Openness Is A Winning Business Strategy

from the it's-not-just-a-philosophy dept

Wed, Aug 6th 2008 5:44am — Mike Masnick

For some unfortunate reason, there seems to be this idea that "open" solutions are somehow a less feasible business strategy. There are still those that sneer at open source companies as somehow being less-than-true-businesses, despite an awful lot of evidence to the contrary. But beyond just being a good business strategy, it's worth pointing out that "open" solutions will almost always win in the end, because they simply provide more opportunities. For years, AOL insisted on a walled garden strategy -- and in the mid-90s there were many who believed that AOL's proprietary system would "beat" the wider internet. How's that looking these days?

More recently, there's been concern about the various "walled gardens" in the mobile space -- which folks like Walt Mossberg have referred to as "the Soviet ministries." Jonathan Zittrain has been beating the drum, insisting that a closed system, like the iPhone's, is a dangerous trend. However, it seems quite like looking at AOL vs. the internet in the early- to mid-90's. While the proprietary iPhone system may seem a lot better at first, there are problems under the surface -- and openness is coming to the rescue.

Now, we've been beating on mobile providers for their silly "walled garden" approach for years, so you'd expect that maybe we'd be pessimistic. But, competition does wonderful things for innovation, and Apple's presence in the market is driving everyone else to become a lot more open. Hell, even Apple is now a lot more open than it was just a little while ago, when Steve Jobs thought that 3rd party native apps would ruin the iPhone. He changed his mind when he realized that the iPhone needed a more open app environment to compete with what was coming down the road from others (competition drives innovation again).

But, Apple's iPhone apps aren't really that open -- something that we warned would be an issue. That's getting some attention now as Apple is, without explanation, making some apps disappear completely, without even telling the developers why. That will cause one (or maybe both) of two things to happen: developers will start concentrating greater efforts on other, more open, platforms to avoid having to deal with the mysterious Apple gods, or Apple will have to give in and be much more open itself.

In discussing this phenomenon, Princeton's Ed Felten points out:

Generally, the closer a system is to being open, the more practical autonomy end users will have to control it, and the more easily unauthorized third-party apps can be built for it. An almost-open system must necessarily be built by starting with an open technical infrastructure and then trying to lock it down; but given the limits of real-world lockdown technologies, this means that customers will be able to jailbreak the system.

In short, nature abhors a functionality vacuum. Design your system to remove functionality, and users will find a way to restore that functionality. Like Apple, appliance vendors are better off leading this parade than trying to stop it.

Openness isn't just a business strategy -- it's the natural evolution of the marketplace, because, in the long run, it will be the business strategy that succeeds.

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Filed Under: competition, iphone, mobile phone apps, openness, walled gardens
Companies: apple

5 Comments

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Anonymous Coward, 6 Aug 2008 @ 6:35am

Bean Counters
Bean counters have such a problem with the concept of an open system. Small business minds want to get a little bit (or a lot) of revenue from everyone who plays in their sandbox. They just can't understand that having a popular sandbox is the key to success.
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Haywood, 6 Aug 2008 @ 6:46am

Hitting the nail on the head
I've been saying this for years. It even applies to cars, I'm much more likely to buy a car that I can tinker with than one that requires an degree from MIT to do a tune up. This is the reason M$ beat Apple in the first place, and the reason Linux will eventually beat M$, if the infighting can cease and the focus becomes smaller. I recently tried a coupe versions of Linux, & found them not bad, if you just wanted to surf and do office apps, they would do just fine. If I were giving Grandma a computer it would have Kubutu installed. I don't even own my first Cell phone yet, but if I were to, I'd want one I could tinker with.
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C Sense, 6 Aug 2008 @ 7:11am

Don't pass opinion as rule
Open CAN be a winning business strategy. Your examples of AOL and the iPhone are very specific and poor. AOL was very successful for a long time, but their decline did not come about because they didn't have an open business strategy, it was simply a poor outlook on the internet market which other, even more "open", providers fell to.

In your examples you seem to talk more to compatibility as "open". Being able to work with other applications is a feature that allows a strong or weak symbiotic relationship with one or many other products. This increases value for a product surely, but does not make a product "open" in the traditional definition.

Open can work when the core competency or monetization of the product is increased by uncontrolled variations in the marketplace. The owner can almost certainly expect loss of exposure of his on flavor. A good example of this working is with LinkSys. The WRT54G sells like wild fire because of the company allowing third party firmware. The firmware that comes with it is mediocre, yet adequate, but is enhanced by third party firmware. The firmware is not how the product generates revenue, it’s in the selling of the hardware, and so making it "open" for firmware flavors increased the products value. This would have been a better example of how it works.
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CG, 6 Aug 2008 @ 8:05am

Android
I think Apple's entry to mobile really helps Google's Android -- like you said, "competition does wonderful things for innovation"

Now the carriers will be pressured to be more open; that allows Google to impose less restrictions on developers. Besides, there's the potential of a much bigger market to distribute apps to than the iPhone could ever deliver.
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George Fragos, 7 Aug 2008 @ 1:28am

I'm done with closed phones
Every year the phones have more features and the carriers give the users less choice for more money. My answer is the Nokia N810 -- all Linux and all open with bluetooth, GPS and WiFi. There is is no phone in it so I let my Verizon contract expire and keep my old phone in my pocket for those times when WiFi and VOIP isn't available. Skype, Gizmo and SIP is supported and readily available. It has on screen, slide out and an optional folding bluetooth keyboard. Less than $350 any day and no cumbersome contracts required.
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