Off to the Races?

The term “platform” misleads people.  The metaphor is flawed.  It suggests land, and it can be made to work, if you insist.  Accepting the metaphor then applications are built on the platform, like houses on the landscape.  I read recently a brief summary of why even if you set aside the housing bubble the cost of housing has risen in the US.  Two reasons: zoning and tax caps.  Zoning has made it ni-impossible to increase the density of the existing  metropolitan  areas.  Tax caps doubled down on the primary problem of public goods, under provisioning.  In the absence of public goods (schools, roads, security, environment, public health, …) individuals are forced to provide substitutes; and by definition these are higher cost and lower quality.  For the platform metaphor to work it’s critical to think not just about the  applications  it supports.  You need to dig into the governance; i.e. the costs, rules, and services provided.  That is an improvement and it does illuminate the question but it is not my preference.

There are at least three aspects of that metaphor that I find lacking.  You need a metaphor that gives equal weight to both sides of the equation.  The services a platform provides are just as important as the applications it enables.  You need a metaphor that gives more weight to life-cycle of platforms; that in each round we  experience  a race to see who will own the platform.  The platform as land metaphor is far to lead us to ‘pay no attention to the man behind the curtain.’  You need a metaphor that embraces how important the network effects are.  All these can be see thru the lens of each other; particularly in the early days of as a platform emerges.

Consider the current state of play.  Developers seek out fresh real estate to build on and these days they appear to be gathering in two regions: smart phones and cloud computers.  So there are two species of platforms, two competitive games in play, two industrial standards battles.  In the life cycle of these platforms both horse races are well out of the gate.  Apple and Amazon respectively have grabbed substantial early leads.

Picking the right metaphor helps to assure you stay focused the right things and that you have the right expectations.  For example some applications, payments for example, are probably destined to become key platform features.  That in turn informs the question of who’s in the game.  For example is eBay/Paypal a cloud computing OS waiting to happen?  I think so.  It also helps to explain why Google or Amazon have a payments offering.

We know to expect an operating system to provide a file-system and a GUI.  We know to expect that a local government will provide public schools and some regulation of the sewage.  So, presumably we should be forming expectations about what features a cloud computer offers, or a smart phone.  Here’s a nice long list for cloud computing.  Here’s a shorter list for smart phones.  When the  column  fodder charts are that messy you can be sure of a lot of condensation and turbulence ahead.

The early days in the life-cycle of a platform are interesting in part because where the lines are drawn is under discussion.  Things settle down during the midlife.  I can recall the heady early days of the Mac when every release of the OS brought with it new extremely exciting APIs.  But also how each of these APIs was actually prototyped by somebody else, often an application builder.  There is always a tension between what will be owned by the platform and what will be owned by those around him.  This is a bit like how some wags like to complain that the town’s public produce markets or schools competes unfairly with private enterprise.  Right now, for example, there is a firm that is dominate in the geo-location via wifi market and there are three clear ways that might go.  They might be rolled up into one of the platform players.  They might be displaced by an open substitute (based on say open street maps), or of course they might survive as a vendor.

There is one place where I seem to most often run into confusion caused by the platform as land metaphor and that is with websites that are playing the open API card.  The metaphor causes them to focus  primarily  on getting developers to adopt their API.  That’s an unalloyed good thing, not just because it is actionable.  But it tends to make them blind to the dynamics of the battle unfolding all around them.  For example; for various reasons a service offered inside of EC2 is  preferable  to a service offered outside, at minimum it will be more performance and the bandwidth costs will be zero.  So I suspect we will see a trend toward all firms offering a open API moving some or all their offering inside of EC2.  More generally, and presuming that real competitors to EC2 emerge, they will have to build the same kind of branch offices inside each EC2 competitor.  That in turn is exactly like the “Render unto Caesar the things which are Caesar’s” dynamic seen around older operating system platforms.  Where, for example, a hardware maker or application maker has to carefully assure his offerings are supported by the OS vendor.

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