preview

Case Analysis : Platform Envelopment

Decent Essays

1. Platforms providers being surrounded (enveloped) by multiple competing providers, who with its cost advantage or bundling strategy can swallow entire market share. This phenomenon is called “Platform Envelopment”. This strategy is majorly harmful to the standalone platforms and can cause a provider to exit the market too. For instance, RealNetworks had a business model where it charged for its supplier side of the streaming server and subsidized on the consumer side by providing free music. This Real model faced platform envelopment by Microsoft. Microsoft provided the content companies with a multipurpose server - incorporating file, print, email, web servers and a free streaming server. Due to this bundling, the companies preferred Windows NT to the Real server. For a well established firm to overcome platform envelopment, it needs to defend by one of the following strategy: a. It could revamp its business model, by changing the money side and subsidized side or by offering a system integrator rather than a standalone service. b. It could form an alliance with the complementary services and then use a bundling strategy to form an attractive package. c. It could file anti-trust legal action against the predator firm. 2. At a launch stage, a firm needs to strategies in order to prevail in the competitive market. The major drivers of the market are the users, who actually decide which technology to adapt to, and depending on their usage the success of a product launch

Get Access