Versioning and Launch Timing for Platform Technologies
“Platform technologies and network goods: insights on product launch and management”, Information Technology and Management 15.3 (2014), pp. 199–209, ISSN: 1385-951X
The article examines the tension between growth and profitability for network goods (such as Skype, Dropbox, Facebook, smart phone platforms, etc.). It discusses various levers of control available to the firm including managing product design and the intensity of network effects, managing the timing of product announcement vs. actual product release, selecting the target market for initial product launch, and whether to sell a single version or an expanded product line. The article emphasizes the role of standalone benefits in early adoption, even for network goods, and the need for deep subsidies and losses in early stage to ensure a substantial network size that is critical to a platform’s success. But it also argues that growth and profitability can both be achieved, via strategies such as freemium pricing and multi-version product lines. It argues that despite high uncertainty regarding platform success, it might be optimal to bear the cost of product line expansion early; doing so would expand the user base, make the platform more attractive to developers which, over time, would make the product more attractive to late adopters. The paper illustrates these insights by examining launch strategies for Apple’s iPod, iPhone and Amazon Kindle, among others.