A platform is something that can be built upon. In the case of Windows, the operating system had (has) an API that allowed 3rd-party programs to run on it. The primary benefit that this provided to Microsoft was a powerful two-sided network: developers built on Windows, which attracted users (primarily businesses) to the platform, which in turn drew still more developers. Over time this network effect resulted in a powerful lock-in: both developers and users were invested in the various programs that ran their businesses, which meant Microsoft could effectively charge rent on every computer sold in the world.Thompson then goes on to discuss why platforms and ecosystems are no longer as important as they were in the Windows era. His point is that in the past owning the platform and ecosystem was the key to sales success, today being the best product or service for a consumer’s needs is more important.
An ecosystem is a web of mutually beneficial relationships that enhances the value of all of the participants. This is a more under-appreciated aspect of Microsoft’s dominance: there were massive sectors of the industry built up specifically to support Windows, including value-added resellers, large consultancies, and internal IT departments. In fact, IDC has claimed that for every $1 Microsoft made in sales, partner companies made $8.70. Indeed, ecosystem lock-in is arguably even more powerful than platform lock-in: not only is there a sunk-cost aspect, but also a whole lot more money and people pushing to keep things exactly the way they are.