Apple Inc. (NASDAQ:AAPL) launched its Pay service last week, and it’s just the latest addition to the company’s platform. Many analysts have written about the value of the Apple ecosystem, and UBS analysts are the latest to dive into the topic, although they take a slightly different angle.

Apple Inc. (AAPL)'s Platform Is The Key To Success: Expert

They believe Apple Inc. (NASDAQ:AAPL) is the best example of what they call “multi-sided platforms,” with the iPhone being the very first one and the Apple Watch being the latest.

Apple (AAPL)’s platform is more valuable than its products

In a report dated Oct. 24, 2014, analysts Steven Milunovich and Peter Christiansen talked about a call they co-hosted with Prof. Marshall Van Alstyne recently. They describe Van Alstyne as a “research pioneer on multi-sided platforms.”

They say such platforms “create value primarily by enabling direct interactions between two or more distinct types of affiliated customers.” In addition, they say these platforms are 25% of stock market value and can be found all over the web, although they think Apple Inc. (NASDAQ:AAPL) provides the best example because it brings both developers and consumers together to support sales of its devices.

In fact, they think the Apple Inc. (NASDAQ:AAPL) platforms are so strong that the company will be able to avoid BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s problems.

Apple (AAPL) begins to open APIs

The UBS team explained that multi-sided platforms monetize one side of the transaction while subsidizing the other size. They say one theory for why Apple lost to Microsoft Corporation (NASDAQ:MSFT) in PC software years ago because Apple was trying to monetize both consumers and developers. Meanwhile Microsoft discounted its SDK.  Others have argued that the problem was that Apple was too proprietary, but they subscribe to the first theory.

The analysts say that now, however, Apple seems to be opening up things for developers through its APIs, although it continues to remain closed on the technology that’s in the devices it monetizes. Some examples they give of Apple’s open APIs include the Apple Watch, Apple Pay and Car Play. They also point out that enterprise developers now have access to Apple’s APIs.

Watch out for the Watch

The UBS analysts also said that the way the multi-sided platform framework works means that sometimes it’s a good idea to “cross industry boundaries when indirect network effects create demand-side economies of scale and scope.” They define this as sort of a side attack which they call “envelopment.”

The analysts say Apple Inc. (NASDAQ:AAPL) made this kind of attack on the Japanese consumer electronics industry by combining a mobile phone with an internet browser, music, calculator, camera and gaming device in creating the iPhone. They believe the Apple Watch will become its own platform, possibly undercutting not only the traditional watch market but also Fitbit, Jawbone and other related devices.

Market may underestimate Apple

The UBS team has a Buy rating and $115 per share price target on Apple. They think many valuation models will “underestimate the market expansion due to network effects.” In addition, they think Apple CEO Tim Cook understands why it’s important for Apple Inc. (NASDAQ:AAPL) teams to collaborate with each other and also with outside companies.