Applico’s Platform Innovation Matrix

Platform holding companies have arrived. Making sense of multiple sets of network effects and platform businesses is a tough task. Applico’s Platform Innovation Matrix helps analyze the holding company’s overall strategy as comprised of its different platform business units.

Large, public platform businesses will have at least one monopoly which generates a lot of cash. Then, they will have additional platforms which are defensive “moats.” These businesses don’t generate much revenue; however, they could begin to as the business evolves. Stars have high consumer growth and can also generate revenue. If these platforms can get enough market share in the ecosystem, they can gain monopoly status as the industry matures and competition dies down so they can increase profitability.

Y Axis: Relative total platform revenue per producer calculates the total revenue generated by the platform divided by the total number of producers on the platform. If you compare iOS to Android, Apple’s development platform makes much more revenue / producer and therefore is higher on the Y axis as compared to Android. A platform is only compared to other platform businesses within the same platform type. If your platform commands a dominant amount of the network effects in an ecosystem, one would hope that you can generate more revenue per producer than the runner-up platform.

X Axis: % consumer growth is calculated by the growth of consumption specific to a platform business. Consumption could be measured in a variety of ways. Here are a few examples: the number of active consumers, the total amount of transactions, or the amount of time spent consuming content.

As part of our continual analysis of how public platforms are performing, we put Google through Applico’s Platform Innovation Matrix and found Search and Gmail are monopolies while Android and YouTube struggle to evolve from Stars into Monopolies. Waze and Google Drive are currently playing the role of Moats as Google+ has met its demise.