Software Applications and Platforms
- [The University of Chicago]
- Overview
The Internet is full of software applications. As a software developer or entrepreneur, you might want to develop or own the next unicorn in the IT industry. Focusing on the right areas can be the key to building a successful platform.
When creating the best digital platform for your business, it’s crucial to understand how different software platforms work and their business models. Without identifying your ideal target audience and business goals, you may choose the wrong software platform.
Software platforms are an essential part of the digital world because they allow people to share content, create content, and develop products for mobile phones, computers, and other electronic devices. Some software applications effectively operate as platforms. For example, the programming language Java is a software application that you can download to a device and run the application.
Regardless of the type of software, platforms are the foundation upon which developers create products for consumers to use. Understanding the importance of software platforms can help you understand e-commerce, digital technologies, and digital marketplaces.
Almost every software entrepreneur is building some kind of "platform" these days. However, few will confidently answer a seemingly simple but very important question: What kind of platform are you building? Not all platforms are created equal. Google Search, Facebook, Amazon Web Services, Amazon Marketplace, Android, Uber, AirBnB, Waze, WeWork, Twilio and even Bitcoin are all platforms.
At the same time, these platforms vary greatly in how they create network effects, the interactions they enable, the approach to the chicken-and-egg problem (do you build the demand side or the supply side first?), openness, growth drivers Identity, subsidies, competitive strategies and monetization methods.
Building a successful platform is more about making the right tradeoffs than the best technology. To understand these tradeoffs, you must have a good grasp of the type of platform you are building.
Please refer to the following for more information:
- Wikipedia: Computing Platform
- The Software Platform Ecosystem
A software application (app) is a specific program designed to perform a distinct user-focused task, like sending an email or editing an image. A software platform is a foundational operating or infrastructural ecosystem that supports multiple applications and allows developers to build, test, and deploy code.
Understanding the ecosystem requires looking at how these two categories interact across different layers of technology:
1. The Core Platforms (Operating Systems & Infrastructure):
These are the foundational systems that control hardware resources and allow applications to run.
- Desktop Platforms: Microsoft Windows, Apple macOS, and Linux.
- Mobile Platforms: Google Android and Apple iOS.
- Cloud Infrastructure Platforms: Infrastructure-as-a-Service (IaaS) providers like Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure that host modern web applications.
2. Application Platforms (Development & Deployment):
These frameworks provide developers with the tools, APIs, and runtime environments needed to build, deploy, and scale apps.
- Platform as a Service (PaaS): Environments like Heroku and Vercel that streamline the hosting and scaling of web applications.
- Low-Code/No-Code Platforms: Visual builders like Salesforce Platform or Microsoft Power Apps that let teams build custom applications with drag-and-drop interfaces.
3. Application Software (End-User Tools):
These are the daily tools that end-users interact with, categorized by their specific functions.
- Productivity & Collaboration: Microsoft 365 (Word, Excel), Google Workspace, and communication tools like Slack.
- Business Operations: Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) tools like Salesforce and HubSpot.
- Design & Content: Multimedia and graphic suites like Adobe Creative Cloud and Figma.
- Web Browsers: Access portals like Google Chrome or Mozilla Firefox.
- Types of Software Platforms
A platform is the hardware and software architecture on which other applications, processes or technologies are developed or underpinned. In computing, a platform refers to the basic hardware, the computer system, and the software, the operating system that often runs software applications. A platform bridges physical computing architecture, like system CPUs, and software like the operating system.
A platform is a set of software and a surrounding ecosystem of resources that help you grow your business. A platform grows through connectivity: its value comes not only from its own characteristics, but also from its ability to connect external tools, teams, data, and processes.
If an application is the foundation for other programs, it can also serve as a platform. For example, the web browsers we use in our daily lives rarely accept third-party plug-ins, so browser applications become the interface platform.
The technology landscape encompasses several distinct platform models:
- Utility Platforms: These platforms attract users through free, useful services - like Google Search or flight aggregators such as Kayak and Skyscanner - before monetizing via secondary participants (e.g., advertisers and airlines).
- Content Distribution Platforms: These facilitate the delivery of content or ads to users, matching advertisers with the right audiences. Examples include Google AdSense.
- Data Harvesting Platforms: These platforms accumulate large datasets by providing free user services, subsequently leveraging the collected data to refine algorithms, deliver targeted ads, or train machine learning models.
- To Know What Kind of Platform You are Building
To build a successful digital platform, you must determine exactly what kind of platform you are operating and align your strategy with its core function, whether it is an Online Marketplace (like eBay or Amazon), a Content/Data Platform (like YouTube or Waze), or an App Store (like Android).
To ensure your platform achieves critical mass and scales, you must make strategic tradeoffs in the following areas:
- Open vs. Closed Ecosystems: Decide whether to build an open system (which drives rapid Innovation by welcoming third-party developers) or a closed system (which gives you full Control over user experience and security).
- Supply vs. Demand First: Solve the classic Chicken-or-Egg Problem by identifying which side brings more inherent value. Many platforms Subsidize Supply (e.g., offering financial incentives to drivers) to establish a vibrant network before targeting demand.
- Providing Standalone Value: Before building a full multi-sided platform, it is often a winning strategy to offer a highly focused, Standalone Tool that attracts your initial audience (e.g., Zillow starting as a free home-valuation tool).
- Monetization Strategy: Choose how you will capture value—through Transaction Fees, advertising, or tiered services - while preventing users from Multi-homing (taking their business to rival platforms).
