Information, Technology, and Innovation: Resources for Growth in a Connected World

CHAPTER 5

Platforms

Given that one, if not the, byword of today's technological landscape is “connectedness,” much attention has been focused on how systems of networked or related devices evolve. Whether the connection is obvious, as in mobile phones or Facebook friends, or less direct, as in unrelated people who all use Windows and Microsoft Office, the notion of platforms is central to any understanding of this world. Winning in a platform market can be a multibillion-dollar outcome but can involve speculative investments of the same scale. Such household names as Apple, Google, Intel, Nokia, and Sony need to be understood at least in part through the platform lens.

What do we mean by the term “platform”? A few definitions are in order. Platforms are foundational technologies, building blocks upon which an entire industry might develop. Michael Cusumano of MIT and his then graduate student Annabelle Gawer were plainspoken in their essential study of the topic: A platform is “an evolving system made of interdependent pieces that can each be innovated upon.”¹ That's concise but dense, and worth playing out: Platforms have to evolve, which presents challenging issues around innovation, return on investment, and other strategic decisions. Platforms are the product of multiple actors: Even Microsoft, a dominant company if ever there was one, relied on both a powerful network of software developers to build applications on the foundation technology and a myriad of hardware companies. ...