Winner takes all

On Monday this week taxi app Lyft raising a new $1bn round which included $500m from General Motors. Twelve months ago the received wisdom was that Uber was on a tear and it’s competitors would fail and in response to this  funding news LA Times wrote a piece questioning whether the ‘winner takes all phenomenon’ that characterises so much of the internet doesn’t apply in transportation.
I’m wondering whether the ‘winner takes all phenomenon’ is disappearing more broadly.
In mobile we now have two ecosystems – iOS and Android – that look like they’re self-sustaining. According to observers like Benedict Evans the answer to whether Google or Apple won the mobile internet wars is that ‘both have’
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Nic Brisbourne.

Interesting concept!

It’s easy to think of many other large markets that have distilled down into duopolies (Coke-Pepsi, Colgate-Crest, Boeing-Airbus, Coles-Woolworths [an Australian example], etc).

The OSS market is far more fragmented. Does this mean that it needs to significantly consolidate to better serve its customers?

The talent pool is widely spread and since there are so many solutions, the knowledge sets of that talent is also vastly different, and in many cases not easily transferrable. There is also significant duplication of effort across that talent pool. Just think of all the inventory management tools out there for example.

The question arises as to why there are so many product offerings in the OSS industry.

I believe there is fragmentation because no organisation has been able to come up with a solution (of people, process, technology, contract) that fulfils the needs of a broad section of the market.

Vendors currently differentiate on functionality, which is an important factor of course. But I can’t help but think that this is not THE differentiator that will capture the attention of the market at large.

The factors that are more likely to are:

  • Price (ie significantly lower)
  • Simpler [therefore faster and cheaper too] (across all aspects of design and delivery)
  • Consistency (standardisation with an ability to configure to bring a vastly more “building block” approach to the industry)
  • Reliability (ability to cope with poor data quality and process variants)
  • Flexibility (to use data to give on-demand insights that go beyond the operations team without hard-coding fixed insights into our products). This is actually contrary to the current belief of differentiating on fixed functionality

Of course there will always be room for smaller product niches, just as there are many other alternatives to Coke and Pepsi but which organisation/s are going to take over significant OSS market (and mindset) share?

On what basis do you think they’ll achieve it? How will they overcome the stickiness of existing install bases?

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