The Binary Stars of High Tech
The following is an excerpt from Wikipedia:
The universe of high-tech has many binary stars. Sometimes the binary stars form a duopoly, where the pair account for most of the revenue in the market. Even when they do not, the defining characteristic of the binary pair is that they focus on each other as the main competition. This produces a curiously beneficial result as the two spur each other to improve their offerings and keep prices in check.
This may seem counter-intuitive. Duopolies have often been guilty of tacit price fixing, sometimes dividing up customer segments between them. But in high-tech that just does not work because the binary pair are always threatened by the prospect of some upstart coming into the market with a better value proposition should they stop innovating and improving price-performance.
It seems that a company that perceives that it has but one major competitor tends to develop a healthy hatred of the enemy. This antipathy drives it to compete ever more fiercely, and its binary partner reciprocates. This focus is highly motivating for an organization. When there are several perceived major competitors, focus is diffused among them and you do not get the same competitive fervor.
There also seems to be a preference in some markets to focus on a binary pair of market leaders. We understand head-to-head competition, enjoy picking a favorite, become a fan and root for our team. It is easier to choose between two clear rivals than among a bunch of them. Multi-star systems are inherently unstable, thus a multi-vendor market may trend towards natural duopoly as economies of scale develop and promote consolidation. On the other hand, when a monopoly forms, some markets seem to naturally spawn a challenger to restore the binary equilibrium.
I believe that high-tech binary star systems, much like their astronomical cousins, evolve in ways that a single star in a market cannot. We should all encourage them to "exchange mass" and compete ferociously.
HP and Dell. Microsoft and Sony. Oracle and SAP. And on and on…
Copyright © 2006 Philip Bookman
Technorati: software strategy, web strategy
A binary star is a stellar system consisting of two stars orbiting around their center of mass. For each star, the other is its companion star…The components of binary star systems can exchange mass, bringing their evolution to stages that single stars cannot attain.Microsoft and Apple. Cisco and Juniper. Intel and AMD. IBM and HP.
The universe of high-tech has many binary stars. Sometimes the binary stars form a duopoly, where the pair account for most of the revenue in the market. Even when they do not, the defining characteristic of the binary pair is that they focus on each other as the main competition. This produces a curiously beneficial result as the two spur each other to improve their offerings and keep prices in check.
This may seem counter-intuitive. Duopolies have often been guilty of tacit price fixing, sometimes dividing up customer segments between them. But in high-tech that just does not work because the binary pair are always threatened by the prospect of some upstart coming into the market with a better value proposition should they stop innovating and improving price-performance.
It seems that a company that perceives that it has but one major competitor tends to develop a healthy hatred of the enemy. This antipathy drives it to compete ever more fiercely, and its binary partner reciprocates. This focus is highly motivating for an organization. When there are several perceived major competitors, focus is diffused among them and you do not get the same competitive fervor.
There also seems to be a preference in some markets to focus on a binary pair of market leaders. We understand head-to-head competition, enjoy picking a favorite, become a fan and root for our team. It is easier to choose between two clear rivals than among a bunch of them. Multi-star systems are inherently unstable, thus a multi-vendor market may trend towards natural duopoly as economies of scale develop and promote consolidation. On the other hand, when a monopoly forms, some markets seem to naturally spawn a challenger to restore the binary equilibrium.
I believe that high-tech binary star systems, much like their astronomical cousins, evolve in ways that a single star in a market cannot. We should all encourage them to "exchange mass" and compete ferociously.
HP and Dell. Microsoft and Sony. Oracle and SAP. And on and on…
Copyright © 2006 Philip Bookman
Technorati: software strategy, web strategy
Labels: software strategy, web strategy
posted by Phil Bookman at 11:44 AM
<< Home