Platforms are the future—but not for everyone
In late 2015 the 44 platform firms based in Silicon Valley alone boasted
a combined market capitalisation of $2.2 trillion, according to the
Centre for Global Enterprise (CGE), a think-tank. Among them, Apple’s
iPhone exemplifies best how to run a platform: anybody can write an app,
but it has to pass strict tests and the firm keeps 30% of all sales.
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Second, network effects often fizzle. All sides of an online marketplace
have to be nurtured in parallel to avoid imbalances, such as having far
more sellers than buyers. During the dotcom bubble most
business-to-business marketplaces failed because their pursuit of growth
led to such lopsidedness. Even firms that had a head start, such as
MySpace and Nokia, a social network and a mobile-phone maker
respectively, didn’t manage to turn themselves into fully fledged
platforms.
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Third, it is not always easy to make money from platforms. Misjudge how
much to charge each group of customers, and the flywheel can come to a
juddering halt. What is more, for a platform to make good money,
switching to a rival has to be costly, argues Andrei Hagiu of Harvard
Business School. This risk even hangs over Uber, the fast-expanding
taxi-hailing service: using a competitor is easy for both passengers and
drivers.
http://www.economist.com/news/business/21699103-platforms-are-futurebut-not-everyone-emporium-strikes-back