XaaP and the platform business model: How Netflix, Uber, Airbnb are forging ahead
The primary business context for cloud native case studies like Netflix is the ‘Platform Business Model‘,
the conceptual design model for the particular commercial models they
implement as well, one that is directly enabled by the technology.
Considering the business wealth a ‘simple’ mobile phone app has
generated for Uber, this relationship is not hard to identify in action,
and is often communicated through social media, highlighting that
neither owns any taxis or hotels but in a few short years now command
the largest fleets and room availability, vastly larger than their
traditional competitors who took decades to do so.
The platform revolution
The repeatable secret sauce is the Platform Business Model, described
in detail through academic literature and popular business books; for
example, the MIT book ‘Platform Revolution’ sets the scene for the
market trend that Cloud Foundry is addressing and is ideal for.
The Platform Business Model has emerged as the moniker for defining
the hyper-scale disruptors like Netflix, Uber, Airbnb, Facebook, Twitter
et al, as the book describes:
“Facebook, PayPal, Alibaba, Uber-these seemingly disparate
companies have upended entire industries by harnessing a single
phenomenon: the platform business model.”
The book builds on prior MIT research, such as this detailed 2007 research report on Platform Networks, this highly recommended presentation Platform Strategy and Open Business Models, and in a simpler format in this presentation, which defines:
“A “network platform” is defined by the subset of components used
in common across a suite of products (Boudreau, 2006) that also exhibit
network effects. Value is exchanged among a triangular set of
relationships including users, component suppliers (co-developers), and
Throughout these materials they provide an anatomy of these business models, exploring dynamics such as “multi-sided pricing“.
Platforms are marketplace models, ranging from the people-centric
services like Uber taxis and Airbnb accommodation, through to electronic
distribution channels like Apple and Xbox. MIT examines the different
permutations and shares those best practice insights.
The sharing economy meets elastic cloud business models
The MIT research explores the different dynamics of platform
scenarios and markets, like Microsoft vs Apple across computers,
portable music players and ultimately smartphones.
The trend has also been described as ‘The Sharing Economy‘, a wave that the disruptors ride through technology innovation.
The dynamism of cloud computing is a perfect match for this equally
‘organic’ approach to resource management, both scaling in real-time to
actual market demand experienced.
As the new breed of hyper-scale startups like Uber, Netflix, Airbnb
are demonstrating when it is combined with massive investment financing
and highly scalable mobile and cloud application services, it very
quickly becomes an all-dominating behemoth, unstoppable unless you
compete on the same level.
Hence why the business model itself has become so important and popular. For example Dan Woods says your CDO efforts will fail unless you adopt platforms.
XaaP: Industry scenarios for platform adoption
The enabling relationship between cloud computing and the increasing
maturity of the model, as demonstrated by real-world adoption successes,
is characterised by how they’re described as “XaaP” initiatives, by
which I mean for example: