Context: While there are many success stories of achieving high reuse and improved quality using software platforms, there is a need to investigate the issues and challenges organizations face when transitioning to a software platform strategy. Objective: This case study provides a comprehensive taxonomy of the challenges faced when a medium-scale organization decided to adopt software platforms. The study also reveals how new trends in software engineering (i.e. agile methods, distributed development and flat management structures) interplayed with the chosen platform strategy. Method: We used an ethnographic approach to collect data by spending time at a medium-scale company in Scandinavia. We conducted 16 in-depth interviews with representatives of eight different teams, three of which were working on three separate platforms. The collected data was analyzed using Grounded Theory. Results: The findings identify four classes of challenges, namely: business challenges, organizational challenges, technical challenges, and people challenges. The article explains how these findings can be used to help researchers and practitioners identify practical solutions and required tool support. Conclusion: The organization's decision to adopt a software platform strategy introduced a number of challenges. These challenges need to be understood and addressed in order to reap the benefits of reuse. Researchers need to further investigate issues such as supportive organizational structures for platform development, the role of agile methods in software platforms, tool support for testing and continuous integration in the platform context, and reuse recommendation systems.