Four months after Facebook unveiled its platform initiative, now everyone is talking about a platform strategy. Everyone in the technology ing space dream about creating the next web 2.0 platform. Virtually every major tech (software, mobile, hardware, broadcast, payment) company has a platform strategy, not to mention an equally elaborate set of plans to do whatever possible to stop any competitors from achieving platform status or anywhere near there. Over lunch yesterday, one of my business partners was quick to point to the need of an open platform strategy for Apple's iPhone. That’s a little too simplistic if we consider the business strategy of Apple and the complexity of putting literally hundreds of small technological innovation into one big one. They simply cannot afford to open the floodgate to deal with all kinds of unpredictable technical issues due to many proprietary designs (hardware included) as well as the speed they bring these products to the market. There are many factors that make platform-based design a sine qua non . Design has become far too complex to allow engineers to start from scratch development and verification at reasonable effort every time. While time-to-market targets have reduced drastically to an unrlealistic level – development from scratch is very difficult challenge. Apple performed a mission impossible job. And just reusing your own or third party IP modules is not enough, reuse as a methodology itself has to be optimized as well. In many cases, it is no longer sufficient to focus on one specific bus protocol because of different applications require very often different bus protocols, for example by a given choice of an embedded CPU or a specific touch-sensistive screen. But it is an inevitable move for Apple, Jobs will announce the plan for third-party iPhone applications on Wednesday. Next Feb, iPhone developers will finally be able to obtain a software development kit that will give them the tools and the know-how to create safe and reliable applications for the iPhone without having to depend on "jailbreaks" programs. That means iPhone users will be able to add applications without voiding their warranties. It has taken a while and the reason being Apple wanted to find a way to be as "open" as possible to third-party development while still keeping a lid on viruses and malware as well as managing potential risks that could kill the iPhone before it becomes the iPod.
Platform strategy is always an interesting one which most people understand half of it only. Any platform innovation takes on very different properties depending on which of the following three strategies you have in mind:
1/Improve Cycle Time Productivity -This is the most basic domain of platform innovation—develop your own product line with a product architecture that people can build and extend upon. Over a longer term, almost every company needs to undertake some form of architecture rationalization effort to migrate toward a common platform. The goal is to improve their productivity and reduce cycle time and time to market. So this is platform strategy 101.
2/Strategic Business Eco-system Building - This is a bigger idea, brining in innovation from partners and suppliers, the goal is to build out an ecosystem of partners who will add their efforts to yours to develop solutions that jointly compliment and reinforce each others’ strategic positioning. The typical mistake of these efforts is recruiting a large number of strategic partners, which is almost never a good idea. Rather the focus should be on a smaller group of intimate partnerships, making sure you actually bring together the best of breed companies that share a common industry vision or more effecitvely a share enemy.
3/Owning a De Facto Standard - This is the ultimate thing, in which your technology becomes a critical enabler of a whole class of applications or verticals or categories. Microsoft, Google, eBay and iPod did that. There are many others too, GSM vs CDMA, PS2 vs Nintendo and XBox, ATG vs BEA, etc. Becoming the De Facto is like winning the lottery and you almost need to have this in your b-plan if you are pitching VCs for big dollars. Being a monopoly also has its price. You will become the incumbent and the core target of all these basement start-ups, those young smart guys in India or France is working day and night to put you our of business. You will end up being the Defender. Again, it is not a bad problem to have because you must be filthy rich by then.
Last few weeks, social networks Tagged, Hi5 and LinkedIn have made it clear they're working on application program interfaces (APIs) for developer platforms much like Facebook's. I’ve heard rumors that Facebook's chief rival MySpace.com is also working on something similar as well. Third-party developers are all scratching their heads just by thinking about the ideas of creating applications for a ten platforms. That will never happen. Customers' lock-in is always very tempting idea, doesn’t happen often and if it does, it doesn’t last long enough.
If you are successful, you want to push the open-innovation button and open your APIs. If you are failing, you might as well do that too. The idea of wooing developers to one social-networking platform makes Google, which has for several years been integrating with third-party developers on other properties such as Google Maps, an intriguing possibility in this fight for attention / big wins. There are rumors saying that the company is seriously considering opening the codefor Orkut, its social network, which is getting anywhere. Google might leverage some of its existing properties, like Gmail or new acquisitions like Jaiku, into a more coherent "social utility". Just by virtue of being a Google company, it gives you a ticket to enter the game.
Let me tell you why I am not keen in this idea. Facebook has stated that there are no confidentiality protections for developers who submit business plans to the company in the hopes of earning venture cash for their applications. Theoretically, this means Facebook could see a developer plan it likes and create something similar in-house. The other thing many developers have no idea of the platform economics, I have doing that for ages and I can just run the numbers from the back of a napkin and tell you whether it is a good idea of not in 5 minuets (That’s why I can't charge by the minute). If you decide to do that, make sure that the widget must be “monetizable” and try to create or maintain a “barriers to entry” for other. I called it "Wigetnomics".OK, just coined another web 2.0 term.
Anyway, really need to go back to my day job. Will continute our branding discussion next week and talk about some joint outputs. Received many suggestions from many of you,with thanks.
