/25/can-you-guess-which-facebook-app-is-making-a-million-dollars-a-month-i-can/

Horribly written article. Sorry.

I initially read Umair Haque's post at BusinessWeek at URL http://www.businessweek.com/managing/content/aug2008/ca20080821_127879.htm

When I first read Umair Haque's piece, I had an unconscious reaction which only just now consciously manifested itself.

Namely, I just realized that his "The Platform is the Market" is analogous to Marshall McLuhan's famous dictum "The Medium is the Message".
Please see http://individual.utoronto.ca/markfederman/article_mediumisthemessage.htm

The philosophy of Sharing and Openness that contributors above either belittle or support has been far more an integral part of Apple's culture than might be supposed. It is true that certain aspects of Apple's products are "closed". The famous OS X for example. As were Apple's earlier operating systems.

But Apple's contributions go far beyond the narrow focus of the contributors' writings above. People forget that word processing and laser printing and the GUI of the early MAC were breakthroughs of unimaginable power for the early 1980-s. At least they were when delivered as products to the "mass market".

These approaches were built upon work done in other places — like XEROX's famous research center at Palo Alto, CA — please see http://en.wikipedia.org/wiki/Xerox_PARC
— later to be popularized and marketed by Apple —
BTW, what exactly were the XEROX executives waiting for? — their own engineers had created a world revolution right under their noses and they couldn’t recognize it, but some kid named Steve Jobs could?

Apple gave up some of its pioneering roles when the groundwork had been done for other contributors to follow — there was (and still is) much more, other work yet for Apple to do. Seems obvious to me anyway, at least it is if based on the assessment of every new (or made-better) technology that Apple periodically and inevitably delivers.

When others deliver superior applications for an iTunes Store or an iLife application suite then we'll know that Apple once again has pushed others into delivering competent products as well.

Guess who most eagerly waits for each new OS X release from Apple so that it can get to work on the next better version of its own operating system?

So what I don't get is why some writers here are griping about something that Umair Haque is not even addressing.

Umair wrote "there's Apple - ignoring many of the rules of platform strategy, but radically redesigning the long-suffering mobile value chain with the iPhone App Store."

And "Apple took something radically evil - the mobile industry - and is making it a little bit more good".

Haque wrote "Apple doesn't see a platform to be manipulated, but a market to be made".

Here Umair Haque was addressing the mobile platform. Sure there might be other platforms where his message would also make sense but let’s stay on topic here, please.

If Apple really thought that the open-source community working with LINUX could create an OS in as timely a manner and with the same value-add as its own OS X, wouldn't it convert to LINUX? Why wouldn't it?

The basics are good. Make it better with the Open Source Community.

What's the problem?

There is always a balance between the great skills gained from the community in "opening up" and the control lost if one has a vision that ITSELF might otherwise be lost. Apple is in that predicament. You don't really have that problem when you are only working on an open-source word processing program.

Apple had to dream up many of its own apps before those apps ever made sense to anyone. Then of course everybody immediately and conveniently forgot where the breakthroughs were made.

When MS first made its GUI "Windows" the geeks who had once sworn NEVER to give up their DOS commands all of a sudden converted to saying things like "well, a GUI is so OBVIOUS —— why would you want to use anything else" AND "listen, a GUI is self-EVIDENT; there really is nothing else that could have been created in its place."

Sound familiar?

Same with the iPhone. Who made it first? Why didn't Apple just wait for "someone else" to do it?

Sounds to this writer like Umair Haque has simply recognized, acknowledged, and complimented the genius "at the heart of Apple's furious domination of the mediascape."

I have to apologize -- I ended up getting off topic just like everyone else.

I did it by criticizing others when I should have been focussing on the questions at hand -- namely, the questions posed by our host as:

Is platform thinking holding players back?

Are there players who are still using platform thinking to great effect?

Who do you think who should be thinking in terms of markets instead of platforms?

Where else do you see players shifting from platform thinking to market thinking?

I am now writing from home under one of my pseudonyms.

To me the reason WHY a company like Apple selectively chooses when to go to Open Source solutions and when to stay within the proprietary solution framework seems self-evident ---> when it makes SENSE. Neither approach is all-encompassing nor all-appropriate. What would ever make us think otherwise?

And to me and to our host, Umair Haque, and to Apple, it apparently makes sense on the mobile platform to go "OPEN". Again this is not going "OPEN" for Apple's iPhone OS but for the market apps.

That is, Apple admits that it is unable to know where this very fragmented market wants to go. But guess what? Apple (as Umair Haque so eloquently points out) doesn't HAVE TO KNOW.

Apple is TOO BUSY LETTING THE MARKET MEET ITS OWN NEEDS. Even Apple is not God. Nor does Apple pretend to be God.

Create the Ecosystem and let the organisms populate and diversify.

The questions posed are thought-provoking. I can guess that anytime some person or some company can establish a novel platform (think Entire New Ecosystem) then I would think that thinking in terms of platforms makes sense.

