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Laws of Tech: Commoditize Your Complement

A classic pattern in technology economics, identified by Joel Spolsky, is layers of the stack attempting to become monopolies while turning other layers into perfectly-competitive markets which are commoditized, in order to harvest most of the consumer surplus; discussion and examples.

Laws of Tech: Commoditize Your Complement

Quotes from “Chap­ter 1: The In­for­ma­tion Econ­omy”: Tra­di­tional rules of com­pet­i­tive strat­egy fo­cus on com­peti­tors, sup­pli­ers, and cus­tomers. In the in­for­ma­tion econ­o­my, com­pa­nies sell­ing com­ple­men­tary com­po­nents, or com­ple­men­tors, are equally im­por­tant. When you are sell­ing one com­po­nent of a sys­tem, you can’t com­pete if you’re not com­pat­i­ble with the rest of the sys­tem. Many of our strate­gic prin­ci­ples are specifi­cally de­signed to help com­pa­nies sell­ing one com­po­nent of an in­for­ma­tion sys­tem.

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