One often hears advice that firms should try to become platforms. Whether that is possible, in almost all cases, is the issue. Platform as a business model varies from the use of the term in the computing industry.
As a business model, a platform is a marketplace or exchange. It means revenue is earned by a fee or commission on a sale of a third party good or service, not the direct ownership and supply of that product.
That is quite different from the typical business model for most businesses, for centuries. Most businesses create a product and then sell those products to customers. All connectivity providers do the same.
To become a platform would mean, at the very least, shifting from creating and selling connectivity services to creating a marketplace for others to sell and buy connectivity services. No firm in the communications industry has done that, ever.
Some data center operators have created ecosystems of colocated firms. But the revenue model still is real estate. Data center operators do not actually earn revenue (commissions or fees) for purchases by tenants of the data centers. The business model remains “real estate.”
The advantages of a platform business model, assuming one can be created, are the ability to scale, lower transaction costs for buyers and sellers, as well as the creation of new distribution channels for sellers and buyers. Most platforms must create ecosystems of suppliers as well.
source: Platform Business Model
Some note that asset ownership patterns are different for platforms: they are said to be asset light.
Platforms also might help to make resources and participants more accessible to each other on an as-needed basis. In that sense Amazon Web Services is a platform. Social media companies also are thought of as platforms, aggregating people and interests and then building revenue models based on advertising and commerce.
Indeed there are conceptually many forms a platform can take. Marketplaces for services or products are one set of forms.
But payment or investment platforms also are possible. Any peer-to-peer payment service or app might be viewed as a platform. A stock exchange also is an investment platform.
Social or possibly communication networks can be platforms, especially when communications occur in the context of a social network.
Software development platforms also can be created, whether based on operating systems, application program interfaces or open source.
Content platforms might include gaming, other forms of content or overlap with social platforms.
The big hurdle for a connectivity provider is that it must essentially get out of its current business--selling connectivity services--and become something else. If it is possible, that new model would involve creating a marketplace for others to sell and buy services from each other.
That would be among the most-difficult of all business strategy transitions, as it changes the answer to the question “what business am I in?”
No comments:
Post a Comment