The Technium

Platforms Trump Products

[Translations: Japanese]

The general trend in the technium is a long-term migration away from selling products to selling services. Jeff Bezos has long said the Kindle is not a product, but a service selling access to reading material. That distinction will be made even more visible very shortly when Amazon introduces an “all you can read” subscription to their library of ebooks. Readers will no longer have to purchase individual books, but will have the option to subscribe to all books (600,000 to begin with), like you do to movies on Netflix. As a paying subscriber you get access to any book in print (eventually). Amazon books is a service not product. Verb not noun.

Screen shot 2014 07 16 at 10 14 46 am1 e1405522383435
Test page for Amazon’s Kindle Unlimited book subscription service

In this migration the ultimate vehicle for selling a service is not a store (which is for selling products) but a platform. A platform allows you to sell services which you did not create, just as a store allows you to sell products you did not create. If you are trying to sell services and you don’t have a platform, then you have to make them all yourself, and it won’t scale.

Jeff Bezos has turned Amazon into a platform that sells services that others provide. Apple, Microsoft, Google and Facebook all also see themselves as platforms. All these giants employ third party vendors to make use of their platform. All employ APIs extensively. Sometimes platforms are called ecosystems, because in true ecological fashion, supporting vendors who cooperate in one dimension may also compete in others. For instance, Amazon sells both brand new books from publishers, and it sells — via its ecosystem built of used books stores — cheaper used versions. Used book vendors compete with each other and with the publishers. The platform’s job is to make sure they make money (add value) whether the parts cooperate or compete. Which Amazon does well.

In the network economy platforms trump products. For the consumers, this translates into: access trumps ownership. Products induce ownership. But “owning” a service doesn’t quite make sense conceptually, or practically. So if companies aren’t really selling products and are instead selling services, then what customers need is access. And increasingly they prefer access over ownership. (See my Better Than Owning)

People have traditionally subscribed to services that entailed a never-ending stream of updates, improvements, versions, that forced a deep interaction and constant relationship from the producer to the consumer. To ease that relationship, a customer committed to a product (phone carrier, cable provider) and was promised uninterrupted quality. The first standalone product to be “servicized” was software. This mode is called SAS, software as service. As an example of SAS, Adobe no longer sells it’s software as discrete products with dated versions. Instead you subscribe to Photoshop, InDesign, Premier, etc, or the entire suite of services. You sign up and your computer will operate the latest best versions as long as you pay the monthly subscription. This new model entails are re-orientation by the customer who may be used to thinking of software as a product her or she owns.

TV, phones and software were just the beginning. The major move in the upcoming decades will be XAS — X as service, where X is anything, and maybe everything. You don’t buy specific products; instead you get access to whatever benefits you need or want. Take TAS, Transportation as Service. You would not own a car. To get from point A to Point B, you would use a robot car to pick you up at your home, take you to the high speed rail station, which takes you to your general destination area, let’s you out at the subway, which you take to meet another robot car to take you the final few miles. You pay some monthly fee for this access to the transportation platform run by a private/public consortium. Other possible XAS:

Food as Service

Health as Service

Clothes as Service

Shelter as Service

Entertainment as Service

Vacation as Service

School as Service

Hotel as Service (AirBnB)

Tools as Service (Techshop)

Fitness as Service

Toys as Service

And so on. Yes, even physical things can be delivered as if they were digital.


© 2023