Here’s the law, really simple.
For every popular high priced application, over a period of time there will be an open source (free as in beer, not as in freedom, in this case) application that will have 80% functionality of that application within 1-4 years. So, in a period of at the most 4 years, you will have a free competitor in your space that at least 80% as good as your highly priced product.
Every salesforce.com will give us a sugarcrm.com.
Every Camtasia will have a Camstudio and a Microsoft Movie Maker
Netscape brought IE and Apache. IE brought Firefox.
Sure, there are exceptions to this rule, but they are so few that you really need to consider this theory in your product life-cycle. It’s not enough to add a couple of features every release date. You’ve got to take measures to make sure that what you sell remains relevant.
Let’s start out by what doesn’t work.
Not doing anything, or ignoring my theory,didn’t work for Netscape or Sun. Sun has changed it’s tune, by reaching out to the open source community. And the only remnants of Netscape are those bits of code that Frank Hecker memo’d to become open source.
Doing worthless, incremental changes, will only work until customers get wise to you. In the end adding unneeded features raises the complexity of end user operation, and the software company’s product costs.
I haven’t bought a copy of Mindjet’s Mindmanager since version 2002. Why? Because the product took on a bunch of features that had no value to me, and I wasn’t going to pay for them. It’s Mindmanager 2002 that’s competing against the free and low cost shareware products, and those alternatives, are just as good.
Putting out a “dumbed down” or “lite” version of your Enterprise Product. You are better off simplifying your pricing, or lowering your costs on the enterprise product. By having a lite product, you either take out needed components, which makes your product less competative than the free products, or you remove unneeded features that cannibalize your existing product.
What partially works?
Adopting a large market share in the beginning, will lengthen the amount of time before Computer Associates buys your product and puts it on the shelf with their other dead acquisitions, squeezing every little bit of life blood out of your remaining customers.
Locking your customers in with a proprietary solution will work once, but you can bet that once those customers are free from the chains you bound them with, they will look elsewhere.
Part 2 tomorrow.