Ken Leyba came up with a great article about competition in a dominated market. I’d like to add another twist to his story by taking a closer look at the principles behind market domination and the possibilities for a competitor to get into a dominated market.
As Ken points out,
I have been in the IT field long enough to remember when we didn’t live in a Microsoft centric world. Several office applications from different vendors existed: Wordstar, Ami Pro/Word Pro, WordPerfect, Word, etc. Everyone had their preferences, based on needs, personal preferences, support and sometimes just on having learned a particular application first.
This is a common process. Some companies come up with a good product. There was a time when Wordstar, Ami Pro, etc. were just good products in their area of expertise. Those products matured over the years, and people’s understanding what a word processor should do tightened. Eventually one of the products met the requirements of most of the customers. Combined with a good combination of marketing, distribution and support, it took over the market. In this case Microsoft has been incredibly successful. Of course, whenever someone takes the lead of something, not everone is happy about that.
How can competition exist when anything not produced by Microsoft is considered to be a lesser product?
This is a fair point. Achieving a dominating position in a market is with no doubt very comfortable. Several examples exist that it’s not sufficient to just have a better product to take over the pole position. Competition needs something more, but what could that be?
I don’t believe that regulations or penalties help very much here. Although the situation for a competitor looks daunting, clearly signs of hope show through:
100% market share are not possible
If there are competitors in a dominated but still free market, there will always be people using the alternatives. These ‘rebels’ are more interested in not using a dominating product than they are in feature completeness or quality. This is a ground to base efforts on. Linux is a popular example. As is Mac OS (but this draws me into a religious discussion, where I’m definitely biased).
You can always do better
You can always improve an existing solution. If you can’t find an area to improve, you’re certainly not creative enough. Listen to the customers! Either you specialize and provide features and services the market leader cannot offer or is not yet interested in, or you generalize and provide a product which is simpler to use for an even broader customer base.
Chances are, the market leader is very efficient in keeping its position, so the results you can expect might not justify the efforts.
Think beyond the status quo
If the product isn’t changing, the context will always be. Great products won’t stay great products. The environment changes, and this is your chance. If you develop a feeling for the next big change in the environment this can be your step to success.
In the OS enviroment your feeling could point you to remote availability of applications (Web 2.0), better design and usability (eye candy and effects) and many other ideas.
The market leader always has the same chances to follow these principles. And his position serves him well, because he surely is equipped with the resources to prepare and to catch up. But history tells us that there are only few, if any, companies that can really withstand these dynamics for a long time.
At the end of the day, there’s always a possibility to disrupt the status quo and come up with something new. No one said, it would be easy. Closing with Ken’s words:
This generation must have their minds opened to creating new ways of doing things, new ideas, and new technologies. It amazes me, going beyond the information age, the limits some have put on themselves.