Invisible Engines: How Software Platforms Drive Innovation and Transform Industries

By Andrei Hagiu, Richard Schmalensee, David S. Evans, et al.

Book Overview

Software platforms are the invisible engines that have created, touched, or transformed nearly every major industry for the past quarter century. They power everything from mobile phones and automobile navigation systems to search engines and web portals. They have been the source of enormous value to consumers and helped some entrepreneurs build great fortunes. And they are likely to drive change that will dwarf the business and technology revolution we have seen to this point. Invisible Engines examines the business dynamics and strategies used by firms that recognize the transformative power unleashed by this new revolution -- a revolution that will change both new and old industries. The authors argue that in order to understand the successes of software platforms, we must first understand their role as a technological meeting ground where application developers and end users converge. Apple, Microsoft, and Google, for example, charge developers little or nothing for using their platforms and make most of their money from end users; Sony PlayStation and other game consoles, by contrast, subsidize users and make more money from developers, who pay royalties for access to the code they need to write games. More applications attract more users, and more users attract more applications. And more applications and more users lead to more profits. Invisible Engines explores this story through the lens of the companies that have mastered this platform-balancing act. It offers detailed studies of the personal computer, video game console, personal digital assistant, smart mobile phone, and digital media software platform industries, focusing on the business decisions made by industry players to drive profits and stay a step ahead of the competition. Shorter discussions of Internet-based software platforms provide an important glimpse into a future in which the way we buy, pay, watch, listen, learn, and communicate will change forever. An electronic version of this book is available under a Creative Commons license.

• Format: Hardcover
• Language: English
• ISBN: 0262050854
• ISBN13: 9780262050852
• Release Date: October 2006
• Publisher: MIT Press (MA)
• Length: 395 Pages
• Weight: 1.10 lbs.
• Dimensions: 1.3" x 6.0" x 9.2"
• Age Range: 18 years and up
• Grade Range: Postsecondary and higher

Customer Reviews

The concept is groundbreaking and goes beyond understanding of the software industry

While "Invisible Engines" provides readers with a good "lens" to understand what is driving competition in the software industry, the beauty of this book is that it is based on a new concept in economics, two-sided (multi-sided) platforms, which may be applied to many other industries. So far, economics reearch focused mostly on the single market model, but in the real world, there are many situations where two markets converge or two-sided platform is at work. The simplest example is singles clubs, which are mentioned in this book. The clubs need men and women and in the right proportions to even have a product. In summary, this book is a good introduction to the new frontier of ecnomics research, multi-sided platforms.

A very interesting and entertaining read

Not necessarily for weekend travels, but a very interesting and entertaining read nevertheless, on what may a priori seem like a pretty dull subject - software platforms. Well, little did I know, there is quite a lot of action (competition, innovation, "imperialism"?!?) going on in those industries. I would highly recommend it to any slightly economically-curious business person or even for someone who is just interested in investing in IT markets - great overview.

Tour de force

Ever wondered what iPods, Windows, Xboxes, PDAs and smartphones have in common? This book provides a useful analysis of the successful business practices that cut across all of these industries and have made their pioneers extremely rich and famous. I found it very insightful and surprisingly well-written - there are lots of well-chosen anecdotes which help the reader cope with the complexity of the subject.

Emerging markets use technology to take multi-sided markets to new heights

Technology innovation where emerging markets like China can apply at the same rate has taken the traditional multi-sided markets to new heights. Where the environment is more dynamic than mature economies, and cultural preferences differ, platforms like bulletine boards and blogs and online social communities which serve various interested parties, are more ubiquous and trusted than in mature economies where printed info are still accurate. The book is fascinating as it explores how markets are created and enabled by platforms that balance the relative powers of each player and interested parties. Definitely a good read!

Read Before Planning Your Next Technology Venture

The last page of this book is where all technology entrepreneurs and CEO's should sketch out their "next great idea". To do so before reading this book is like skydiving without a parachute. "Invisible Engines" is one of the best investments a technology related venture capitalist can make and is a must read for anyone contemplating creating, leading or investing in an organization involved in the technology sector.