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So what is an Internet platform?

Rajiv Jayaraman | Dec. 11, 2008
Talking about it is like nailing a jelly on the wall

Other examples: E-bay, Flickr

Benefits for platform companies

•    Hook developers to your APIs and make them part of your sub-system.

•    Leverage the innovations that are built on top of the APIs

Benefits for app developers

•    Avoid re-inventing the wheel

•    Access to tried-and-tested technical tools

The Firefox plug-in model

In this model, third-party app developers enrich the user experience of the platform users by extending the functionality of the platform. Firefox and Facebook are shining examples of this model.

Highlights

•    The third-party developers code resides and gets executed outside the platform.

•    The app, however, becomes part of platform user experience.

•    Scalability is an issue that the app developer has to deal with.

Benefits for the platform company

•    Third-party apps enrich user experience

•    Cater to the needs of a wide audience at a very low cost and in a very short time.

Benefits for app developers

•    App developers have the opportunity to build a viable business. They instantly get access to millions of users through the platform. The cost of scalability and availability, however, are borne by the developer.

•    VCs have set-up funds for such app developing companies. Kleiner Perkins iFund is a fund created for iPhone apps. Facebook, along with Accel Partners and Founders Fund, have created a fund for Facebook app developers.

The Salesforce model

In this model, the app developer builds an app, uploads the app to the platform and runs it online. For instance, Salesforce lets its users upload apps to its platform to extend and customise Salesforce features. Other prominent examples in this model are Google Apps, Second Life, and Amazon EC2.

Highlights

•    In this model, the third party application actually resides and runs inside the platform.

•    The platform company assumes the risk of executing arbitrary third-party application code.

Benefits for the platform company

•    Utilise spare capacity to allow developers to build applications on your system.

•    Leverage the meta-information that is available to you through the apps that run on your system for ads.

•    Assume the cost of scalability and availability, so that user experience is not compromised

Benefits for the app developer

•    App developers neednt assume the cost of scalability and availability.

In my view, platform economics is here to stay. In a flat world, product companies need to stay ahead of the innovation game and one way of doing that is by crowd-sourcing. CTOs, business managers and developers need to take this model seriously. Product companies need to think about how to collaborate with third- party app developers to keep their offering fresh and innovative. App developers can now tap into funds that are available for developing apps for platforms. There has been no better opportunity to reach millions of users without the cost of acquiring customers.

 

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