Platforms are ruling the Digital world. They are everywhere. Amazon, Instagram, and Spotify are some of the successful platforms that are part of our daily lives.
Through this blog post, we will explore the Platform Strategy for Products by looking at the transformation of Microsoft Teams from a productivity app to a productivity platform.
Windows as a Platform in the PC Era
In 1985, Microsoft released Windows 1.0, when the PC era was still in its infancy. The PC market needed a boost, and Microsoft saw an opportunity.
Bill Gates's vision was to "put a computer on every desk."
For this vision to become a reality, Windows was made to work on a wide variety of hardware, so that the PC manufacturers could install it on their machines. This strategy was a win-win for both parties, resulting in rapid growth for the PC market and the realization of Gates' vision.
Once customers became familiar with Windows, it was easier for Microsoft to cross-sell its other offerings, such as Microsoft Office, to existing customers.
Windows was the first platform from the Microsoft bastion. Using Windows as a platform to promote its other products and services (Internet explorer, Microsoft office) was a smart approach that allowed it to sell more to its existing customers. Of course, this move also caught the attention of the competition watchdog.
The Birth of Microsoft Teams
In 2014, Microsoft was considered a company in decline, having lost its mojo.
Satya Nadella took over as the new CEO, with the vision of empowering every person and organization on the planet to achieve more. This vision led to the implementation of a cloud-first, mobile-first strategy, which required a cultural shift within Microsoft.
You can read the fascinating journey of transformation of Microsoft in the book "Hit Refresh" authored by Satya Nadella.
Microsoft Teams was launched in 2016 with basic collaboration features like video calls, chat, and file sharing.
It was in the year 2019, during the COVID and work-from-home mandate that Microsoft Teams became a household name along with other collaboration apps like Zoom and Google Meet.
A starting boost to Microsoft teams was provided by the 2 existing Microsoft products - Windows OS and the Microsoft Office suite.
Microsoft Teams is cleverly bundled with Microsoft Office or Office365 (the current name). And so it was easy to push Microsoft Teams to the existing customers who were using the Office suite.
Over the last few years, the capabilities of Microsoft teams have expanded beyond call, chat and file share.
Today, you can use Microsoft Teams to do things like
1. Project planning and tracking
2. Manage your to-do list
3. Assign and track tasks of the team
4. Track your engagement during work hours
The key differentiator that elevates Microsoft Teams from a Productivity App to a Platform is in its capability to integrate and host other apps.
Teams allows
4. Integration with other Microsoft Business apps like PowerBI
5. To Create your own apps -e.g. Bots, Automate flows, etc
6. To use 3rd party (non-Microsoft) apps
Why 3rd party apps are Important for a Platform?
Keep the customers hooked on the platform
By adding support for the 3rd party apps, Microsoft Teams has become a more useful and versatile tool for users. The higher the usage of a product, the higher the growth is. In this case, the usability of Teams is no longer dependent only on features added by Microsoft, the 3rd party apps are boosting it. These 3rd party apps are the hooks for the users to stay on Microsoft Teams.
Entry Barrier
The combination of the platform and the 3rd party apps keeps the customer engaged and this creates an entry barrier for competition.
New Revenue Stream
Typically, the 3rd party apps have to pay a fee to the Platform. And this is a new revenue stream.
What is the Platform Strategy
The Platform strategy is a go-to-market approach in which the platform connects suppliers and consumers. Amazon, Facebook, Instagram, and Google Play Store are examples of platforms.
In the app-driven approach, the interaction is between the company and customers. In the platform approach, the company is the platform, enabling the interaction between the consumer and the supplier.
For the Platform strategy to work, it is critical to have a growing consumer or supplier base.
In the case of Microsoft Teams, it has a strong consumer side and is now working on building the supplier side.
Platform strategy doesn't always work though if you can not balance the 2 sides.
Windows Mobile is an example. Microsoft tried to grow the supplier side (the app developers) by incentivizing them, but it failed because there were too few consumers using the platform, resulting in a lack of apps to serve customers. And there were very few customers because there were very few apps.
Amazon onboarded sellers for two years before launching in India because they knew that customers would not be happy if the products they wanted were not available. So they focussed on building the supplier side before focussing on the consumer side.
You can read more about Platform strategy in our Platform Strategy series.
Take away
Platform strategy works really well for Business growth and also to safeguard Business by creating entry barriers. Microsoft Teams evolving into a Platform is a Windows moment in the Digital era though Microsoft has diversified into multiple domains now.
However, GenAI has pushed the technology market into top gear. As the technology firms evolve to grapple with this shift, it will exciting to see the new Business models and strategies they use to stay relevant in the Market.
Image credit: Google Gemini
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