Dynamic platform strategies in an interconnected ecosystem: Navigating standards and complements in the emerging smart home ecosystem
Smart home platforms increasingly rely on third-party standards and complements, shifting from closed strategies; entrants choose differently.
Summary
The study follows 97 smart home platform providers over time and classifies their strategies along two choices: whether the complements (the connected devices and services) come from the firm or from third parties, and whether the technical standards are the firm's own or third-party ones. That yields four modes: closed integration, a proprietary ecosystem such as Apple HomeKit, open complements, and pure interoperability. Early entrants mostly chose closed strategies because they lacked ecosystem resources, and the field has since moved towards strategies that rely on third-party standards, often combining several modes for different product segments. Later start-ups disproportionately chose pure interoperability to reach the many existing complements, while diversifying incumbents favoured open complements, using standards to reposition their legacy products. The trade-off for strategists is that third-party standards open new complementarities but give up control over the interfaces.
Editor's opinion
In an emerging ecosystem, the closed strategy that works at the start gives way to openness as the ecosystem matures: platforms adopt other parties' standards to reach the complements that already exist, and accept losing control of the interface. Late entrants without products should go for interoperability, while incumbents with products use standards to extend their reach, so the right degree of openness depends on what assets the firm brings.
Key concepts
platform strategy · standards · complements · smart home