The Power of Platforms

Xiaomi Hongmi and the Apple Watch

Horizontal computing, cloud infrastructure, the open source movement, etc. have drastically dropped the cost of building technology. Because many gatekeepers have disappeared (access to capital, access to information, etc.) the ability of vast populations to problem solve is being enabled at scale.

Problem solving at scale is important for two reasons.

• First, there are an infinite amount of problems to be solved. One group of builders cannot get to them all, let alone know that they all exist.

• Second, problems must be solved by people who understand that problem deeply. The alternative — attempts to solve a problem without understanding it — can be very detrimental (think Toms shoes). So tools which make more people creators are essential.

Platform ecosystems — like iOS, Android and all the others to come — are the connective tissue between creators and users. By creating a space for creator’s products to reach users, and vice versa, they incentivize more creators to build more products.

Two (reciprocal, mutually inclusive) methods to increase the power of a platform are:

• Increase the amount of people who have access to the platform (extend people-reach)

• Increase the ability of that platform to solve problems (extend problem-reach)

Let’s look at this through the lens of two products: Xiaomi’s Hongmi Smartphone and the Apple Watch.

First, Xiaomi Hongmi:

Today, 1/3 of the world population has access to the internet. Penetration in developed markets nears saturation, but it’s just getting started in emerging economies. Projections show internet penetration reaching 80+% around 2023. Computers are no longer expensive devices for the world elite, and companies like Xiaomi are building high-quality mobile devices for cheap. Xiaomi sold 57.36 million phones in its first three years of operation. The Xiaomi Hongmi line — with 18 million units sold — makes up the majority of sales. It costs $113 — $129 dollars, around a 1/3 the price of other comparable products. It is a high-quality, fully-integrated smartphone running on forked Android, and is being sold in China, India, Southeast Asia, etc..

Products like the Xiaomi Hongmi enable emerging market populations to connect to the platform. As such, the people-reach of the platform ecosystems (read: the reach of products built by creators) has increased 20x from 10 years ago and will continue to skyrocket. These people — who technology has never served before — are entering at scale. They have unique needs, and there is massive value to be captured by creators who serve that opportunity.

Second, Apple Watch:

The history of time-keeping seems to be a good analogy.

First, we had the town hall clock. You had to go to the town square to see it. Then, the grandfather clock. One in each house. Then, wall clocks, one for each room. Then, pocket watches, just a pull away, and always with you. Then, we got watches.

Now, computers.

First, there was the mainframe. You had to go to a university to use it. Then, there was the desktop PC, and you had to sit in the house to use it. Then, laptops, one for each person, and you can bring them with you, but you need to have the bag, and take it out of the bag in order to use it. Then, smartphones, and those buzz in your pocket, and you take them out of your pocket in order to use them.

Now, we have watches. With each shift, tools get closer and closer to users. Each shift is a tighter vertical integration with a user’s life, and in that way makes new things possible. The issue with communicating what new things it makes possible is that nobody knows yet. Nobody could have predicted Uber would be built on top of the smartphone, even though it’s a powerful use case of things the smartphone can do that a laptop cannot.

Horace Dediu has a piece called Tentpoles, excerpted here.

“When the iPhone launched, Steve Jobs introduced it as three products in one: a wide-screen iPod, a phone, and an internet communicator. When the Apple Watch launched, Tim Cook introduced it as being three things: A precise timepiece, a new, intimate way to communicate, and a comprehensive health and fitness device…what I want to note is that the three things which the iPhone was defined as being are no longer things that it is most used for…Of course, the reason iPhone outgrew its tentpoles is because of the app economy. 1.3 million apps does that to a product… Collaborative innovation explodes the opportunity to discover new needs and uses.”

The Watch is a true companion device. It’s with you, and it has to be respectful of you, but it is with you, and can tap you on the shoulder when it is most necessary. I’m excited by what it enables to be built, and I’m excited to build.