In July 2008 Apple released their Apple App Store for their first iPhone, three months later Google launched their Play Store for their Android operating system. As there are several competing mobile application ecosystems, customers and developers can participate in more than one ecosystem. This is called multi-homing. Multi-homing often occurs in multi-sided platforms (D. S. Evans, 2003). A two-sided market consists of a buyer-side (or user-side) and seller-side (or developer-side). Firms on the seller side make (complementary) products and try to sell them to the users/ buyers through the platform (Jullien, 2010; Rochet & Tirole, 2003, 2004; Roson, 2005).
Armstrong (2006) explains three different situations where multi-homing occurs within multi-sided markets: none of the sides are multi-homing, one of the two sides is multi-homing, while the other is single-homing and the last situation is where both sides are multi-homing. However, a situation where all the agents of both sides are multi-homing is not likely to occur (Armstrong, 2006). Rysman (2004) assumes that the buyer-side of multi-sided platform choose one platform which they will use, making that party the single-homing. On the other side of the platform, the seller-side will choose the platform based on the number of buyers. If the numbers of buyers are equal on both platforms, they could choose for sell their product on multiple platforms.
When an application developer is multi-homing, he offers the same products in two or more mobile application ecosystems. For example Apple App Store and the Google Play store. Multi-homing has several advantages: Sellers gain access to larger potential markets (Rochet & Tirole, 2003), reduce dependency on one ecosystem and to offer their products to the same customers across different platforms (Idu, Zande, & Jansen, 2011). On the other hand, multi-homing comes with additional costs while converting and maintaining application for several platforms (Eisenmann, Parker, & Alstyne, 2006).
Hyrynsalmi et al (2016) have conducted a study on the influence of developer multi-homing on competition between three leading mobile application ecosystems. They demonstrated that the multi-homing publishing strategy is only employed by a small number of developers and, typically, for only a small set of applications, while Google Play and Apple App Store host the greater part of the multi-homing applications. Only 1,7 to 3,2% of the applications are multi-homing, however among the most downloaded apps that number is almost a tenfold (39,2%).
In conclusion, building applications for multiple mobile operating systems comes with additional costs. However, among the most downloaded applications, almost half of the applications are developed for both platforms. It seems that some kind of chicken-egg dilemma occurs here. Does this make multi-homing mobile applications a luxury good, or does it make multi-homing a success factor in becoming one of the most downloaded applications?
What do you think?
Sources:
Armstrong, M. (2006). Competition in two-sided markets. The RAND Journal of Economics, 37(3), 668–691. http://doi.org/10.1111/j.1756-2171.2006.tb00037.x
Eisenmann, T., Parker, G., & Alstyne, M. W. Van. (2006). Strategies for Two- Sided Markets. Harvard Business Review, 84(10), 12. http://doi.org/10.1007/s00199-006-0114-6
Evans, D. S. (2003). Some Empirical Aspects of Multi-sided Platform Industries. Review of Network Economics, 2(3), 191–209. http://doi.org/10.2202/1446-9022.1026
Hyrynsalmi, S., Suominen, A., & Mäntymäki, M. (2016). The influence of developer multi-homing on competition between software ecosystems. Journal of Systems and Software, 111, 119–127. http://doi.org/http://dx.doi.org/10.1016/j.jss.2015.08.053
Jullien, B. (2010). Two-sided B2B platforms, 1–27. Retrieved from http://idei.fr/doc/wp/2010/two_sided_b2b_october2010.pdf\npapers2://publication/uuid/3510E821-E92A-4211-BF41-F3E964BD70B7
Rochet, J., & Tirole, J. (2003). Platform Competition in Two-Sided Markets. Journal of the European Economic Association, 1(4), 990–1029. http://doi.org/10.1162/154247603322493212
Rochet, J., & Tirole, J. (2004). Defining Two-Sided Markets. The RAND Journal of Economics, 2004(1), 1–28. http://doi.org/10.1.1.191.787
Roson, R. (2005). Two-sided markets: A tentative survey. Review of Network Economics, 4(2), 142–160. http://doi.org/10.2202/1446-9022.1070
Rysman, M. (2004). Networks : Competition Between A Study of the Market for Yellow Pages. Review of Economics and Statistics, 71(2), 483–512.
