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Of Platforms, Operating Systems and Ecosystems

In the earnings Q&A Stephen Elop used the word ‘Platform’ once, ‘Operating System’ three times and ‘Ecosystem’ 15 times.

Though they seem interchangeable, the three phrases have significant differences in meaning. Briefly put, a Platform is a business model concept,  an OS is a technology concept and an Ecosystem is a marketing concept.

Platform

A platform, as the New York Times recently pointed out, can take many forms. The Barbie doll is a platform as is the US Interstate Highway system. These are products or infrastructure that allow other products to be ‘built on top’ and can thus charge rents from them. When building platforms, a company needs to think of how to make their work foundational so it can support other structures. Other examples of platforms are browsers, the Apple 30 pin dock connector, Game Consoles and Facebook.

In terms of innovation theory, a platform is a signal to industry that the company is willing to allow its innovations to be extended and thus share in the creativity of adopters. There is however a down side: platform adopters may also create so much value that users will shift loyalties to the layers above the platform thus restricting the freedom of the platform owner to modify or modernize the underlying platform.

This loss of control over the roadmap often forces platform owners to institute draconian limits to the extensibility of the platform (e.g. the iPhone developer restrictions.) In other cases, platform owners have acquired and integrated various core apps or services so that the platform and core apps can be upgraded in sync. This was the impetus to the development of Microsoft Office. Office was motivated by a need to prevent Lotus from slowing the upgrade path for Windows not, as it’s assumed, to create a new revenue source. However, again, the effect is the destruction of the ability to innovate on that particular area (no new Word Processor or Spreadsheet programs for 20 years).

It takes a great deal of work to platformize a product. I would guess 10x more than a similar product which does not allow collaborative innovation. Platforms are difficult to build, require delicate balancing acts to maintain but can be enormously valuable due to network effects.

Operating System

In contrast an Operating System has a very clear technical definition. It has been extended to include many applications and services, but it’s basically the control system of a computer. An OS may or may not be a platform. For example embedded operating systems typically do not have APIs to support applications. Some basic mobile operating systems support applications through a sandbox like JaveME (in this case the platform is Java) and are therefore also not platforms.

A company licensing an OS may not accept the platform with the license or may not consider it valuable. It’s even possible to license an OS and consider the platform value to be a liability to your own strategy (arguably HP fits in this scenario as regards to Windows. HP had its own operating systems and tried to build alternative platforms in spite of Windows).

An example of an OS with minimal platform value may be WebOS which has a very limited API for native applications.

Ecosystem

The word ecosystem as it applies to technology was coined by Palm to describe the app vendors that built apps and the accessories for its Palm Pilot. This is not a common word as it’s largely equivalent to Platform. The subtle difference is that it’s used in a marketing context to signal platform value. Having a large ecosystem implies the acceptance of a platform by a large base of developers.

For example a platform may not have a viable ecosystem if there are few developers and/or little economic value ‘on top’ of the platform. Symbian is often cited as being a decent OS, but a poor platform with a mediocre ecosystem.

So these three phrases are overlapping but have a different tone. Although perhaps unintentional, Elop’s emphasis on Ecosystem vs. Platform or OS, might signal that what’s missing from Nokia’s strategy is the motivation or encouragement of developers to participate. My prediction of WP7 licensing may not fit well with this deficiency but perhaps Microsoft’s ecosystem building potential is still greater than Nokia’s.

I should also point out that Nokia’s platform strategy has also included an intermediate layer called Qt that enables cross-platform ecosystems, thus making the OS irrelevant. Technically this may have merit, but it’s a long haul to getting an ecosystem for it.