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March 2018 (published: 28.03.2018)
Number 1(32)
Home > Issue > Platform-based business models
Konopatov S.N., Saliyenko N.V.
To maintain competitiveness and sustainable development, modern companies need to innovate in technology products, services and business models. There are 2 types of business models: "pipeline" (traditional) and platform (ecosystems). Currently platforms are developing and penetrating into various branches of business and life. The paper compares traditional and ecosystem business models. There are 2 types of ecosystems: transactional and innovative. In the paper the competitive advantages of ecosystems by the example of Windows, Apple, Android, and others are examined. For example, a two-way Windows platform (because it connects developers and application users) is of little value in itself, but it gives access to a quantity of different programs (complementary products) and the mass of ecosystem users. On the other hand, Apple's platform uses the network effect: the increase in the number of users increases the value for developers, which generates the same effects in the opposite direction. The benefits of ecosystem participants are indicated. The platform holder dictates terms of the ecosystem and receives monopoly profits. There is also an ecosystem effect when the value of the platform grows without the efforts of the platform holder. At the same time, the platform business is estimated at times higher than the traditional one. For application producers, the ecosystem provides access to a large market. Clients of the ecosystem can save time and effort, users receive a large number of necessary functions. At the same time, platform holders do not monopolize the production of applications, otherwise competition will fail. As a consequence, there will be a decline in application quality and price increase, and most importantly - the value of the ecosystem for its members will decrease. Considering technological progress tendency of ecosystem collisions is up-to-date. In conclusion, the perspectives of firms' survival in the context of the spread of ecosystems are considered, as there are a lot of competitive "pipeline" firms in the world at the moment.
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Keywords: platform, ecosystem, crowdsourcing, open system, market entry barrier, network effect, ecosystem effect.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 339.13
Platform-based business models
To maintain competitiveness and sustainable development, modern companies need to innovate in technology products, services and business models. There are 2 types of business models: "pipeline" (traditional) and platform (ecosystems). Currently platforms are developing and penetrating into various branches of business and life. The paper compares traditional and ecosystem business models. There are 2 types of ecosystems: transactional and innovative. In the paper the competitive advantages of ecosystems by the example of Windows, Apple, Android, and others are examined. For example, a two-way Windows platform (because it connects developers and application users) is of little value in itself, but it gives access to a quantity of different programs (complementary products) and the mass of ecosystem users. On the other hand, Apple's platform uses the network effect: the increase in the number of users increases the value for developers, which generates the same effects in the opposite direction. The benefits of ecosystem participants are indicated. The platform holder dictates terms of the ecosystem and receives monopoly profits. There is also an ecosystem effect when the value of the platform grows without the efforts of the platform holder. At the same time, the platform business is estimated at times higher than the traditional one. For application producers, the ecosystem provides access to a large market. Clients of the ecosystem can save time and effort, users receive a large number of necessary functions. At the same time, platform holders do not monopolize the production of applications, otherwise competition will fail. As a consequence, there will be a decline in application quality and price increase, and most importantly - the value of the ecosystem for its members will decrease. Considering technological progress tendency of ecosystem collisions is up-to-date. In conclusion, the perspectives of firms' survival in the context of the spread of ecosystems are considered, as there are a lot of competitive "pipeline" firms in the world at the moment.
Read the full article
Keywords: platform, ecosystem, crowdsourcing, open system, market entry barrier, network effect, ecosystem effect.
DOI 10.17586/2310-1172-2018-11-1-21-32