\cite{GawerCusumano2008companies} How companies become platform leaders

papers platform Gawer, A. Cusumano, M.A.

bibtex

@article{GawerCusumano2008companies,
  title={{How companies become platform leaders}},
  author={Gawer, A. and Cusumano, M.A.},
  journal={MIT Sloan management review},
  volume={49},
  number={2},
  pages={28--35},
  year={2008}
}

These markets require distinctive com- petitive strategies because the products are parts of systems that combine core
components made by one company with complements usually made by a variety of compa- nies.

The business challenges include either making key complements or introducing incentives for third-party companies to create the complementary innovations necessary to build market momentum and defeat competing platforms.

Our strategic recommendations consist of two basic approaches.

  • One strategy, “coring,” addresses the challenges of creating a new platform where one has not existed before.

“Coring” is the set of activities a company can use to identify or design an element (a technology, a product or a service) and make this element fundamental to a technological system as well as to a market.
The platform leader must create economic incentives for ecosys- tem members to invest in creating complementary innovations and to keep doing so over time. In addition, platform-leader wannabes need to protect their ability to profit financially from their innovations, just as any innovator company should. The balancing act ― protecting one’s sources of profit while enabling complementors to make an adequate profit and protect their own proprietary knowledge ― is perhaps the greatest challenge to platform leadership.

example1: Google's search technology: make browser venders to implement their service to toolbar
example2: Qualcomm's CDMA technology
3:EMC's WideSky

Coring

Strategic Option:

How to create a new platform where none existed before

Technology Actions to Consider

• Solve an essential “system” problem
• Facilitate external companies’ provision of add-ons
• Keep intellectual property closed on the innards of your technology
• Maintain strong interdependencies between platform and complements

Business Actions to Consider

• Solve an essential business problem for many industry players
• Create and preserve complementors’ incentives to contribute and innovate
• Protect your main source of revenue and profit
• Maintain high switching costs to competing platforms

  • The second strategy, “tipping,” tackles the problem of how to win platform wars by building market momentum.1

For a dom- inant standard and a platform leader to emerge from such standards wars, the markets have to “tip” in favor of a particular technology standard or platform embodying that standard. “Tip- ping” is the set of activities or strategic moves that companies can use to shape market dynamics and win a platform war when at least two platform candidates compete.

com- panies should try to gain control over an installed base, broadly license their intellectual property and facilitate partner invest- ments in complementary innovation.

  • >see this reference
@book{shapiro1999information,
  title={{Information rules: a strategic guide to the network economy}},
  author={Shapiro, C. and Varian, H.R.},
  year={1999},
  publisher={Harvard Business School Pr}
}

Platform-leader wannabes should also invest in building brand equity as well as manufac- turing, distribution or service capabilities to signal support of the platform.
Pricing is another useful strategic weapon,,,,
At the opposite extreme, trying to stimulate demand through low or zero pricing for all or part of a platform system can de-stroy the business model for complementors.

But there is another powerful way to accomplish tipping: “tip- ping across markets,” which others have called “platform envelopment.”10 Tipping across markets occurs when a company crosses over the boundary of its existing market to absorb techni- cal features from an adjacent market and bundle them to extend the company’s platform.

  • >see this reference

@article{EisenmannEtAl2006strategies,
title={{Strategies for two-sided markets}},
author={Eisenmann, T. and Parker, G. and Van Alstyne, M.W.},
journal={Harvard business review},
volume={84},
number={10},
pages={92},
year={2006}
}

cases: Linux for servers, Internet Explorer

Tipping

Strategic Option:

How to win platform wars by building market momentum

Technology Actions to Consider

• Try to develop unique, compelling features that are hard to imitate and that attract users
• Tip across markets: absorb and bundle technical features from an adjacent market

Business Actions to Consider

• Provide more incentives for complemen- tors than your competitors do
• Rally competitors to form a coalition
• Consider pricing or subsidy mechanisms that attract users to the platform

There is an important difference between a product and an industry platform.

  • > this paper is written about "industry platform"

examples; microsoft vs Apple's machintosh, video game consoles

because Apple did not open the Mac’s architecture and software to third-party complementors and licensees.

We believe that coring is a possible option for any company because technology and architectural leadership do not directly depend on the size of the company.

  • > no for web application

switching cost of web app is much less than OS or hardware, because it can be used only by accessing certain URI.