Designing a lock-in effect
Did you know that there is a Beatles song about the Microsoft Windows, Microsoft Office and Apple's iTunes? Of course, there is not, but there is a song about the lock-in effect. The song is called Chains and appeared first on the Please Please Me album. Listen for yourself.
If you do not have the time to watch the video, this is the crux of the lyrics:
Chains, my baby's got me locked up in chains.
And they ain't the kind that you can see.
Whoa, oh, these chains of love got a hold on me, yeah
Software companies love their customers so much that they would like to keep them forever, so they try to lock them in. The best lock-in effect leaves the customer of the software in a situation that keeps uses chains of "the kind that you can [not] see" and make the lock-in appear as "chains of love".
The best time to attempt creating a lock-in effect is when your new product is having maximum market impact and growth. The reason is that at this time you will have most goodwill in the market, so customers and prospects will be uncritical to your attempts of creating a lock-in. Even if the chains are recognized,hey, they are chains of love. The second reason is that with having achieved maximum growth there is still plenty of time for your product to become a cash cow that can subsidize the development of related products that will reinforce and profit from the lock-in effect.
A good example is how Microsoft created its lock-in of the Desktop. After the launch of Windows 95 and NT 4.0 it had overwhelming market acceptance. My father took me, as a boy to a trade show, just to see Bill Gates speaking. And we were not the only fans eager of new Microsoft products. With this momentum, Microsoft could consolidate its offering by combining the Windows operating system with the Microsoft Office productivity suite, with the Exchange groupware server. This combination created a sustainable ecosystem, that customers happily accepted, developers adopted (remember the times when custom business applications were Visual Basic desktop applications) and that allowed Microsoft to conquer adjacent markets such as the Browser market.
The design problem with Microsoft's lock-in is that it is too visible and obvious, which means customers are aware of it, which creates an opportunity for competitors to attack the lock-in and offer "breaking free from the Microsoft lock-in" as an additional value proposition. As a result, Microsoft's ecosystem of connected applications is under market pressure: Firefox is gaining market share on the browser market and has just surpassed Internet Explorer, at least here in Europe. Google (and millions of web developers) are working to make the desktop operating system irrelevant, with Android they are challenging Microsoft's hold on mobile operating systems. With Eclipse developers have an alternative to the Visual Studio brand of software development environments (yes, I am aware, there are other cool open source IDEs, but not a single one has the breadth of Eclipse). Microsoft, noting how competition is starting to pick the locks, is doing its own job to damage its lock-in by offering a web-based version of Microsoft office that teaches customers to accept compromises on the look, feel and functionality of their productivity software, which opens another window of opportunity for competitors.
For a better way to design a lock-in we should not think of the big padlock, but of the thousand lines that are tying down Gulliver. For one, he is being tied down, while sleeping, which means - start the lock-in while nobody, at least not the customer, is watching. Secondly, with thousand lines there is no single line to identify that drives the lock-in, that can be easily attacked.
A good example of this is Apple's iTunes. Apple offers a very comfortable lock-in to its customers to make sure they stay loyal when new competitors emerge. Wether it is a streaming service like Spotify or Amazon's MP3 download service, all of them are unlikely to lure me away from iTunes - and it is not just iTunes, it is the iPhone, that extends the lock-in to the mobile carrier, it is the Airport Express and Apple TV that wire the living room entertainment system, it is the Genius service that gives personalized music recommendations (which are better than Amazon's item-based recommendations), it is the iTunes remote control application for the iPod touch, it is the Bonjour music sharing, it is the locked iPod database, it is the integration with iLife. If one line breaks down, for example DRM in the iTunes store, there are still enough combination points to make the lock-in effective and attractive.
If you have the opportunity to create a lock-in effect, keep these rules in mind:
- do it at the right time
- make sure nobody is watching
- make it attractive to be locked in
- keep building integration points
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