Platformization: The Future of Connected Devices is Here

“Platformization refers to the strategic development of a unified ecosystem that integrates various hardware and software components, offering users a seamless and interconnected experience.”

This approach revolutionizes how companies design and market their connected devices, enabling them to provide more comprehensive and personalized solutions and tap into new revenue streams.

The importance of the platform-first trend is evident in the direction that Google and Amazon have taken for their leading consumer products, such as Google Home and Amazon Alexa; these we call born-in platform products. On the other hand, Xbox was first introduced to the market as a pure hardware play, but Microsoft quickly realized the potential for building a broader platform around it. By embracing Platformization, Microsoft has transformed Xbox from a standalone console into a comprehensive gaming ecosystem, resulting in users’ stickiness and new revenue streams.

It is not just the big tech companies; platformization is increasingly proving to be a growth driver across different industries. Check out how Palo Alto Network’s CEO is betting big on Platformization after announcing record earnings last month, in August 2024. This article will provide more details on how Platformization has played a crucial role in the journey of many successful connected products.

Let’s review the benefits of Platformization, its characteristics, and why companies should consider Platform-First strategies.

Make platform-first central theme of your connected devices strategy

As you develop your next connected device, making Platform-First the core pillar of your strategy will be critical to remaining competitive in today’s tech landscape. Behind every successful product, there is a magical platform. Starting with a platform-first mindset will streamline development, drive long-term growth, and reduce future technical debt. Let’s review how a Platform can help you achieve your business objectives.

1. Enhanced User Experience: Platformization offers companies a seamless and cohesive user experience. Integrating various devices and services into a single ecosystem allows users to enjoy greater convenience and functionality, leading to higher satisfaction and loyalty.

2. Increased Revenue Opportunities: A well-developed platform can create multiple revenue streams. Companies can monetize their platforms through subscriptions, in-app purchases, and partnerships with third-party developers.

3. Competitive Advantage: Adopting a platform strategy can provide a significant competitive advantage. Companies that offer comprehensive and interconnected solutions are more likely to gain user loyalty.

4. Data-Driven Insights: Platforms leverage vast amounts of user data they generate on their Platform to gain valuable insights into user behavior and preferences. This data can inform product development, marketing strategies, and customer support initiatives, leading to more targeted and effective business decisions.

5. Brand Loyalty: A successful platform fosters brand loyalty by creating a consistent and engaging user experience. Users invested in a platform will likely remain loyal to the brand, reducing churn and increasing lifetime customer value.

Building Blocks of a Connected Platform

Let’s explore what tools and capabilities to include in your platformization strategy.

1. Open Unified Ecosystem: Connected Devices Platforms create a unified ecosystem where hardware and software components work together seamlessly. For instance, Microsoft Xbox integrates gaming consoles, cloud gaming services, partner solutions, and a robust online community, providing a cohesive gaming experience. This unified approach improves user satisfaction and also fosters brand loyalty.

2. API-FIRST: Google Home and Amazon Alexa Home tout themselves as API-first platforms. Built on the foundation of Interoperability, these platforms facilitate seamless interactions across diverse devices regardless of their brands and form factors. The Platform allows users to control multiple devices through a single interface, from smart lights to security cameras, enhancing convenience and user experience.

3. Developer Community: A thriving developer ecosystem is crucial for platform success. Companies like Google and Amazon actively encourage third-party developers to create platform applications and integrations to broaden the Platform’s functionality: Google’s annual I/O developer conference or Amazon’s Alexa Skills Kit incentives to foster ecosystem engagement.

4. App Marketplace: As companies expand their product lines to offer more value to their users and add new revenue streams, the Platform provides a foundation for building and selling value-added solutions and services.

5. Customization and Personalization: A modular platform provides a basic structure or environment upon which other components can be built and customized. It allows for adding or removing components without affecting the core functionality. Without a solid platform backbone, it would be hard to automatically adjust the temperature settings of a Google Nest smart thermostat based on users’ daily schedules, weather conditions, and energy usage preferences.

6. System-ilities refers to a wide range of attributes that determine digital systems’ quality, performance, and maintainability. These non-functional requirements are essential for overall success and should be considered upfront during the design phase.

Comparison summary of big-tech platforms

When comparing the different platforms powering Google Home, Amazon Alexa, Microsoft Xbox, and Meta Quest on the above six Platform dimensions. They all score high on API-first, app marketplace, customization, and system-ilities. However, regarding developer community engagement and creating an open, unified ecosystem, Microsoft Xbox and Meta Quest have some work to do; they need to grow their developer community and broaden the ecosystem.

Success Stories of Big Tech Powerhouses – Reinventing Device Experience with Platform

Platformization has elevated the connected devices game by providing a standardized framework for their development and interaction. Let’s review how big tech companies leverage Platforms to offer differentiated solutions and capture market share.

Google Home

Google Home exemplifies Platformization by integrating various Google services and third-party devices into a single, cohesive ecosystem. Google Home’s interoperability with devices from different manufacturers allows users to control smart home devices regardless of brand.

Amazon Alexa

Amazon Alexa has become synonymous with smart home automation. The Platform’s extensive compatibility with a wide range of devices and its robust skill ecosystem make it a leader in the Platformization trend. Alexa’s voice assistant capabilities extend beyond basic commands, offering users a highly personalized and interactive experience.

Meta Quest

By creating an interconnected ecosystem of VR hardware, software, and social experiences, Meta Quest offers users an immersive and comprehensive VR experience. Its strong emphasis on social interaction—through platforms like Horizon Worlds—sets it apart in VR.

Microsoft Xbox

Microsoft Xbox has transitioned from a gaming console to a comprehensive gaming platform. Microsoft’s emphasis on Interoperability allows gamers to access their favorite games across different devices, including PCs and mobile phones. The Xbox Game Pass subscription service drives user engagement and opens new revenue channels.

Takeaway: Start with the big picture

Platformization is the cornerstone for transforming the value proposition of connected devices, offering companies new opportunities to enhance user experiences, drive revenue, and gain a competitive edge. Google Home, Amazon Alexa Home, Meta Quest, and Microsoft Xbox validate the perspective that critical characteristics of the Platform include Interoperability, unified ecosystems, scalability, modularization, personalization, and robust developer communities are essential for platform success. Companies that embrace Platformization in their connected devices strategy are well-positioned to thrive in the increasingly competitive and dynamic technology landscape.

Connected Devices is our key focus area at Capgemini. As a strategic business partner to our clients, Capgemini is pioneering the intelligent industry – the digital transformation era characterized by a growing convergence of the physical and virtual worlds in products, software, data, and services and unlocking new revenue streams. Learn how different organizations have accelerated their Intelligent Industry and Business Transformation journey by partnering with Capgemini. Contact our experts today for a discussion to explore endless opportunities to #getthefutureyouwant