Last month we published a post on the risk early stage tech businesses take when they develop products for other products built by third parties. The example we cited in our post was a familiar one, Microsoft and Intel’s collaboration over the last 25 years. The key points about this collaboration? Intel produces the next generation of is X86 firmware and Microsoft debuts a new version of Windows. The danger implicit to this strategy, as we wrote, amounts to predicating the success of a product on the success of the other product. The historical example of why this type of inter business collaboration can work to the detriment of one, or both of the partners, can be found in the recent phenomenon (over the last 5 years) where tech consumers have switched from the devices built on Intel’s X86 firmware to devices built on ARM Holdings firmware. Examples of devices built on the latter architecture include most, if not all, of the products we refer to as small, smart mobile devices.
The kind of collaboration we noted, as it turns out, is actually nothing new. In an article titled Capturing the Value of Synchronized Innovation, Jason P. Davis describes precisely the type of business to business collaboration we worked with in our post, albeit at a much higher level. Mr. Davis describes a truly ubiquitous activity cutting across businesses at all stages of maturity. Examples of this type of collaboration, as Davis demonstrates, can be found all the way from whole sets of companies coordinating product release dates around the target debut of a new smartphone, all the way up to a new jetliner from Boeing or Airbus.
We came to two conclusions as a result of reviewing Jason P. Davis’ article:
- His “Synchronicity” is much easier to identify around hardware devices than it is around software applications. Based on our experience, we can say Davis’ “synchronicity” usually occurs around the debut of operating systems, or major platform releases (for example, Enterprise Content Management or “ECM”, or Enterprise Document Management, “EDM”)
- Despite the popularity of this activity, we nevertheless hold to our position. Early stage ISVs will do very well to carefully consider whether or not it makes snese to build products based on “synchronicity” before leaping into an effort
© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved