Summary of Platform Revolution

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“Platform” businesses such as Uber, Airbnb and Wikipedia, are laying siege to more traditional “pipeline” businesses in the transportation, travel and media industries. Professors Geoffrey G. Parker and Marshall W. Van Alstyne and Platform Thinking Labs founder Sangeet Paul Choudary explain the “platform revolution” by relating backstage stories of selected platform successes and describing more disruptions yet to come. getAbstract recommends this powerful, enticing read to executives, entrepreneurs, professionals, policymakers, students and consumers.

In this summary, you will learn

  • How “platform” businesses disrupt traditional firms,
  • What role economies of scale and “network effects” play as platforms challenge “pipeline” companies,
  • What start-up and marketing strategies work for platforms, and
  • How platforms solve the “chicken-or-egg problem” of needing users to get producers, and needing producers to get users.
 

About the Authors

Professors Geoffrey G. Parker of Dartmouth College and Marshall W. Van Alstyne, of Boston University, are research fellows at the MIT Initiative on the Digital Economy. Industry expert Sangeet Paul Choudary founded Platform Thinking Labs, a strategic consultancy. He co-chairs the MIT Platform Strategy Summit and advises the Global Platform Data Project at Stanford.

 

Summary

“Platform Revolution”

New platform business models are disrupting traditional industries and have transformed “travel, transportation, media and communication” business models. Consider Airbnb, the room-rental service that offers affordable accommodations in homes, or Uber, the taxi alternative that facilitates buying a ride from someone driving his or her personal car.

Apple, Google and Microsoft are the world’s fastest-growing brands. They also are “platform” businesses because they match “external producers with consumers” and create value by enabling participants to “exchange…goods, services or social currency.” Platform businesses concentrate on external resources. They hire outside professionals and resources in marketing and IT rather than building those functions internally. Platforms “invert” the traditional “pipeline” model to create value for their communities of users. These businesses use resources they don’t own by connecting providers and users. For example, in spite of listing more than 500,000 properties and having accommodated more than 10 million boarders, Airbnb does not own a single room. Its platform helps people offer their spare ...


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