The Proprietary And The Open:Research On The Platform Competition Strategy Of The Network Information Goods

In recent years, Google as the giant of the Internet search engine, pays much attention on researching Android operating system and purchasing Motorola, and it expands the field to Mobile Internet field, such as mobile phone, computer and so on; Accordingly, Apple as the giant of the Consumer electronic products manufacturers, launches iCloud clouds service and Apple advertising platform iAd, and steppes into Mobile Internet field. Consequently, this phenomenon leads to the intensified competition in the field of Mobile Internet field, which causes the author’s attention of platform competition strategies of the Network Information Goods. At the same time, the Two-sided Markets theory provides new ideas for the research on the Network Information Goods platform competition strategies.Based on Two-sided Markets theory, this paper through the platform competition strategy model, and combined with the case of Apple (a Proprietary platform strategy) and Google (an open platform strategy), Launches research on the two different platform competition strategies about the Proprietary platform and the open platform. This article first analyses the basic problems which the Network Information Goods platform competition needs to be resolved, that is, the number of users and the scale of the network, then draws the ideas of the early-stage of platform and the stable-stage of platform. Among them, the focus of the early-stage of platform’s competition strategy is to obtain the basic user numbers, and form the minimum network size; the competition strategy of the stable-stage of platform is mainly to solve the problem of platform profit model, and maintain the stable development of the platform. Then, this paper through the models of the early-stage of platform and the stable-stage of platform elaborates the theory, and Carries on the comparative analysis to the Proprietary platform and the open platform. Finally, combined with Apple and Google’s case, this paper explains the phenomena why the Proprietary and the open platform can succeed eventually.The study finds that, in the early-stage of platform, no matter adopting a Proprietary platform strategy or an open platform strategy, the platform manufacturer also takes subsidies or investment strategies on sellers but the difference between them is the degree of subsidies. In the stable-stage of platform, the difference of the two platform strategy shows in the following respects:in the user market, the open platform manufacturer takes free pricing strategies, but the Proprietary platform manufacturer takes pricing strategy based on products, and the price changes with the user’s preference on an open platform and Proprietary platform; In the software developer market, the software developers which complement with the open platform, charges the price to end users related with the cross network externalities and the service fee which platform manufacturers charged. However, in the Proprietary platform, the software developer would improve the price charged to end users with the intervention of the manufacturers. In addition, the study finds that the sales of the product quantity of the open platform are related with the cross network externalities and the service fee, and the sales of platform manufacturers are higher with smaller cross network externalities and lower service fee. Therefore, the open platform manufacturer could take lower service fee or free pricing strategy to enlarge market share. And as the intervention of other manufacturers, for the Proprietary platform manufacturers, the biggest market demand is lower than the biggest one in the monopoly platform, so the sales amount of the Proprietary platform are lower than previously monopoly market sales.Further analysis, we find that when manufactures have the monopoly ability, they can take the Proprietary platform strategy, and implement the asymmetric pricing strategy on both side users. They realize the profit by constantly technology innovation to improve the price of the unit product. As the joining of the open platform manufacturers, the Proprietary platform manufacturer will decrease the client’s fees, but improve the software developer’s price; When the platform manufacturers are not have the monopoly ability, as the potential into the market, they can take an open platform strategy, through taking free or a lower price to expand the numbers of users, and perfect the platform network scale. At the same time, they can make a profit through the third party. So the key to make a profit is to further expand the number of users on both sides of the platform, by increasing the number of unit product to increase profits.