- [Roses]
- Software Platform's Direction and Strategy
Building a successful software platform requires navigating fundamental tradeoffs between platform openness, control, and network effects. Understanding the specific category of platform you are building—whether it is a transaction marketplace or an innovation layer—determines your go-to-market strategy, monetization method, and how you solve the initial supply-and-demand dilemma. [1, 2, 3, 4, 5]
Determining your platform's direction and strategy requires understanding different archetypes, tradeoffs, and architectural focuses: [1, 2, 3]
1. Platform Typology and Value Creation
Understanding the exact type of platform is critical for valuation and growth: [1, 2, 3]
Innovation Platforms: Provide technical foundations (like APIs) that enable third-party developers to build complementary innovations. Investors often value these highly because they leverage scalable, global developer ecosystems. [1, 2, 3, 4]
Transaction Platforms: Digital marketplaces or exchanges that connect users looking for goods/services with sellers/providers. [1, 2]
Computing Platforms: Like Apple iOS or Google Android, these facilitate interactions between users and third-party developers via curated app stores. [1, 2]
2. The Core Strategic Tradeoffs
Software development involves constant compromise. When planning your platform, consider these core choices: [1]
Open vs. Closed Systems: Open platforms are flexible and encourage rapid ecosystem growth, but lack centralized control. Closed platforms, like Salesforce AppExchange, are heavily controlled by a gatekeeper to protect quality and branding, but require massive upfront investment. [1, 2]
The "Chicken-and-Egg" Problem: You must determine whether to build the demand side (consumers) or the supply side first. Utility platforms, for example, attract users by providing a highly valuable free service first before introducing the supply or advertiser side. [1, 2, 3]
Product vs. Platform Thinking: Transitioning from lump-sum "project thinking" to ongoing "product thinking" justifies long-term investment by managing a continuous value pipeline. [1]
3. Business Models and Monetization
Selecting the right business model aligns the value of the platform with its revenue streams: [1, 2, 3]
Subscription (SaaS): Standardized, cloud-based access charging a flat rate, per-seat fee, or usage-based cost. [1, 2]
Commission / Transaction Fees: Taking a percentage from facilitating transactions between external buyers and sellers (common in marketplace platforms like Amazon Marketplace or Uber). [1, 2, 3, 4]
Platform-as-a-Service (PaaS): Allowing third-party developers to build and sell applications within your infrastructure, collecting a share of the revenue. [1]
Could you tell me what specific industry or target audience you are trying to reach so I can help define the best go-to-market strategy and monetization model for your idea?
- Technology Platforms
Technology platforms are not user-facing. Rather, it is the foundation upon which user-facing companies build their products.
For example, two different video streaming services might use the same technology platform, but their interfaces would appear different to users because they interact with a company-specific interface rather than the underlying software.
- Operating Platforms
The operating platform is both the user interface and the underlying platform used by the device. For example, your smartphone uses an operating platform regardless of make and model.
The operating software on the phone allows third-party application developers to create products that run on it. Other devices such as tablets, smart TVs or computers also use operating platforms.
- Service Platforms
A service platform usually involves a website or other digital product that offers something to its users for free. The platform's goal is to use the free service to reach a large enough audience to attract advertisers.
A search engine is an example of a service platform. Users use search engines to find content on the internet, and eventually, the platform begins to monetize its audience through advertising.
Another example of a service platform might be a website catering to the travel industry. Users can use the site to find cheap flights, find hotels, explore potential tourist activities and plan trips.
The service is free, and the value of the platform comes when more users earn higher advertising fees for the site.
- Video Games
Each model of console has its own software platform for which third-party developers build games specific to that software. Launching a new generation of consoles requires updating the hardware programmers use to create games, and the software that underlies games changes. As with other platforms, console software can be updated and add new features, correct bugs, or address security issues.
- Engagement Platforms
These platforms focus on user engagement and interaction with other users. Participating platforms are generally free to use and include social media sites that allow users to post content and interact with other users. User identity is an important part of these sites, as it allows users to create roles or be themselves, choose a username, and add personal information.
After creating an account, users can post content, share other people's content, and connect with other users. Types of user accounts include organizations, businesses, real people, and fictional characters.
The platform then uses algorithms to track user behavior and serve them content based on their interests and interactions. Attracting and retaining users allows platforms to monetize their services through advertising.
- Digital Marketplaces
Digital marketplaces focus on facilitating e-commerce by connecting users looking for goods with individuals or organizations looking for potential buyers. The digital marketplace includes categories such as real estate, retail merchandise, auctions, investor fundraising and vacation property rentals.
Digital marketplace platforms have elements of search engines as people on the website search for specific items. It also allows for a certain level of user engagement, as the platform typically allows users to post and reply to information, such as comments.
- Consumer Demand Platforms
This type of software application acts as its own platform, usually as a downloadable application. Ride-sharing services, grocery delivery services, and consumption-on-demand services are common examples of such platforms.
Consumer demand platforms typically have a payment system, a method to track the status of consumer requests, and a method to rate received services.
These platforms typically focus on a specific area, such as ride-sharing, as opposed to digital marketplaces that may offer multiple e-commerce options.
- Content Platforms
Content platforms sometimes allow uploading and sharing of videos or allow users to stream video games.
These platforms focus on empowering users to create and share their content with others. These platforms often have revenue-sharing relationships with content creators.
The platform allows automated advertising to appear as content creators gain views on their content. Platforms and content creators distribute revenue generated by ads through rates based on views or clicks.
- Data Collection Platforms
Data collection platforms collect information from the web. Typically, this involves programming that allows data collectors to crawl websites and collect data.
Some data collector platforms collect data through their platforms, such as map services that collect location data. Join the platform, users allow to use
[More to come ...]
