The Platform Is What Matters

Today, Steve Jobs mentioned that the Apple iPhone will finally opening up for third-party application development in February 2008. Apple will provide a iPhone Software Development Kit (SDK) for developers to create applications for the iPhone and iPod Touch.

Platforms

That is the correct move. As far as I can recall, almost every major software company or organization has become dominant by bringing developers to their platform. If your platform can attract developers you end up with a dynamic ecosystem which will fill every niche’ imaginable and extends the usefulness of the platform. An operating system, by itself, is not much use, but with untold third-party applications written for it, it can provide unlimited productivity and entertainment.

Platforms often provide an application programming interface (API), which gives developers freedom to create and innovate by building and launching applications on top of the platform. Some platforms are still closed-source, such as Microsoft Windows and Apple Mac OS X. Others platforms are open-source, such as Linux and Sun Solaris, so that the platform, itself, can be modified. Here is a list of some successful platforms:

Open-Source Platforms

• Operating Systems
  1. BSD
  2. Linux
  3. Sun Solaris
• Web Browser
  1. Apple Safari
  2. Mozilla Firefox
• Programming
  1. Sun Java
• Advertising
  1. Openads
• Social Network
  1. PeopleAggregator
• Social Media
  1. Songbird

Closed-Source Platforms

• Operating System
  1. Apple Mac OS X
  2. Microsoft Windows
• Web Browser
  1. Microsoft Internet Explorer
  2. Opera
• Programming
  1. Microsoft .NET
• Advertising
  1. Google AdWords & AdSense
  2. Microsoft AdCenter
  3. Yahoo Advertising & Publisher Network
• Social Network
  1. Bebo
  2. Facebook F5
  3. Orkut
  4. MySpace
• Social Media
  1. Apple iTunes
  2. Digg
  3. Flickr
  4. Slashdot
  5. Technorati
  6. Wikipedia
  7. YouTube

Network Effects

Both open-source and close-source platforms have been successful (as shown above). The concept of the platform is to drive the community. As people are increasingly reliant on the platform, network effects kick in. The idea with network effects is the more users that use a platform the more valuable it becomes for everyone. The diagram shows the value of network effects for the telephone platform. As more and more people join the phone network, it becomes more valuable — anyone can call anyone else that also has a phone. The total number of possible connections in the network is n*(n-1)/2, where n is the number of phones.

Network effects and the platform go hand-in-hand. Often the platform is the catalyst for network effects. This is what makes the the platform so valuable. As aspiring startups and old-stalwarts battle for supremacy in the technology world, it is important to align strategies that will enable your platform to achieve network effects.

Microsoft has done this with their Windows and Office platforms. Google has done this with its AdWords and AdSense platforms. Social Media and Social Networks depend on network effects.

Apple has done this with their Mac OS X, Safari, iLife, and iTunes platforms. Now, by providing a iPhone and iPod Touch SDK they are adding a mobile platform to the mix — in other words, OS X. Each platform that they add complements and reinforces the others. Thus, each additional platform can achieve network effects with existing platforms!

Who owns the most major platforms?

Adobe

1. Creative Suite
2. Flash
3. PDF

Amazon

1. Affiliates
2. Retail
3. Cloud Computing (EC2, S3)

Apple

1. Final Cut Studio
2. iLife
3. iTunes
4. Mac OS X
5. OS X
6. Safari

eBay

1. Affiliates
2. Auction
3. PayPal
4. Skype

Google

1. AdWords & AdSense
2. Android
3. Apps
4. Maps
5. OpenSocial
6. Orkut
7. Search
8. YouTube

Microsoft

1. AdCenter
2. C#
3. IIs
4. Office
5. Search
6. SQL Server
7. Windows
8. XBox

Sun Microsystems

1. Java
2. OpenOffice & StarOffice
3. Solaris
4. Sun Grid

Yahoo

1. Advertising & Publishing
2. Flickr
3. Search

Obviously, the list above is not a complete, but it can give you a sense of the value of platform synergies for these organizations.