The Power of Platform Ecosystems


Today Facebook announced a very aggressive move to open up its system and become a Platform (read more on TechCrunch or ReadWriteWeb). At the same time several applications were announced on top of the new platform (read more on WebWare). This is completely opposite to what MySpace has done in creating its walled garden. I think this is a great move by Facebook, it gives the 20 million Facebook users more of a reason to keep coming to Facebook at the same time as it gives a lot of companies and developers access to those 20 million users. In the middle is Facebook, who, if the strategy succeeds, establish itself as the platform in a living online Ecosystem.

The Web is full of Ecosystems

There are already plenty of Ecosystems out there. Amazon was one of the first companies that understood the power of this, and created an open API that developers all over the world now are using (and thereby increasing the sales of books for Amazon, plus the brand recognition of course). YouTube’s success is largly due to the ease of including and showing videos on your own sites and blogs (the real success was of course that Google pay a ridiculous amount of dollars for them, but that is a completely different story). Flickr is doing the same for photos online. WordPress is an OK blog engine, but it would be nothing without all the plugins, so that is another successful Ecosystem. In the Enterprise world there is of course Salesforce that now has more requests coming in via their API than via their web page.

There are also successful such Ecosystems that are not based on web applications. Firefox (OK, that one is almost web based, just humor me please) is a great browser, but without all the add-ons it is not that usefull (me love Firebug!). Apple has been very successful in creating an Ecosystem around the iPod, just think of how many companies make great money by just producing skins and other extensions to the iPod.

The Platform Wins

What is in it for the Platform is pretty evident: more loyal users that have more reason to keep coming back. This is hard to create, and if System Providers build apps on your Platform then basically you are expanding your development deparment and you have more brilliant minds trying to figure out the killer app for your users. Also this is a great way to keep the competition at bay. Now when Facebook is becoming a Platform and not just a site it will either force the main competition MySpace to do the same or be left behind.

The System Providers Win

The System Providers that write applications that run on the Platform (most likely called something fancy like widget, gadget, addon, plugin or extension) gets access to a whole lot of ready made functionality and a huge existing user base. There is no longer any need to implement photo album funcitonality for your web app, just use Flickr. No need to build video capabilities, just use YouTube. If you build an app for Salesforce you can sell it on their AppExchange and make some money. So in short you get both functionality and a userbase, that is a pretty good deal.

The Users Win

The users can stay on one platform and take full advantage of that the platform continously gets more and more functionality added. Since each of the System Providers do not have to implement the most basic functionality (user handling, file uploading, photo album etc) they can concentrate on new great features, which of course benefits the end users. So more cooler useful features, that makes uses happy.

Win Win Win and Lose

The winners are the Platform providers that are in the center of the Ecosystem, the System Providers that gets features and a user base for free and the users that get more features quicker. That is a pretty impressive Win-Win-Win scenario.

The losers are the companies that do not understand that Ecosystems are the new type of light weight business partnerships. Either you try to be a Platform or you take advantage of whatever the Platforms around you offers. To build a new big web application and not provide an API is simply failing to take use of a huge opportunity. To build any web site and not take advantage of one or more existing Ecosystems is to do more work than you need to. It seems like Facebook really has realized that (that is no good reason to say no to the $1 billion that Yahoo is rumoured to have offered, saying no to $1 billion is always a bad move in my humble opinion).

links for 2007-05-23