Software Platforms – Ozzie

From Ray Ozzie’s Software Platform Dynamics:

Software platforms have the potential to create increasing returns as a function of ubiquity, and thus tend to exhibit natural geometric growth patterns until they reach the point of practical market saturation, at which point their growth pattern becomes at best highly correlated with the overall market.

The more that the platform’s leverage directly and positively impacts the platform’s ultimate end-user (e.g. the more “visible” it is), the more rapid the geometric growth pattern will be. The same is true of other levels of the value chain, e.g. demand at outer levels of the value chain accelerates growth far more than “embedded” platforms whose demand at inner levels may be suppressed by the time it gets to outer levels.

For any platform to attract a sustainable ecosystem, it is required that the entity building the platform additionally and directly invest in building nontrivial “layered offerings” on that platform, in order to gain experience with the costs would be to ecosystem partners, and in order to ensure that the platform’s capabilities are complete enough to provide actual value to the ecosystem partners. This is later guaranteed to catalyze ecosystem conflict, but it is a necessary cost of driving a successful platform.

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Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.