Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Tuesday, December 06, 2005

Research Note: How Edge Platforms Disrupt Industries

Edge competencies are often expressed in the real world through edge platforms. Edge platforms have a numer of key features. The most familiar are that they're often massively distributed, and open-access.

These two features alone make edge platforms often hugely disruptive to the economics of traditional, pre-network industries. Why? Because, strategically, they are enormous sources of leverage: they can usually almost completely vaporize the fixed costs of production from most of the resources that are necessary and sufficient to compete in those industries.

Here's a killer example. Peter Molyneux's new game is an edge platform for machinima. This nice Post article talks about how film students are beginning to use it to throw together flicks at almost zero cost.

This is a form of coordination arbitrage: these students are arbitraging the fact that coordination, in Hollywood, is relatively overpriced. That is, studio execs, stars, agents, etc cost a great deal - but are returning less and less relative to new forms of competition at the edge, which exploit cheap coordination.

We can think of many, many other examples: Wikipedia, AdWords,, to name just a few.

We can also think of many other markets whose consistent refusal to move from the core to the edge - whose deep strategy decay - is threatening them with not just competition, but irrelevance.

-- umair // 8:04 AM // 1 comments


ref to a wiki discussion on your article.
// Anonymous Chinarut // 10:00 AM

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