All DatabasesMacTech Vol 10-1994
Competition
Volume Number: 10
Issue Number: 4
Column Tag: Inside Information
The Competition of The Future
Do you know any dinosaurs headed for extinction?
By Chris Espinosa, Apple Computer, Inc., MacTech Magazine Regular
Contributing Author
In the personal computer software industry we’re extremely fortunate to have a
couple of natural forces that help keep ahold of our customers. First, there is the
normal upgrade cycle, where for a small amount of work we can make an improvement
on the products our customers already own, and do a "trade-in" at a very low cost of
goods. You can’t do that with refrigerators, for example, because most of the costs are
in materials and manufacturing. The revenue stream from upgrade products is what
keeps most companies profitable in the software industry.
Second is the "switching costs" that keep customers on that upgrade path. Once
you’ve bought a product, learned its interface and features, committed a lot of your
data to its file format, and (consciously or unconsciously) designed your everyday
habits around it, you’re pretty reluctant to switch to another product, even if it
promises to be A Whole Lot Better. It has to be so much better that it overcomes the
pain of learning a new feature set and user interface, the time-consuming and
inaccurate process of file conversion, and the discomfort of losing old habits and
gaining new ones.
In many cases, the switching cost is always higher than the benefit. A modern
application has so many features that it’s rare for a different product to completely
satisfy its users. Everybody has one crucial feature that they love in one application
and won’t give up. It’s hard for a competitor to cover all of the cherished features well
enough to really steal customers from an established product.
As long as software remains large and hand-crafted, with each application having
its own file format and user interface, the switching costs for users will remain high.
That means that you can generally trust that your installed base will be a ready market
for your upgrades, and you can focus most of your effort on adding features that please
them, get the attention of new computer purchasers, and (maybe) attract some people
who already own your competitors’ products.
But OpenDoc and the component software revolution change the technical basis for
many of these switching costs. Because the information edited by part editors is stored
in the Bento file format, it’ll be easier for one application to read another’s data.
Because OpenDoc lets you add part editors to any document, you can keep the user
interface and cherished features of the most important data, and integrate them easily
into another application. So when someone creates a compound document with your
application and a lot of OpenDoc part editors, it’s not that difficult for them to take
those parts and move them to another application without a major upheaval in file
format, user interface, or features.
It will be a long time before software components become truly interchangeable
parts, but just a little interchangeability can make a serious difference in how you
develop your products -- and how you keep a hold on your customers.
In development, you should see your application as a whole, not just (to use the
cliché) the sum of its parts. For example, consider constructing your
graphics-editing application so that the bulk of the work is done in a graphics part
editor, but your “container” application adds automation, management, and control.
Though people might be tempted to just use your part editor in other applications (as
well they could), they’d soon miss the advanced features only available in the
container.
Or focus on customizability. One of the tempting things about General Magic’s
Magic Cap environment is that it’s terrifically personal, and people will get attached to
it: not to the environment itself, but to what they’ve done to it. When users
personalize your software to the degree that moving away from it is like moving out of
their homes, your chances of keeping them are stronger.
As software becomes interchangeable, the less it will cost to switch. Ultimately
we’ll have to deal with the fact that some kinds of software will become commodities,
just like clone PC hardware today. And that means that a lot of the things that are
important in today’s software business (like upgrades and new features) may become
less important, and things that are most important in other industries might become
most important in software as well.
Things like great customer service, personal customer support, high quality (the
first time, not in the .1 version), and heavy direct marketing. Things like licensing
terms that are not only convenient, but understandable (have you even read the license
agreement you put on the software you sell?). Things that make YOU different, not
just things that make your product different.
For many technologists this will be extremely annoying. At its worst it’s a
“marketing-driven” industry. At its best, it’s a great foundation for innovation,
though your innovations of two years ago don’t give you a natural customer base for
next year. In any case, a lot of the things that we have gotten away with so far must
end: bugs and instability, rampant featuritis, and “upgrades” that are bigger and
slower than the current version. When your users can take their data and use a
different product, they’ll be less tolerant of your mistakes and foibles.
Perhaps this will never happen. It’s possible that interchangeable software
parts are still a long way away. If so, we can probably get away with proprietary data
formats, buggy code, and feature bloat for a few more happy years, dragging our poor
customers with us. But even if the component revolution doesn’t happen on schedule,
it might be a good idea to clean up our act anyway: remember that phones, TVs, and
video games are creeping up on our personal computer industry just like we crept up
on minicomputers ten years ago. If we don’t pay attention to what people really want,
we could be the next dinosaurs.
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