Achieving platform leadership: Application of inverting and porting in system development

Inverting and porting are two of modular operators identified by Baldwin and Clark (2000) in Design Rules to characterize changes of system modularity. The objective of this article is to examine the economics of inverting and porting and to infer their implications to platform strategy. The result is that for inverting to be beneficial, the module must have technological nature of a platform, which is to interact with many modules, and to succeed in inverting, transactional mechanisms and marketing initiatives must be devised because suppliers and consumers are linked by modular compatibility resulted from standardized interfaces. Porting can be applied passively to deliver benefit of insurance or actively to advocate new value propositions. Active porting starts a window of opportunity for the module to invert to become a platform. The case of the leading digital music service provider in Taiwan, KKBox, is discussed as an illustration.