Since a platform is the technology foundation for a marketplace, platforms – to achieve extraordinary growth – need to instill the rules of marketplaces as we laid them out in our previous post.
But not all platforms are created equal and some self-proclaimed platform vendors do not adhere to marketplace principles. That could mean you as a provider think you subscribed to a meritocracy – with equal opportunity exposure – yet other participants (your competitors) get pay-to-play advantages. Potential buyers in that tainted market are actually shopping in a premium market, not the free-market they expect to be most economical and trustworthy.
Other synonyms of the same phenomenon abused in the technology industry include ecosystems, exchanges, communities and networks which all serve identical needs in connecting disparate supply with disparate demand, something a premium market is unable to do.
Freedom Of Choice
Consumer companies understand the freedom of choice customers demand. Enterprise software and services vendors have long basked in the glory of premium markets and have a long way to go in order to truly build winner-takes-all free-markets, which in total size are often larger in size than the total size of premium markets in that category.
In the Enterprise space, the majority of customers (roughly 80%) buying products or services deviate from its intended design and want to add-on, integrate or correlate those off-the-shelve configurations with other ones. Enterprise customers often spend more money on customization than they spend on licensing fees for say, Oracle products. Hence the requirement for a true marketplace of additional enterprise components (check out Serena, great concept but marketplace execution and marketplace compliance – yet to be developed – will be the tell-tale of their real success). Salesforce.com’s Appexchange seems to provide the best proximity to a free-market of applications we’ve seen, although we have yet to verify its integrity against the marketplace rules.
Developer programs from companies like Oracle (with OTN), Microsoft (MSDN) and others use surrogate models of marketplaces to mimic, but not truly deliver on its powerful benefits. Go visit their websites and you’ll notice no mention of third-party products. There literally is no marketplace, although Microsoft has a link to “a library” if you can find it.
Apple (with the iPhone Developer Network) is experimenting with its rules but apart from compliance with the free-pricing rule, its overall compliance to a free-market is minimal. And, today, they don’t need to. Apple still has time to deploy some premium market tricks as long as Google with Android doesn’t deliver on a real marketplace for developers early.
As a software provider you may need to run on and comply to a major vendor’s technology, just don’t assume a developer network, exchange or community will make you rich – not until the marketplace supports a true meritocracy. And for that, again, real marketplace principles need to be deployed.