Platform Strategy and the Internet of Things

Professor Marshall Van Alstyne, coauthor of Platform Revolution, provides insights on how platform strategy and IoT combine to produce value for all players in the ecosystem.

Reading Time: 6 min 


In their book Platform Revolution (W.W. Norton & Co., 2016), authors Geoffrey G. Parker, Marshall Van Alstyne, and Sangeet Paul Choudary write that the platform model is the basis of some of the most successful companies operating today, from Google and Amazon to Uber and eBay. “No matter who you are or what you do for a living, it’s highly likely that platforms have already changed your life as an employee, a business leader, a professional, a consumer, or a citizen — and are poised to produce even greater changes in your daily life in the years to come,” they write.

The platform business model uses technology to connect people, organizations, and resources in an interactive ecosystem. As defined in Platform Revolution, “A platform is a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participatory infrastructure for these interactions and sets governance conditions for them. The platform’s overarching purpose: to consummate matches among users and facilitate the exchange of goods, services, or social currency, thereby enabling value creation for all participants.”

On October 13, 2016, Van Alstyne, the Everett Lord Distinguished Faculty Scholar at Boston University, participated in a webinar about platform strategy hosted by MIT Sloan Management Review and made possible with sponsorship support from Xively. The presentation focused on the crucial role of the emerging Internet of Things as a component of platform strategy. The webinar was moderated by Steven Paul, a contributing editor at MIT SMR, and highlighted on Twitter at the hashtag #MITSMRevent. Among Van Alstyne’s key points:

Architecturally, the IoT redefines how devices communicate and offers significant economies of scale.

Before the Internet of Things, each participant in a network had his or her own device, with each device having a full stack of the functions that they use. In this architecture, “each device has to communicate with each of the other devices,” said Van Alstyne. The Internet of Things presents a competing architecture view, which “might be to put everything into a single box,” he said. “Here you get economies of scale. Everyone has access to all of the functions, and you save and economize on some of the connectivity and communications that take place.” There is a downside to going completely in this direction, he said: “While this model scales beautifully, it makes making changes more difficult.


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Comments (3)
toma zelik
I like this book and the video very much, I would like to know more regarding this topic.
You're quite right! Thanks, we've fixed it.
Nabil Abdullah
Great point on the network effects from outside the company. 

In regards to your last paragraph, you said " with Airbnb wanting its riders to become drivers and Uber wanting its guests to become hosts"

I would have thought you meant the other way around.