Platform policy and its effect on diffusion : the case study of Android and iOS

• Main Author: Yoon, Ilbae
• Other Authors: Stuart E. Madnick.
• Format: Others
• Language: English
• Published: Massachusetts Institute of Technology 2014
• Subjects: Sloan School of Management.
• Online Access: http://hdl.handle.net/1721.1/91069

Thesis: S.M. in Management Studies, Massachusetts Institute of Technology, Sloan School of Management, 2014. === Cataloged from PDF version of thesis. === Includes bibliographical references (pages 68-70). === Platform has played an important role in telecommunication industry. As the industry evolves from value chain to value network industry, firms can no longer pursue innovation and maintain competitiveness solely by improving value chain activities. Rather, they have to become a platform intermediary among various participants' value network. Firms that successfully built up and internalized the platform now lead the telecommunication industry: on one side, there's opened Android platform, and on the other side, there's closed iOS platform. Each platform provider employs different platform policies, and these policies show different characteristics in the diffusion of each platform. To illustrate, the adoption rates of new operating systems are different: Android has adopted open policy, so it enjoyed relatively fast growth, but lags the adoption rate of new version's installed base far behind that of iOS. Meanwhile, iOS has adopted proprietary policy, so it the growth of user adoption was relatively slower than Android. However, frequent upgrade of Android platform resulted in so called fragmentation: while consumers enjoy wider choice of devices under opened platform, not all end users get benefit of version upgrade and this sometimes eliminates surplus generated around the platform. We see smaller fragmentation in more proprietary platform, iOS. In this study, the difference in the diffusion patterns of open and closed platforms will be analyzed using system dynamics analysis, and then the managerial implication regarding the policy and diffusion pattern will be discussed. (1) The diffusion of those two different types of platforms will be modelled using system dynamics modeling. To incorporate open and closed policy in the model, each model will be constructed in parallel. These models will be fit into historical data and used to predict the future trend. Predicted trend will be compared with real data to evaluate the accuracy of the model. (2) As a second step, the effect of open and close platform policy on diffusion pattern will be tested with variables used in the modeling. (3) Lastly, sensitivity test will be conducted to see whether platform intermediaries or platform participants can somehow manipulate the speed of diffusion. === by Ilbae Yoon. === S.M. in Management Studies