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# Platforms, Microsoft, and Two-Sided Markets
- URL: https://www.philsimon.com/platforms-microsoft-and-two-sided-markets/
- Published: 2012-06-22T10:52:47.000Z
- Updated: 2025-12-30T02:56:03.000Z
- Description: Understanding the virtuous cycle of platforms.
- Author: Phil Simon
- Tags: Platforms, Strategy, Frenemies, Microsoft, The Age of the Platform

The following quote is from "[Strategies for Two-Sided Markets](https://hbr.org/2006/10/strategies-for-two-sided-markets/ar/1?ref=philsimon.com)," a HBR paper by a number of authors, including my friend [Marshall W. Van Alstyne](https://hbr.org/search/Marshall+W.+Van+Alstyne/0/author?ref=philsimon.com):

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 Age of the Platform*, I write about the network effects and virtuous cycle of platforms. (I don't mention [two-sided markets](https://en.wikipedia.org/wiki/Two-sided%5Fmarket?ref=philsimon.com) *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.