Talking about Platforms

This paper brings together the recent literature on industry platforms and shows how it relates to managing innovation within and outside the firm as well as to dealing with technological and market disruptions and change over time. First, we identify distinct types of platforms. Our analysis of a wide range of industry examples suggests that there are two predominant types of platforms: internal or company-specific platforms, and external or industry-wide platforms. We define internal (company or product) platforms as a set of assets organized in a common structure from which a company can efficiently develop and produce a stream of derivative products. We define external (industry) platforms as products, services, or technologies that act as a foundation upon which external innovators, organized as an innovative business ecosystem, can develop their own complementary products, technologies, or services. Second, we summarize from the literature general propositions on the design, economics, and strategic management of platforms. Third, we review the case of Intel and other examples to illustrate the range of technological, strategic, and business challenges that platform leaders and their competitors face as markets and technologies evolve. Finally, we identify practices associated with effective platform leadership and avenues for future research to deepen our understanding of this important phenomenon and what firms can do to manage platform-related competition and innovation.

In this episode, Kevin Boudreau discusses his research on platforms, from his early perspectives to his current view of platforms as governed digital spaces. He also delves into the impact of AI and data on platforms, and how business schools can play an active role in helping companies adapt to the rapidly changing landscape.

This influential paper by Caillaud and Jullien from 2003 examines imperfect price competition between intermediation service providers, with a particular focus on aspects relevant to informational intermediation on the Internet. The authors analyze three key elements: indirect network externalities, non-exclusive use of multiple intermediaries, and price discrimination based on user identity and behavior. Using a developed model, they explore how these factors influence market structures and pricing strategies in intermediation markets. Key findings include that both efficient and inefficient market structures can emerge in equilibrium. Additionally, intermediaries have incentives to offer non-exclusive services to moderate competition and exert market power. The study provides a detailed analysis of pricing and business strategies employed by intermediation service providers and has significantly contributed to understanding competition dynamics in digital intermediation services, making it foundational for research on two-sided markets and platform economics.