Invisible Engines: How Software Platforms Drive Innovation and Transform Industries

Posted by Social Science Research Network

Invisible Engines: How Software Platforms Drive Innovation and Transform Industries

David S. Evans (Global Economics Group), Andrei Hagiu (Harvard) & Richard Schmalensee (MIT)

Abstract: “Software platforms are the invisible engines that have created, touched, or transformed nearly every major industry for the past quarter century. They power everything from mobile phones and automobile navigation systems to search engines and web portals. They have been the source of enormous value to consumers and helped some entrepreneurs build great fortunes. And they are likely to drive change that will dwarf the business and technology revolution we have seen to this point. Invisible Engines examines the business dynamics and strategies used by firms that recognize the transformative power unleashed by this new revolution — a revolution that will change both new and old industries.” Invisible Engines was written, including those words, mainly in 2004 and 2005 and published in 2006. Timing is everything and, sometimes, even economists get it right: on January 9, 2007 Steve Jobs introduced the iPhone. We believe Invisible Engines may still be worth reading for the enduring principles it lays out; for the lessons taught by software platforms that transformed the economy from the mid 1970s through the mid 2000s; and for its general insights into new economics of multisided platforms. Some of the book will, no doubt, seem like watching an old movie with landline telephones and big cathode ray screens sitting or workers’ desks.

Note: MIT Press has kindly agreed to allow us to post the published book on SSRN for free distribution. Invisible Engines was the Winner of the Business, Management & Accounting category in the 2006 Professional/Scholarly Publishing Annual Awards Competition presented by the Association of American Publishers.