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Information Systems Prof Wins Best Paper Award

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Jianqing Chen, associate professor of information systems, won the best paper award from the Ninth China Summer Workshop on Information Management (CSWIM), held in Hefei in June. His paper, “Frenemies in Platform Markets: The Case of Apple’s iPad vs. Amazon’s Kindle,” co-authored with Ron Adner of Dartmouth College and Feng Zhu of Harvard University, studies platform openness and platform compatibility when competing platforms generate profits through both hardware sales and royalties from content sales.

Chen and his colleagues studied the e-reader market, in particular two major platforms, Apple’s iPad and Amazon’s Kindle, which compete against each other. The authors noted that the rival companies tend to focus differently on profits: Amazon concentrates more on royalties from e-book sales while hardware profits are more important to Apple.

The researchers created a model showing that competing platforms may have incentives to cooperate and become “frenemies” — friendly enemies — under certain conditions. When the difference in their “profit foci is large enough,” Chen and his colleagues wrote, “having the Kindle Reader available on iPad is agreeable to both Apple and Amazon: Amazon’s e-book sales increase because iPad users can now purchase e-books from Amazon and read them via Kindle Reader, and Apple’s hardware sales increase because greater value accrues to the iPad with access to Kindle Reader….The additional profits Apple generates from hardware sales more than compensate its loss in royalties from e-book sales through its iBooks. Similarly, the additional profits Amazon generates from e-book sales are greater than its loss in Kindle device sales.”

Although their model was specific to the e-reader market, “the insight that competing platforms with different profit foci may have incentives to cooperate applies in other settings,” they concluded, and they recommended that platforms “should actively seek opportunities to cooperate with rivals with different approaches to value.”

Kris Imherr

Kris Imherr

Kris Imherr, the Jindal School’s communications director, has a BA in English and an MS in journalism. She is proud of them both and happily puts them to use on JSOM’s behalf. She thinks JSOM Perspectives is a great idea and encourages everyone with a point of view and a pencil to contribute.

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