ABOUT API

API: Application Programming Interface are well defined methods, protocols, standards of communication between various software/hardware components. 

API enables components to encapsulate the core logic and only expose the results or outcome to the caller of the API. The components includes and not limited to 

Application Software(s)

Operating System(s)

Hardware 

Middleware

The ability to communicate to a central Application through an API or set of APIs enables the application to concentrate on the business logic and not worry about how the data is being gathered. 

For example, an advertising company would like to know the trends and consumer behavior patterns. For this, they could invoke twitter API or any other marketing agency API out there to get that information. Data gathering may not be a core competency of an Advertisement company, well in the past it was their job. But now they can leverage on someone else's intelligence. That saves tons of time and effort. 

API as Product:

Now API being just an set of standards, methods, protocols etc.. , then why do we need to treat an API as a product?
Reasons: 

1) The protocols changes over time

2) Some security (authentication, authorization) features become obsolete and some mandatory (OAUTH, OAUTH2, SAML etc...)

3) The format of data is not supported any more.( XML, JSON are now standard)

4) The data itself becomes obsolete. 

Hence an API will have a life cycle stages of its own. 

1) Introduction 

2) Growth 

3) Maturity 

4) Decline