What can you do when a competitor has already established a leading platform? Learn from Apple’s iPhone, Google’s Gmail and Facebook — and how they overtook earlier market leaders.
The newest era of the Information Age could very well be called the Age of Platforms, given the explosion of markets defined by platform competition. Increasing numbers of companies big and small, whether providing hardware devices, traditional software or software in the cloud, are attempting to become platform masters by releasing application programming interfaces that allow others to build software and hardware products or complementary services on top of their technology offerings. Platform competition is expanding into many markets and can be found today in a variety of industries and on different scales: from the nearly universal platforms of the Internet, credit cards and the telephone to newer Internet-enabled platforms such as Facebook, Skype, Google Maps and PayPal.
During the last decade, several key elements that constitute a “platform theory” have emerged.1 These are now being taught in business schools and discussed by technology managers across the globe. But the existing theory does not fully explain the rise of some key players, such as Apple’s iPhone, that have entered their industries relatively late and have succeeded in dethroning powerful incumbent platforms. The experiences of these “platform dethroners” offer several important lessons for companies entering or competing in platform markets. (See “About the Research.”)