(2008-08-20) Haque Facebook Vs Apple Platform
Umair Haque compares FaceBook's vs Apple Computer's Platform strategies. Yesterday, we saw platforms as mechanisms to strategically control complements. Strategists and economists studied platform wars intensely - with Annabelle Gawer and Michael Cusumano's excellent Platform Leadership being perhaps the reference work for strategists. Today, I think there's perhaps a simpler and more powerful way to think strategically about platforms. Let me advance a simplifying proposition: Platform-s are Market-s.
Apple took something radically evil - the mobile industry (TelCo) - and is making it a little bit more good.
What would it take for FaceBook to stop thinking platforms, and start thinking markets? Well, simply start charging people for apps, for a start: that would amplify incentives for crappy apps to go the way of the dinosaur. If advertisers are subsidizing apps for people, Facebook's market will always be distorted - because advertisers need consumers more than consumers need advertisers today.
Who else knows that platforms are really markets? Google, of course. (Hmm, because the run a WebAd Market? I guess so. I Commented to ask about GMail.) Who's blind to it, and still plays by yesterday's rules? Microsoft, AOL, Yahoo. But that's just a start: the most interesting examples come from players outside tech industries altogether: Ford, The Gap, and Bear-Stearns, to name just a few players trapped by platform logic.
I think Umair's point is that the Legibility/fungibility of money/market transactions make incentives more transparent, and makes it easier to unbundle/restructure economies...
Aug26: Albert Wenger wrote about Umair's post. Somehow in Umair’s view this makes Apple’s app strategy a “market” and genius and Facebook a failure. This strikes me as a gross exaggeration. It is worth examining both of these differences more closely. I Commented.
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