In 2009 toys company toys 'R' us sued amazon saying that it had violated some of the agreement of their multi- side platform deal in which amazon will provide the platform for selling the toys of toys 'R' us through it's online web-site.But it turns out that toys 'R' us learnt it the hard way that amazon was focusing more on toys 'R' client in order to create a rapport with them which was more oriented towards creating a value for amazon.
The above stated dispute is only one of the myriad issue which one needs to understand in order to get an insight into nuances of MSP. There are various issues which a firm should consider before going in for a msp with an existing platform provider like amazon,ebay etc.first of all let me elaborate the cons whcih are stated in a point wise manner
1.The platform provider can access your customer base and can focus more on creating value for themselves rather than focusing on your concern.
2.Differentiating your product is quite difficult when you are using multi-side platform.This is the sole reason why exclusive companies like Louis-Vuitton prefer to have their own platform rather than going in for msp
.
3.seamless integration between you and the provider may not be there.
Now let us see what are the pros of going in for a MSP
1.lesser cost.this is quite obvious as you not concocting anything rather you are just using the service of an existing platform.
2.Access to larger customer base-the provider which you use will have been there in the market for quite some time and thus it is expected that their customer base will also be quite wide.This gives an instant access to the existing customer base.
3.Also these days the provider are providing some space for customization of your offering.This can be used as a tool for differentiating your product,but again no 100% customization is there.
Deciding whether to go for a msp or concocting yours own platform is a strategical problem.The firm must know what sort of business they are in, whether they have a long term orientation or they thrive more on short term gains.A mismatch between the orientation of the platform provider and the subscriber has always been a source of discrepancy.In the amazon case amazon has a long term orientation whereas toys 'R' us has a short-term orientation as toys market thrives mainly on short-term intermittent innovations.Most of the time the paltform provider tries to monopolize by setting in certain demands.Microsoft developed an opensocial paltform in which applications which can run on any social network platform like facebook,myspace,linkedln can be developed.As a barter for providing this service what microsoft demanded was an access to the customer of these social network sites.Linkedln sniffed some hidden motive behind this and opposed this motion of microsoft.Instead of going in with opensocial linedln created it's own platform which used only few features of opensocial which were quintessential like searching based on a particualr calendar date and an event to see who all members of linkedln or other socialnetworking sites where attending it.
Companies like google has been raking in quite a lot of money through advertisement wherein they charge the companies which use theirs ads to promote themselves.Generally the companies which use this feature of google pays on the basis what exact search pattern string which they will like to purchase,whenever the user types in the search string which a particular company has purchased,ads of that company will pop up along with the search results.A firm can also go in for more than one MSP for example the same firm can use the advertising facility of both google and yahoo.
In the past there has been the case where the MSP has become kind of monopolist and in order to discourage this type of monopolism various firms have chipped in to search for new service providers.But again while choosing new service provider firms must make sure that they are not tipping the new provider to become another monopolist.This is exactly what happened with apple's i tunes,initially it was encouraged to end the monopoly of napster but overtime it grew so large and commanded such a high stake in online music store business market that it itself has become a sort of monopolist.
To end this discussion all that can be summed-up is that whether to go in for msp or to build your own platform is a strategic decision.firms must have a complete knowledge of what they are striving to achieve including the knowledge of the customers which they are targeting, type of the market which they are into ,whether it has long term or short term orientation etc and various other factors which vary with the requirement of the firm.
The above stated dispute is only one of the myriad issue which one needs to understand in order to get an insight into nuances of MSP. There are various issues which a firm should consider before going in for a msp with an existing platform provider like amazon,ebay etc.first of all let me elaborate the cons whcih are stated in a point wise manner
1.The platform provider can access your customer base and can focus more on creating value for themselves rather than focusing on your concern.
2.Differentiating your product is quite difficult when you are using multi-side platform.This is the sole reason why exclusive companies like Louis-Vuitton prefer to have their own platform rather than going in for msp
.
3.seamless integration between you and the provider may not be there.
Now let us see what are the pros of going in for a MSP
1.lesser cost.this is quite obvious as you not concocting anything rather you are just using the service of an existing platform.
2.Access to larger customer base-the provider which you use will have been there in the market for quite some time and thus it is expected that their customer base will also be quite wide.This gives an instant access to the existing customer base.
3.Also these days the provider are providing some space for customization of your offering.This can be used as a tool for differentiating your product,but again no 100% customization is there.
Deciding whether to go for a msp or concocting yours own platform is a strategical problem.The firm must know what sort of business they are in, whether they have a long term orientation or they thrive more on short term gains.A mismatch between the orientation of the platform provider and the subscriber has always been a source of discrepancy.In the amazon case amazon has a long term orientation whereas toys 'R' us has a short-term orientation as toys market thrives mainly on short-term intermittent innovations.Most of the time the paltform provider tries to monopolize by setting in certain demands.Microsoft developed an opensocial paltform in which applications which can run on any social network platform like facebook,myspace,linkedln can be developed.As a barter for providing this service what microsoft demanded was an access to the customer of these social network sites.Linkedln sniffed some hidden motive behind this and opposed this motion of microsoft.Instead of going in with opensocial linedln created it's own platform which used only few features of opensocial which were quintessential like searching based on a particualr calendar date and an event to see who all members of linkedln or other socialnetworking sites where attending it.
Companies like google has been raking in quite a lot of money through advertisement wherein they charge the companies which use theirs ads to promote themselves.Generally the companies which use this feature of google pays on the basis what exact search pattern string which they will like to purchase,whenever the user types in the search string which a particular company has purchased,ads of that company will pop up along with the search results.A firm can also go in for more than one MSP for example the same firm can use the advertising facility of both google and yahoo.
In the past there has been the case where the MSP has become kind of monopolist and in order to discourage this type of monopolism various firms have chipped in to search for new service providers.But again while choosing new service provider firms must make sure that they are not tipping the new provider to become another monopolist.This is exactly what happened with apple's i tunes,initially it was encouraged to end the monopoly of napster but overtime it grew so large and commanded such a high stake in online music store business market that it itself has become a sort of monopolist.
To end this discussion all that can be summed-up is that whether to go in for msp or to build your own platform is a strategic decision.firms must have a complete knowledge of what they are striving to achieve including the knowledge of the customers which they are targeting, type of the market which they are into ,whether it has long term or short term orientation etc and various other factors which vary with the requirement of the firm.
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