Building the Value of Next-Generation Platforms

What is it about?

The focus of this study is on the value users derive from the variety and quality of the complementary products of a new platform of next-generation technology, and its impact on leaders’ performance over time relative to followers. The analysis reveals that next-generation platform leaders can enhance platform value to users at early market stages. Yet, often, leaders lock themselves into suboptimal performance patterns and eventually fall behind their followers.

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Why is it important?

Major benefits can accrue to technology leaders, but for platform technologies that require complementary innovation from external third-party firms to create value for users, those benefits are limited by the difficulty of securing complements. The analysis highlights the challenges platform leaders face, particularly in the growth stage of a platform’s market evolution, and the critical role played by complement quality in shaping platform competition over time.