STRATEGY phone handset business,which had competed with its own handset- technology,based in Hopkinton,Massachusetts,launched a strat- maker customers such as Nokia,Ericsson and Motorola. egy in the early 2000s that aimed to establish its hardware and In fiscal 2006,Qualcomm reported an astounding net income software technology,known as WideSky,as a new industrywide of $2.5 billion on sales of $7.5 billion,both selling chipsets as well platform.WideSky was a middleware software layer that made it as licensing its patents.However,as the technology and market possible to integrate and manage third-party hardware.By doing continues to evolve,Qualcomm's position could weaken.To so,it solved an important technical industry problem that af- avoid paying high license fees,European companies led by Nokia fected all IT customers:the efficient management of a growing Corp.and companies sponsored by the Chinese government have assortment of heterogeneous information systems that store been developing or exploring alternatives to Qualcomm patents. more and more mission-critical data. In 2007,Qualcomm only owned 20%of the patents for the newer With WideSky,EMC succeeded at the technological aspect of Wideband Code Division Multiple Access standard,popular in coring,but not at the business side of creating an industrywide Europe.Nokia also has gone to court to challenge Qualcomm's platform.EMC was unable to convince its competitors-princi- high licensing fees,and integrated circuit maker Broadcom Corp. pally IBM,Hewlett-Packard,Hitachi,and Sun Microsystems has filed multiple suits against Qualcomm.Qualcomm might -to adopt WideSky.Non-EMC customers were also reluctant to have avoided this situation in the cell phone market by investing adopt a proprietary standard.EMC's competitors decided to cre- more of its profits earlier into research and development in order ate their own open-standards platform and manage this through to become the indisputable leader for the next-generation tech- an industry group,the Storage Networking Industry Association. nology;it could also have made more aggressive efforts to work The number of companies and users supporting this open tech- with,not against,customers such as Nokia and Broadcom.Qual- nology eventually forced EMC to abandon its platform-leadership comm is trying to diversify.It is attempting a similar coring effort and adopt the SNIA standards.7 strategy for mobile broadband connectivity on laptops,with 70 models embedding Qualcomm chipsets as of May 2007.6 Tipping:How to Win Platform Battles By Building Market Momentum Coring Challenges:EMC's WideSky Not every attempt to establish an As the case of WideSky versus SNIA demonstrates,many plat- industry platform through coring succeeds.Consider the case of form battles involve competition among technical standards and EMC Corp.'s WideSky.EMC,a market leader in data storage incompatible technologies.A current standards battleground pits Strategic Options for Platform-Leader Wannabes Two principal strategies for becoming a platform leader are(1)coring(creating a new platform)and(2)tipping a market toward your company's platform.To become a platform leader,companies need to address both the business and technology aspects of platform strategy. Strategic Option Technology Actions to Consider Business Actions to Consider Coring ·Solve an essential“system"problem Solve an essential business problem for How to create a new platform Facilitate external companies' many industry players where none existed before provision of add-ons Create and preserve complementors' Keep intellectual property closed incentives to contribute and innovate on the innards of your technology Protect your main source of revenue Maintain strong interdependencies and profit between platform and complements Maintain high switching costs to competing platforms Tipping Try to develop unique,compelling Provide more incentives for complemen- How to win platform wars by features that are hard to imitate and tors than your competitors do building market momentum that attract users Rally competitors to form a coalition Tip across markets:absorb and bundle Consider pricing or subsidy mechanisms technical features from an adjacent that attract users to the platform market 32 MIT SLOAN MANAGEMENT REVIEW WINTER 2008 SLOANREVIEW.MIT.EDUSTRATEGY 32 MIT SLOAN MANAGEMENT REVIEW WINTER 2008 SLOANREVIEW.MIT.EDU phone handset business, which had competed with its own handset￾maker customers such as Nokia, Ericsson and Motorola. In fiscal 2006, Qualcomm reported an astounding net income of $2.5 billion on sales of $7.5 billion, both selling chipsets as well as licensing its patents. However, as the technology and market continues to evolve, Qualcomm’s position could weaken. To avoid paying high license fees, European companies led by Nokia Corp. and companies sponsored by the Chinese government have been developing or exploring alternatives to Qualcomm patents. In 2007, Qualcomm only owned 20% of the patents for the newer Wideband Code Division Multiple Access standard, popular in Europe. Nokia also has gone to court to challenge Qualcomm’s high licensing fees, and integrated circuit maker Broadcom Corp. has filed multiple suits against Qualcomm. Qualcomm might have avoided this situation in the cell phone market by investing more of its profits earlier into research and development in order to become the indisputable leader for the next-generation tech￾nology; it could also have made more aggressive efforts to work with, not against, customers such as Nokia and Broadcom. Qual￾comm is trying to diversify. It is attempting a similar coring strategy for mobile broadband connectivity on laptops, with 70 models embedding Qualcomm chipsets as of May 2007.6 Coring Challenges: EMC’s WideSky Not every attempt to establish an industry platform through coring succeeds. Consider the case of EMC Corp.’s WideSky. EMC, a market leader in data storage technology, based in Hopkinton, Massachusetts, launched a strat￾egy in the early 2000s that aimed to establish its hardware and software technology, known as WideSky, as a new industrywide platform. WideSky was a middleware software layer that made it possible to integrate and manage third-party hardware. By doing so, it solved an important technical industry problem that af￾fected all IT customers: the efficient management of a growing assortment of heterogeneous information systems that store more and more mission-critical data. With WideSky, EMC succeeded at the technological aspect of coring, but not at the business side of creating an industrywide platform. EMC was unable to convince its competitors — princi￾pally IBM, Hewlett-Packard, Hitachi, and Sun Microsystems — to adopt WideSky. Non-EMC customers were also reluctant to adopt a proprietary standard. EMC’s competitors decided to cre￾ate their own open-standards platform and manage this through an industry group, the Storage Networking Industry Association. The number of companies and users supporting this open tech￾nology eventually forced EMC to abandon its platform-leadership effort and adopt the SNIA standards.7 Tipping: How to Win Platform Battles By Building Market Momentum As the case of WideSky versus SNIA demonstrates, many plat￾form battles involve competition among technical standards and incompatible technologies. A current standards battleground pits Two principal strategies for becoming a platform leader are (1) coring (creating a new platform) and (2) tipping a market toward your company’s platform. To become a platform leader, companies need to address both the business and technology aspects of platform strategy. Strategic Options for Platform-Leader Wannabes Strategic Option Technology Actions to Consider Business Actions to Consider Coring How to create a new platform where none existed before • Solve an essential “system” problem • Facilitate external companies’ provision of add-ons • Keep intellectual property closed on the innards of your technology • Maintain strong interdependencies between platform and complements • Solve an essential business problem for many industry players • Create and preserve complementors’ incentives to contribute and innovate • Protect your main source of revenue and profit • Maintain high switching costs to competing platforms Tipping How to win platform wars by building market momentum • Try to develop unique, compelling features that are hard to imitate and that attract users • Tip across markets: absorb and bundle technical features from an adjacent market • Provide more incentives for complemen￾tors than your competitors do • Rally competitors to form a coalition • Consider pricing or subsidy mechanisms that attract users to the platform