Platforms and product lines

A value network supported by a platform is similar to a product family. A product family is a set of products produced by the same company but with variations to suit different market segments. It has a stable core architecture on top of which variations are defined. For example, a car product family is defined by a common frame on top of which variations are assembled with various components.

This is similar to a platform in a value network. For example, an operating system provides a stable core on top of which applications can be developed. The operating system is the core, the applications are its complements. (Baldwin & Woodard, 2009).

The two main differences between platforms and product families are (1) that a product family is designed in advance of building it, and (2) that it is designed by one company. In contrast, platforms are designed and built before there is a network of complementary services built on top of it. And the services built on top of it are not usually designed and built by the platform provider but by other companies.

The fact that a platform and the applications defined on top of it are developed by independent commercial companies explains a third difference. In product families, functions shared by all products in the family are implemented in the platform core. By contrast, platform companies do not implement functionality shared by all applications built on top of it. Instead, platform companies may choose to implement services that are very profitable rather than services that are used by all developers.

Platforms can collect data about the services that run on top of it and identify functionality of very successful services. They can then offer this functionality themselves. This shifts some of the revenue of the service developer to the platform company. The result is that the platform company competes with businesses in the network that it supports.

Platform ecosystem Product family
Platform Stable core architecture
Various services defined on top of the platform Variable components added to the core
Only the platform is designed in advance Core and complements designed before implementing
Services designed by others Core and complements designed by one party
Platform and services must all be profitable. Platform implements most profitable functions. Entire product family must be profitable. Core implements shared functionality.