Friday, June 27, 2014

Mobile Computing: The Next Platform Rivalry

Timothy Bresnahan, Stanford and Shane Greenstein, Northwestern analyze Mobile Computing: The Next Platform Rivalry.

ABSTRACT: All modern information and communications technology (ICT) industries use the platform organization. A platform in computing is a reconfigurable base of compatible components on which firms and users build applications. Applications share the general purpose components, which leads to the exploitation of increasing returns at an industry-wide level (Bresnahan and Trajtenberg, 1995). Platforms compete for developers, who create applications which make the platform valuable for users. Distinct platforms serve different or/or overlapping customers. Platforms also compete in their governance structures, which determine what obligations a developer assumes, and what rights the platform leader reserves for itself. Governance serves a useful function, mediating the terms of transactions and assigning responsibilities to build complements. We consider governance in mobile computing, specifically. The market involves many high profile companies, such as Microsoft, Google, Apple, Nokia, and Research in Motion, who employ different approaches to platform governance. That variance frames a seemingly simple question: why doesn’t one form of platform governance emerge as superior, dominating most markets in which platforms play an essential role? Our essay will stress the reasons for differentiation, and we propose an argument that is missing from the platform literature, about changes over time. Platform leaders commit to their approach to governance, but the governance that can help at one moment can get in the way at a later time. That opens up opportunities for differentiated platforms.

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