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APIs: A Strategy Guide by Dan Woods, Greg Brail, Daniel Jacobson

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Chapter 1. The API Opportunity

APIs are a big deal and they are getting bigger. Pioneering companies such as Google, Facebook, Apple, and Twitter have exposed amazing technological solutions to the public, transforming existing businesses and creating new industries. Central to these companies’ successes are the APIs that link people and their computing devices to the underlying platforms that power each business and that tie these companies together behind the scenes.

The world is already changing. Consider the following examples:

  • Salesforce.com built a large, rich partner ecosystem by opening core services for partners to innovate and extend. Today, more traffic comes through the Salesforce API than through its website. As of mid-2011 more than 60 percent of the traffic to Salesforce.com comes through APIs.

  • Amazon opened its core computing infrastructure as Amazon Web Services (AWS), accessed via number of APIs, and now serves more bandwidth through AWS than through all of its global storefronts combined.

  • Twitter is the most visible example of a business almost entirely based on an API and an ecosystem of developer applications.

  • Netflix has completely reinvented how we consume movies and TV shows with streaming to hundreds of different devices, upending not just the video rental industry but also impacting large adjacent markets such as cable TV. APIs allow Netflix to support a multitude of devices in an affordable manner.

  • NPR has infused its API into the engineering culture of the digital media division. The API drives the website, mobile apps, and all other forms of distribution and syndication for the company. The API has also transformed the company’s relationship with its member stations and the way that NPR shares content with them.

Now consider these industry trends:

  • Smartphone sales passed new PC sales in early 2011, and Morgan Stanley predicts that by the end of 2012, there will be more connected mobile devices in the world than PCs.

  • CTIA (the wireless industry association) has determined that there are already more wireless devices in the United States than people.

  • Analysts are competing to predict how many mobile devices will exist in the future. The GSMA (another wireless industry association) predicts that there will be 20 billion connected mobile devices by 2020, and Ericsson CEO Hans Vestberg predicts 50 billion. Meanwhile, Marthin De Beer, Senior Vice President of Cisco’s Emerging Technologies Group, projects that count to be over a trillion by 2020.

  • Cisco predicts that while Internet traffic originated by PCs will continue to grow at 33 percent per year, traffic originated by non-PC devices will more than double each year by 2015.

  • Facebook accounts for over 25 percent of total Internet page views at this writing, and APIs drive both the Facebook products and its ecosystem.

  • Over 30 percent of Internet traffic during US prime-time hours comes from Netflix streaming, which is delivered and managed via APIs.

These statistics point not only to an explosion of overall Internet traffic, but also to a huge shift in the distribution of this traffic towards apps and devices. Looking at these accelerating trends, it’s very easy to imagine that APIs will likely power most of your Internet traffic within a few years.

Why We Wrote This Book

As authors, we are coming at this topic fresh from our experiences in the trenches. Daniel Jacobson led development of the NPR content management system and the API that draws from that system. The NPR API is now the centerpiece of NPR’s digital distribution strategy, transforming NPR’s ability to reach its audience on a wide range of platforms.

Today, Daniel leads the development of APIs at Netflix, whose API strategy is in the critical path of the Netflix streaming service. Netflix’s ability to provide rich video experiences on hundreds of devices is powered by this service and has dramatically increased the rate at which new implementations can be built and delivered to new devices. Through this program, Netflix’s user base has grown tremendously, resulting in API growth from under one billion requests per month to more than one billion requests per day, in one year.

Greg Brail writes based on his work as CTO of Apigee, where he has helped implement dozens of API programs and been exposed to many more. In this role he is also able to draw from the collective wisdom of the Apigee team, who has met hundreds of developers and also learned from hundreds of enterprise API programs.

We wrote this book to help people understand the potential of APIs. Additionally, we want you to go into creating an API with your eyes wide open. This book is not a programming manual but a best practices manual. You need to understand both the opportunity and the tactical issues related to creating an API.

This book will also introduce business executives and technologists to the land of API opportunity. To be sure, the world of APIs involves lots of technology, but what often gets lost in the shuffle is the business impact of APIs. This book is about how to think about APIs from a business perspective and how APIs can have a positive impact on your business.

We also want to educate you on what you’re getting yourself into when you decide to develop an API. What are the implications of offering an API, not just from a technology standpoint but also in terms of business strategy, legal and rights considerations, and relationships with partners?

What we are going to demonstrate is that APIs are having a profound impact on the world of business—and that the time to act is now.

Unlike many other discussions of APIs that exclusively look at the way that large Internet-based companies use APIs publicly, this book also emphasizes the private use of APIs, which we believe has an even greater impact than many of the more prolific public API programs you often read about.

As authors, we must keep one foot in the world of technology and one foot in the world of business. To that end, we hope to educate creative executives and technologists about how to put APIs to work in the context of their own businesses.

In this book, we’ll talk about:

  • The business opportunity for APIs

  • Examples of companies using APIs to transform their business and in some cases their industries

  • Business models being used for APIs

  • What an API value chain looks like and how to enable the different pieces of that value chain

  • Considerations for crafting your API strategy and responding to concerns and objections

  • Issues around API design, especially how to make adoption easy for developers

  • What to do about API security, including coverage of OAuth

  • The legal implications of running an API business, including privacy and data rights

  • Considerations for operating your API at scale

  • How to think about metrics and measuring your API program

  • Engaging developers and building community to drive adoption of your API

In summary, this book offers a roadmap for using APIs to transform your business.

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