Sunday, November 13, 2005


API War 2.0: Past Success is NO Guarantee for Future Success

API War 1.0 was about winning in the software space.

Microsoft won by understanding the power of APIs to develop and nurture an ecosystem of independent software vendors (ISVs). It mastered product platforms through ecosystems in the software space. Much has been written on how Microsoft dominated the software sector by leveraging direct and indirect network effects.

Now, the game is shifting to services with different ecosystems.

Joel Spolsky's 2004 blog is useful to understand the tensions inside Microsoft as we go from that battle to the new battle.

Now, we are in API War 2.0. Microsoft is not fighting against Sun, SAP, Oracle and Real Networks. In fact, it has settled and patched up with many of the old enemies. Yesterday's competitors are today's partners because the game has changed. The battlefront has moved on.

in API War 2.0, the key competitors are: Google, Amazon, eBay and Yahoo. May be we should add IBM and Apple and few others to the list. They are jockeying to win in the services space. It's not about APIs to win in the software space but to use software to win in the services space. Gates/Ozzie memos last week is about preparing to win the next war.

The signs are clear. Past cash registers through Windows and Office cannot be defended for ever. Just being a winner in API War 1.0 is not a guarantee of success in War 2.0. Bill Gates and Co. know that. They have successfully adapted to technology-driven business shifts before.

What will the new services-led ecosystems look like? Will Microsoft be able to parlay its experience with the software ecosystems to create and nurture new services-led ecosystems?

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