1. A platform business model builds value by consolidating customers onto a shared platform and simplifying market processes to reward all participants in the value network. 2. Successful platform models leverage network effects by increasing in value as more users and developers participate, and employ openness to attract developers to expand the platform's functionality through applications and services. 3. Platform businesses generate profits both directly from usage as well as indirectly from the "long tail" of applications and services developed by third-parties that add value to the overall platform ecosystem.

1. Platform Strategy &
Ecosystems
Open Business Conference
May 6th 2014

2. Warming Up

3. Let’s take a look at the 5-year predictable horizon

4. The world will be faster, more connected, with a billion
more participants in the global economy.

5. A rising middle class in Brazil, India, China, and Indonesia will adopt
devices first and computers second, leaping the digital divide.

6. Gen-Y consumers and employees will be in their 30s, defining the
conventions for work and play styles.

7. 4G wireless will be broadly available and
5G will be in limited deployment.

8. Carrier networks will be optimized for traffic
against specific services and media types.

9. Consumer devices will be dominant, but small devices for data sensing
and processing will make up a significant percentage of mobile and
Internet traffic.

10. Most commerce will be initiated via mobile devices and completed on a
range of platforms.

11. Most transactions, when executed, will be multi-party:
between the app and the underlying services.

12. Social media with effective partitions and channels will be the dominant
mode of communication.

13. User attention will continue to fragment, alternately directing and being
directed by a range of apps.

14. Data will be a unit of value and a mechanism of lock-in.

15. Industries will be platform-shaped,
with a dominant player occupying the high-margin platform position
and pushing others to supporting roles.

16. What is a Platform Business Model?

17. Product to Platform

18. Product to Platform

19. Product to Platform

20. A platform business model is defined as follows:
It is a business model which builds value for multiple sides in a
given market by consolidating customers, simplifying market-
wide processes, and rewarding each player in the value
network between the value network and the customers.

21. There are many examples of platform business models
in action today.

22. Eisenmann, Parker, Van Alstyne (2006),“Strategies for Two-
Sided Markets,” SSRN.com.

23. There are many examples of digital platform business models
in action today.

24. 1. Desktop OS: Unix, Mac, Windows
2. PDAs: Palm, Psion, Newton
3. Game Consoles: Wii, Xbox, PlayStation
4. Network Switches: Cisco, IBM, HP
5. Multimedia: Adobe/Flash, MS/Silverlight, Google-Apple/HTML5
6. Payment Systems: PayPal, Google Checkout, Visa, Apple, Mobile Felica
7. Mobile Devices: iPhone, Android, Symbian, Blackberry
8. Enterprise Systems: Salesforce, Oracle, i2, IBM, SAP
9. Social Networks: Facebook, MySpace, LinkedIn, Monster, Twitter
10. Batteries: Sony, Panasonic, Sanyo, A123
11. Web Search: Google, Bing+Yahoo!, Baidu
12. eBooks: Amazon, iPad, Nook, Sony
13. Smart Grids: IBM etc.
14. Health Care: Microsoft, WebMD, IBM etc.
Eisenmann, Parker, Van Alstyne (2011), “Platform
Envelopment,” Strategic Management Journal.

25. Platform businesses are built on network effects.
The more network effects, the stronger the platform.

26. Kindle
Usr Book
PSP
Usr Gam
Zune
Usr Mus
MicrosoftSonyAmazon
Eisenmann, Parker, Van Alstyne (2011), “Platform
Envelopment,” Strategic Management Journal.
MP3
User
Musi
c
Video
TV
Games
Dvpr
Web
HTML
eBooks
Publi
Calls
User
Apple

27. Openness is a critical element of all platform businesses.

28. Eisenmann, Parker, Van Alstyne (2011), “Platform
Envelopment,” Strategic Management Journal.

29. V4
V3
Price
q1
p1
Quantity
V1
V2
Platform sponsor gives away platform
value.
Partners build apps for installed
base, adding new layers of value.
Platform sponsor benefits from
increased sales & royalties.
Partners benefit from cost savings and
installed base.
Parker, Van Alstyne (2011), “Innovation, Openness & Platform
Control,” SSRN.com.

30. Platform models generate profit through
first and third party usage.

31. Most firms can only
concentrate on most
valuable apps
Profits increase when
others add to platform’s
“Long Tail”
Parker, Van Alstyne (2011), “Innovation, Openness & Platform
Control,” SSRN.com.

32. Platform models build digital ecosystems
through virtuous cycles.

33. We view Digital Ecosystems to be the digital counterparts of biological ecosystems,
exploiting the self-organising properties of biological ecosystems, which are
considered to be robust, self-organising and scalable architectures that can
automatically solve complex, dynamic problems. Digital Ecosystems are a novel
optimisation technique where the optimisation works at two levels: a first optimisation,
migration of agents (representing services) which are distributed in a decentralised
peer-to-peer network, operating continuously in time; this process feeds a second
optimisation based on evolutionary computing that operates locally on single peers
and is aimed at finding solutions to satisfy locally relevant constraints.
“
G. Briscoe, P. DeWilde
IEEE Conference on BIONETICS (2006)

34. A digital ecosystem is a distributed, adaptive, open socio-technical
system with properties of self-organization, scalability and
sustainability inspired from natural ecosystems.
Digital ecosystem models are informed by knowledge of natural
ecosystems, especially for aspects related to competition and
collaboration among diverse entities.
“
Various authors
Wikipedia: Digital Ecosystem

35. [Ecosystem Competition]
Kishore S. Swaminathan (2009), Chief Scientist, Accenture

36. This approach of common platforms
and shared incentives
is the path to digital ecosystem success.

37. One Last Thought

38. Given current abundance of choices and
scarcity of user attention,
compelling experiences
must deliver platform capabilities and content to users.
Without such experiences, an ecosystem fails to thrive.

39. Weill & Woerner (2013), “Optimizing Your Digital Business Model,”
MIT Sloan Management Review

40. Thank you
Please send questions and comments to:
@sramji
sramji@apigee.com