If You've Got A Platform Strategy, It Helps To Put Out The Welcome Mat For Third-party Developers

from the open-for-licensing dept

The New York Times Saul Hansell takes a look at the business model behind the Chumby, an Internet-age replacement for your alarm clock. Apparently, the plan is to keep the price of Chumbies low and make money by demanding a cut of any ad revenue generated by third-party applications. Hansell seems skeptical of this business model, and so am I. Chumby did the right thing by making its device relatively open and trying to provide a platform that other companies will build on. But its plan to demand a cut of other firms' advertising revenues seems like it might undercut that strategy. Especially when it's still trying to get the platform off the ground, it should want to make it as easy as possible for third-party developers to participate in the Chumby ecosystem.

Requiring third party developers to license access to the platform both increases the red tape required to enter the market for Chumby applications and reduces the potential profits from doing so. Potential third-party developers are going to think twice about betting on a platform whose owner may demand a bigger cut in the future. Obviously, there needs to be a way to recoup their investments on the Chumby platform. But if the Chumby becomes a hit, there will be all sorts of ways to monetize that success. Most obviously, the company can raise the price of the Chumby, or sell premium Chumbies with extra functionality. It can install its own applications by default and sell ads with those. It can sell accessories, or create a certification program for accessories like Apple's "Made for iPod" program. It can offer seminars and consulting services to people wanting to develop Chumby applications. It's never difficult to monetize a successful platform -- especially when you're selling the hardware. Putting up roadblocks to the development of new applications is a mistake, even if it generates a bit of extra revenue in the short run.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Idiot in a Hurry, Feb 26th, 2008 @ 6:23am

    Bad Name

    Is this Gumby or is it fish bait .....

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Anonymous Coward, Feb 26th, 2008 @ 8:53am

    I dunno... I assume that the only way the Chumby sells is if it keeps its price low. I think it's an interesting product, but I never thought of it as a must-have.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    tlc, Feb 26th, 2008 @ 3:28pm

    $179 for an ALARM CLOCK is cheap???

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    joltdude, Aug 18th, 2008 @ 11:34am

    Re:

    Sure is cheap for an internet radio and a digital pictureframe ;)

     

    reply to this | link to this | view in thread ]


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