Shostack + Friends Blog Archive

Freedom to Develop

Two related posts from last week that I’d like to tie together. Jeff Veen writes about the lack of either Mac software or standards compliance in Polar Heart Rate Monitors in “Polar Heart Rate Monitors: Gimme my data,” and Bob Frankston writes about how the telcos use the regulators to stifle competition and innovation in “Reality vs the Regulatorium.”

In both cases, we have companies that are focused on themselves, rather than their customers. “How do we maximize profits from this investment?” Which is a good thing to ask. But as Google has shown, focusing on the customer, and asking “How do we make customers’ lives better?” can lead to stunningly large profits.

Products become useful because people see them and see new ways to use them. When the company cuts off those ways, it creates a space for a competitor to arise. The market for ipod supplemental gadgets acts as a barrier to entry, both because your product doesn’t have 93 stereo systems that integrate with it, and because consumers are likely to own such things, making them less likely to switch.

The ability to develop new things, without explicit coordination, is an important liberty. It’s under attack by companies who want to use technology to preserve their business model (by which they mean “charge you lots of money.” That’s going to be my business model, too. We’ll get you hooked, then preserve our business model.)

That’s not good for consumers, and in the long run, its not good for companies to be limiting innovation around their products. High prices will make you fat and happy until someone comes along and offers a cheap, decent alternative. I recall an interview with a Dell executive who said “Margins are very high in the printer business. We’ll fix that.” I found it a fascinating statement because so many businesses see high margins as a feature, not a bug.

Originally published by adam on 7 Nov 2005
Last modified on 7 Nov 2005
Categories:   Liberty   Uncategorized