The Impact of Design Moves on Platform Adoption: The Case of Microsoft Windows OS

How soon will firms form alliances with a platform provider? What factors impact the decision and the speed with which firms first move into partnerships with a platform provider such as Microsoft? This study uses the theories of design rules and network effects as its theoretical anchors to explore the timing of the alliance decision with Microsoft. We develop a model that incorporates platform design changes and its impact on the decision of firms to form an alliance with Microsoft. In particular, we analyze two design moves that a platform provider can make — augmenting and inversion. We empirically test the impact of each design move using a sample spanning the years 1989 to 1994. Study results provide an initial design theoretic based examination of platform design changes and its impact on alliance formation.