As markets grow, they fragment, forming distinct sub-markets that may break away from the parent market to become sustainable separate markets, with different products and services.
Fragments start as small segments of customers with similar needs but for which there is no customized solution available. As a result they do not buy or make do with the best alternative. As the market grows, it becomes economically viable to develop and sell products to the fragment. Improvements in technology and production can also help with this.
Fragmentation is a way to growth. If you can spot (or even cause) a fragment to break away from an existing market, you can become that market’s leader. You can also of course continue to serve the parent market (where your reputation in the new market may enhanced your parent market position).

Borrowed from a page about Market Fragmentation

The OSS market is highly fragmented. Herein lies the opportunity for each vendor, depending on their respective strengths.

There are niches for:

  • Product creators – from specialty products to innovators to segments to broad-spectrum
  • Product integrators – from re-sellers to customisers to mix-and-matchers to partners
  • Consultants – from vendor selection to implementation to efficiency evaluation to subject matter expertise to specialist services
  • Revenue models – from open-source to middleware to managed service to licensed to perpetual purchase
  • Customer segments – from CSPs to enterprise to utilities to retail providers
  • Organisation size – from one-man-bands to SME (Small to Medium Enterprise) to multinationals

There are so many options on the OSS vendor continuum. Which one or ones suit you best? If you put on the hat of a business valuation, which one/s will increase the value of your organisation?

Are you making a strategic play to get from one part to another? Is this strategy positioning you for macro or micro market trends?

How do you leverage what a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis identifies with regards to your place on the continuum?

Where do you derive your differentiation or competitive advantage from?

So many questions. So many ways to skin an OctopOSS. Just one further question. If you’re already servicing multiple parts of the continuum, do you measure which parts are most profitable, as opposed to generating the most revenue?

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