Do you know the meaning of “platform business”, or a platform business model? In truth many of us don’t really understand the concept, although we use them nearly every day.
But have you ever taken a ride with Lyft or Uber? Booked a place to stay during travel with AirBnB? Or better yet, purchased something through Amazon? If you answered yes to any of these, then you have engaged with a platform business, a business model that is revolutionizing both our economy and the way we make purchases, use services, and manage our lives.
Now that we have an idea of how we use them, what defines a platform business model? In a recent article on “technology megatrends”, Forbes writer Bernard Marr described them this way:
“A platform is essentially a network (digital or physical) that creates value for participants by facilitating connections and exchanges between people for services, products or information. The platform is rarely the actual service provider; instead, it acts as a facilitator for the crowd, making interactions possible, easy, and safe for participants.
Platforms have given rise to businesses like Airbnb, Uber and Amazon, and are also the foundation of what Facebook and Twitter do. However, platforms offer growth opportunities across all kinds of businesses, industries and sectors – not just tech companies. Even long-running businesses with more traditional business models, like Ford, are beginning to develop platform strategies.”
For example, car ownership is on the wane, due in some measure to the proliferation of ride-sharing services like Uber and Lyft, buy also vehicle-sharing services like Zipcar, Car2GO and other platforms that further depress the need for ownership of / investment in an automobile. While the specific business models of each of these companies are slightly different, they all share the distinction of being platform businesses that are disrupting a very mature industry, across the globe.
Conversely, the “gig economy” is on the rise, allowing people to enter into micro-contracts with one another to provide goods and services with a high degree of flexibility. Platforms like Task Rabbit and Fiverr, which we discussed in an earlier post on location independence, also connect people wanting services with those willing to provide them, with everything from translation to handyman and delivery services.
To illustrate the platformization business model in more detail, Management Consultant and platformization expert John Hagel categorized and describes the four different, most commonly employed types of platforms in a recent article on Medium:
- Aggregation Platforms, which are marketplaces that facilitate transactions among participants like eBay;
- Social Platforms ?that encourage long relationships among participants and also lead to the formation of cliques of like minds like Facebook and Twitter;
- Mobilization Platforms, which facilitate the coordinated action of a group of people in a task that takes considerable time to complete such as supply chains, distribution operations or open source projects where many participants contribute together in complex ways to build and maintain a product;
- Learning Platforms, where a group of people comes together to collectively learn how to address a more complex problem. Again, open source projects that are actively managed with distributed source control, test driven development, issue tracking, and continuous integration are a good example of a learning platform.
With a solid understanding of what platformization is and how it impacts different businesses and activities, let’s next look at some of the technologies that are driving this trend, and how they lead to opportunities for companies like AMI to support the innovators driving this new business world.
Platform businesses typically operate in the cloud to provide the distributed access, deep computational power, data storage, and analytics that are at the core of platformization business models. This need for cloud computing hardware and related technologies translates into opportunity for AMI, since this is where these platforms conduct their operations and house their data.
AMI provides many technologies, such as Aptio® V UEFI BIOS Firmware, MegaRAC® SP-X Service Processor Management Firmware, MegaRAC Composer™ Pod Management Firmware, and many similar products to support data center operations and power the server platforms in use there. AMI also participates in numerous standards groups that are deeply connected with cloud technologies like DMTF and the Open Compute Project to help advance standardized designs to lower cost and barriers to entry.
In Part 2 of this blog series on platformization, we will conclude with a brief examination of the benefits and potential pitfalls of business platformization for both consumers and users. As always, thanks for reading our Tech Blog, we hope you enjoyed this discussion! Let us know your thoughts in the comments below.