Abstract
This paper examines how recent trends in the smartphone industry may be expanding previous conceptions of the industry and its boundaries. The increasing importance of Internet and cloud-based services—which in many ways lie outside the control of the physical device, operating system, and even the cellular network—seems to be changing the roles and strategies of key firms in the ecosystem. Using industry architecture and platform theory, we examine how the key firms seem to be reacting to these new changes. Our analysis indicates that the platform “bottleneck,” or key control point, is moving away from the device and into the cloud, where a new meta-platform based on the Internet may be emerging.
Highlights
Convergences are interesting industrial periods because at these moments entire industries can be restructured as firms compete to achieve positions of architectural advantage
The convergence of telephony, computing, and the Internet has led to new structures of competition among firms promoting different technology platforms and business models
It is important to note that at the moment, the different business models mean that this competition is asymmetric, making outcomes difficult to predict
Summary
Convergences are interesting industrial periods because at these moments entire industries can be restructured as firms compete to achieve positions of architectural advantage. This paper has two goals: first, to demonstrate that the increasing importance of the Internet and cloud-based services is moving platform power from the device into the cloud If true, this shift has significant implications for firm strategy, as it signifies a new playing field where the competition will be waged, but an opportunity for restructuring power and relationships within the merging value networks. The platform literature suggests that the key to securing architectural advantage is owning the Bbottleneck,^ or the core asset that is used across complementors within the ecosystem, yet has high barriers to entry This allows the owner to extract rents from those requiring the platform for their businesses (Jacobides et al 2006). We conclude with a discussion of how this shift in mobile telephony is part of broader alignment of many types of networked devices and service platforms connecting to the cloud through Internet protocols, thereby creating a Bmetaplatform^ or additional layer that may challenge firms’ platform strategies
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