Monday, September 14, 2009

Platform or application?

Friday, Skype announced that it was discontinuing its Extras program due to 'lack of interest from the developer community'. Announced in late 2006, the program was launched with much initial success, with more than 10mm downloads in the first 4 months and more than 4,000 developers signed to build applications on the platform.

The Extra program always seemed to hold great promise. The ability for young vendors, for a fee based on a % of revenues, to hook into a huge (now nearly 500mm) installed base, seamlessly integrate a payment mechanism, and to ride a new ecosystem around the instant web had great equity building appeal. Of course, there was a huge caveat, Extra sent Skype on the path towards being a platform, where its infrastructure takes a back seat to the application written above it. Product management now had to take into account a new constituency, the developer community, as concerned with API's as consumers were about the next new function. It takes strong and consistent leadership to pull this off well. Not many companies have done so successfully.

Despite initial success, shortly into the platform journey it seemed as if Ebay/Skype was having great trouble straddling the 'coopetition' line that platform players, who also build applications must walk. Certification and promotion seemed arbitrary and statements of direction were murky at best. Developers, investors and consumers were confused. It became just too hard to navigate in a world populated with alternatives, so Extra participants turned their attention elsewhere, or disappeared.

With such great potential to stir up the market, unfortunately, Ebay/Skype performed a hysterectomy on its potential Golden Goose.

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