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MULTI-SIDED PLATFORMS

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PATTERNS

Switch to multi-sided Consolidation of
iPod platform business model iPod & iTunes platform business model iPhone & appstore

2001 2003 2008

Apple introduced the iPod in 2001 as a stand- In 2003 Apple introduced the iTunes Music In 2008 Apple consolidated its platform strat-
alone product. Users could copy their CDs and Store, which was closely integrated with the egy by launching its App Store for the highly
download music from the Internet onto the iPod. The store allowed users to buy and down- popular iPhone. The App Store allows users to
device. The iPod represented a technology plat- load digital music in an extremely convenient browse, buy, and download applications directly
form for storing music from various sources. At way. The store was Apple’s fi rst attempt at from the iTunes Store and install them on their
this point, though, Apple was not exploiting the exploiting platform effects. iTunes essentially iPhones. Application developers must channel
platform aspect of the iPod in its business model. connected “music rightsholders” directly with sales of all applications through the App Store,
buyers. This strategy catapulted Apple to its with Apple collecting a 30 percent royalty on
position today as the world’s largest online each application sold.
music retailer.

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