But if the platform is already established like is the interstate highway system and like is the automobile that the highway system hosts, it makes sense to move to "market thinking". (I am purposefully suppressing thoughts of novel technology like that of the "Jetsons" here so as to keep my thinking from going tangentially into outer space.)

So ZIPCAR seems like a concept that established rental companies or even automobile manufacturers could see as arising from "market thinking". And it should be welcomed.

Likewise someone proposing to "apply" a different engine to the car "platform" your automobile company already manufactures as a proposed novel solution for urban-only drivers as an example (or some other 'application' your company had not thought of) should be welcomed because it would only expand your own market --- that is, for your own proprietary product.

Software is an example where the staging costs are relatively low. So-called virtual companies (temporary phantom companies) can be set up quickly at low cost and then disbanded when their original purpose has been realized.

Similarly market thinking as envisaged by our host may seem to be more easily realized, at a lower cost, in the computer business. But this might not be entirely true.

There is great risk in assuming all the development costs of any new technology within a single company's budget. A big effort could break the company.

But when "platform" companies do joint ventures, or allow others to do the development "externally" of a new aircraft engine, they don't have to assume those associated risks. And yet they still benefit (as say the airplane mainframe's manufacturer) when the market for their proprietary product expands.

They need not go obsolete or bankrupt just because they did not invent the new engine themselves.

MS could indeed have maybe done a lot better for its shareholders by not trying so hard to be everything for everyone in the PC business. Why do games? Why do your own notepads? Why even worry about browsers or search engines? Why not farm it all out? Or let the Ecosystem do it for you?

In short, why not just concentrate on making the best PC platform OS ever? (Hint: the answer to THAT question is also another book!)

I have to thank Umair for his thought-provoking article. It has only just started me thinking.

I guess, the reason why Apple got it right this time round is because Steve Jobs has 20/20 vision now, having got it both right and wrong two decades ago,when he mass marketed the XEROX PARC lab's graphical user interface part right in the software side and then blundered with the closed operating system part on the hardware side wrong. Now two decades later, he is still keeping the same strategy intact, albeit having a user friendly hardware that has thrown open the software side open for apps.

In my opinion, facebook, although it is a closed user group model, is perfectly poised to now jump out to the mobile space by making a hardware acquisition --and in this case not a device like apple's, but actually jump into buying the "spectrum", by buying a SIP enabled mobile phone company and extending the facebook brand name to it and also porting the membership.

So it is a really question of how do we turn a losing situation into an advantage and all the players in the old paradigm, yahoo, google, etc could make this play in telecoms, and then acquire a banking license and combine all three into one powerful platform.

Remember, the world is still operating within a licensing raj, and telecoms and banking are two sectors protected by limited access to business players to participate, and this provides for a guaranteed customer base with an assured revenue stream, and now it is a question of converging the three.

Lets see who will do this first: Yahoo, Google or Facebook?

Umair, thank you for the piece. It is very interesting to explore, but as I try to explain more fully in my blog, I don’t think there’s all that much in the distinction you attempt to draw. In fact, you could argue that Apple and Facebook are interchangeable - leading me to think they are more similar than different.

I prefer O’Reilly’s explanation that successful Web 2.0 businesses are based on an “architecture of participation”. Whether that architecture is a platform or a market seems irrelevant. But perhaps we should see platforms as a feature of markets or certain market phases, rather than "platforms as markets", as you suggest. Perhaps this is nothing more than saying that markets consolidate around 2 or 3 large participants (platforms?) and fragment again over time?

Disagree. "Apple" is a segment of a market. They have loyal followers who will buy into _their_ closed market and products that usually need a v2 before they are really ready.

Witness iphone. Here is the continuum: Smartphone (e.g., Motorola Q) - it can compute (~windows), and communicate (cell phone); BlackBerry (RIM) - it can communicate and compute (note the different angle); in the middle, or possibly orthoginal is iphone that can play (some apps, www), and communicate (with problems), and almost compute.

So, why would a business person (likely PC, Windows, MS Office, Outlook, IE) choose an iphone except for the "Apple" market?

Mind you, they are smart to be a marketing company of loyal followers. The technology side is much messier.

It is now a deluge of COPYCATS --> it is raining COPYCATS (Google) and COPYDOGS (MS)...

Umair was right. Please see "App Stores: Microsoft, Google Follow Apple".

This is a story posted by BusinessWeek dated September 5, 2008.

The link is at http://www.businessweek.com/technology/content/sep2008/tc2008095_539146.htm?link_position=link5

One mobile platform that Umair forgot to mention is Nokia. Nokia is the market leader in the space and ofcourse has opened its platforms for development by other parties for many years.

I do agree with Umair's premise that the days of owning the platform and building value add on top of it are gone (unless you are Microsoft). Even Microsoft has been wooing developers on its mobile platform. In fact that may be the biggest advantage Microsoft has over competition.