Vendor Lockin is Killing Innovation

Capitalism is known for its consumer driven economy. It creates competition and therefore encourages innovation and low cost. The consumer ultimately decides on what is an acceptable price and product quality. In these modern times with booming technology we are starting to see a rising trend that has somehow been allowed to exist against the common scene of the common consumer. Vendor lock-in has slipped under the radar as a Trojan horse without causing alarm and is now wreaking havoc and locking consumers and their wallets to monopolized prices all while squashing any and all competition.

locked_girlHow did this happen? Sometimes disguised as product loyalty, Apple sells its hard ware sporting an image. What happens when that shiny MacBook breaks? Can owners of broken hardware bring it to a third party specialist who can fix any hardware that follows standards in best practices in the market? No, consumers must 9 times out of 10 bring it to an Apple store, so that an Apple technician can fix the problem. You bought an Apple product, now you have no choice but to come back for extra service, whether it is an upgrade or extension of service. (Note the irony in that Apple is now locked into a strangling contract with AT&T.)

The initial investment into a company or product ultimately makes smaller choices of upgrades and additions cheaper to stay with the vendor than to change. The next thing the consumer knows, their entire “owned” suite of products (whether it be computer software, hardware, cell phone service, etc.) is with a single vendor. The consumer has essentially dug themselves into a hole of brand loyalty intentionally or not and is therefore forced to continue to financially feed the monster. Where does the cycle end and more importantly how does it hurt capitalism as a whole?

As I have stated earlier, capitalism thrives on innovation and the competition. Small business is a risk. There is no sure thing with a start up. There is less money to throw around, and this causes small business to stay innovative an ahead of the curve. This is its ace in the hole and the only thing it has to fight bigger companies. Large companies have their resources at their disposal; products can be created faster and cheaper. Ultimately the savings can be passed down to the consumer. Small business’s job is to challenge large companies with its innovation. Large companies’ jobs are to create competitive prices for the small business to beat. Thus business swings back and forth as David beats Goliath and vice versa on a regular basis. In the end, consumers win. They get the best of both worlds.

What is happening with vendor lock-in trends is that large companies are forcing their product, at a price they decide is fair on a consumer. The consumer must play along, or pay the price of breaking the cycle. Breaking the cycle means giving up their brand for a lesser known brand that offers innovation at a higher cost. The cost being: throwing away an initial investment into a vendor lock-in type product on top of the cost of investment into the smaller brand’s product.

It’s easy to see how the consumer is getting the tail end of the deal, but it goes beyond cost. Innovation suffers because small business suffers. It’s a snowball effect that creates a standstill in these fast moving technological times. It’s apparent that the problem exists, but there is no easy answer. Open source is starting to get more attention than it has in the past, but it only applies to software. The best way to change the current trends in business is to let the consumer’s money talk. In the end, the US is still run by capitalism. Money is the only language that capitalism understands. We won’t see a change until consumers wise up to the vendor lock-in gift and make it more profitable for business to compete rather than bully.