Abstract
Problem definition: Initial product design decisions are critically important for mobile apps, which show a relatively short time from launch to peak usage, thus providing a narrow window for success and no time for course correction based on market reaction. Mobile apps are designed using a highly modular architecture based on software development kits (SDKs), with SDK choices being sequentially determined along three dimensions—multiplicity (total number of SDKs), compatibility (SDK co-occurrence frequency), and novelty (SDK degree of newness to the developer). We evaluate the consequence of these decisions on initial market success in the context of mobile gaming app design. Academic/practical relevance: The resulting conceptual framework aids developers in determining the modularity of digital product development. Methodology: We formulate an instrumental variables least absolute shrinkage and selection operator regression model to estimate relationships of interest using a proprietary data set extracted from the application programming interface server of a leading mobile apps intelligence firm. Results: We find a negative impact of SDK multiplicity on initial success. High SDK compatibility can mitigate this negative effect, whereas high SDK novelty can exacerbate the negative effect of multiplicity. Post hoc analysis shows that business-to-consumer (B2C) communication features can also mitigate this negative impact. Managerial implications: Prior product modularity research has predominantly focused on physical products or relied on single-dimensional modularity measures. Our study conceptualizes modularity as multidimensional and investigates how these multidimensional SDK-based modularity choices impact the performance of a key category of digital products—mobile apps. We demonstrate that increasing multiplicity, essential in certain markets, negatively affects initial success. However, firms can enhance SDK compatibility, reduce SDK novelty, and use B2C communication channels to mitigate this negative impact. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.1181 .
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