Platforms, Micrsoft, and Two-Sided Markets

Understanding the virtuous cycle of platforms.

The following quote is from “Strategies for Two-Sided Markets,” a HBR paper by a number of authors, including my friend Marshall W. Van Alstyne:

When successful, these platforms catalyze a virtuous cycle: More demand from one user group spurs more from the other. For example, the more video games developers (one user group) create for the Microsoft X-Box platform, the more players (the other user group) snap up the latest X-Box. Meanwhile, the more players who use X-Box, the more developers willing to pay Microsoft a licensing fee to produce new games. And as user bases grow, margins fatten.

In a word, yes! Van Alstyne has done some fascinating work on platforms and, if I met him a year ago, I would have quoted him extensively in The Age of the Platform.

In the book, I write about the network effects and virtuous cycle of platforms. (I don’t mention two-sided markets per se but in effect I’m writing about them, especially when I discuss the importance of ecosystems.)

With respect to X-Box, it is the rare Microsoft consumer success, something that it’s clearly trying to replicate with Surface, its new Windows 8 phone, and other products.

Easier said than done, to be sure. At least Microsoft seems to finally get it. It’s all about the platform.

philanimated

Navigation

BACKRANDOMNEXT

YOUR AD HERE

Filed Under



Enjoy this post? Click here to subscribe to this RSS feed or here to sign up for my bi-monthly newsletter.


Submit a Comment

Your email address will not be published. Required fields are marked *