Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You: How Networked Markets Are Transforming the Economy―and How to Make Them Work for You

by Geoffrey G. Parker

HOW PLATFORMS COMPETE (5): PLATFORM ENVELOPMENT Platform managers need to continually scan the horizon, observing the activities of other platforms—particularly platforms that serve similar or overlapping user bases. We call these adjacent platforms. When a new feature appears on an adjacent platform, it may represent a competitive threat, since there’s a possibility that users of your platform may find the new feature attractive enough to begin multihoming or even to abandon your platform altogether. To respond, the platform manager can choose either to provide a similar feature directly or to offer it indirectly via an ecosystem partner. When used most successfully, this strategy leads to the phenomenon we call platform envelopment. This occurs when one platform effectively absorbs the functions—and the user base—of an adjacent platform.