What did Joel Spolsky mean with the phrase "commoditizing your complement"?
[Compare https://gwern.net/complement and https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/]
Draft 1:
Joel Spolsky's phrase "commoditizing your complement" refers to a strategic approach in the tech industry where a company aims to increase demand for their product by making its complementary products cheaper and more widely available. This can be achieved in several ways:
- Lowering barriers to entry: By making it easier for other companies to develop products that work well with theirs, they encourage a larger market of complementary products. This can involve open-sourcing key components, adopting industry standards, or providing development tools.
- Creating a platform: By establishing themselves as a platform upon which others can build their complementary products, the company benefits from the innovation and growth of the entire ecosystem. Examples include operating systems like Windows or mobile app stores like Google Play.
- Promoting interoperability: Ensuring that their product seamlessly integrates with a wide range of complementary products increases its overall value and adoption. This can involve using common file formats, APIs, and communication protocols.
Spolsky argues that by commoditizing their complements, companies can benefit in several ways:
- Increased demand: As complementary products become cheaper and more available, the overall demand for the core product increases.
- Higher pricing power: Because their product becomes essential for a growing ecosystem of complementary products, they can potentially charge a premium for it.
- Faster innovation: A thriving ecosystem of complementary products fosters innovation and brings new features and functionalities to the market.
However, it's important to note that this strategy can also have potential drawbacks:
- Loss of control: By opening up the ecosystem, the company may lose some control over the development and direction of the complementary products.
- Increased competition: A wider range of complementary products can lead to increased competition within the ecosystem, potentially affecting the overall profitability of the company's core product.
Overall, "commoditizing your complement" is a strategic approach that can be beneficial for companies in the tech industry, but it requires careful consideration and planning to ensure its success.
Draft 2:
In the context of technology businesses and economics, Joel Spolsky used the phrase "commoditizing your complement" to describe a specific strategy. Here's a breakdown of the key points:
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Complements: These are products or services that enhance the value of another product or service. For example, a word processor and a printer are complements to each other.
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Commoditization: This refers to the process of turning a product or service into a common good with many competitors and similar offerings, leading to lower prices and less differentiation.
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The Strategy: Spolsky argues that companies can benefit by lowering the price and increasing the availability of their product's complements. This can be achieved by:
- Making their product compatible with a wide range of competing complements: This increases the user base and potential value for their own product.
- Developing open standards and APIs: This allows other companies to easily create and integrate their own complements with the main product, further expanding the ecosystem and user base.
Benefits: By commoditizing the complements, the company aims to:
- Increase demand for their own product: As the complements become more accessible and affordable, more people will be inclined to use the main product.
- Capture a larger share of the overall market: By facilitating a thriving ecosystem of complements, the company can benefit from the combined growth of the entire market.
Example: Microsoft making their Windows software compatible with various hardware and software from different vendors instead of creating a closed ecosystem, leading to wider adoption of Windows.
Therefore, "commoditizing your complement" is a strategic approach where a company focuses on making the products or services that work alongside their own offering more readily available and affordable, ultimately aiming to expand their market share and profitability.
Draft 3:
Joel Spolsky's phrase "commoditizing your complement" refers to a strategic approach in the tech industry where a company aims to increase demand for their product by driving down the price and increasing the availability of its complementary products.
Here's a breakdown of the key points:
- Complements: These are products or services that enhance the value of your main product. Think of them as pieces of a puzzle that work together to create a complete solution. For example, a smartphone is a complement to mobile apps, and a game console is a complement to video games.
- Commoditization: This means making something a commonplace and readily available good, often leading to lower prices and increased competition.
Spolsky's argument is this: By making your complements more affordable and accessible (commoditizing them), you encourage more people to use them, which in turn increases the demand for your own product. This can be achieved through various means, such as:
- Open standards and APIs: Allowing other companies to easily build products that work with yours fosters competition and drives down the cost of complements.
- Supporting multiple platforms: Making your product work on various devices and operating systems increases its reach and accessibility, potentially leading to more people using complementary products on your platform.
In essence, by "commoditizing your complement," Spolsky suggests a strategic move to grow the market for your product by making the supporting ecosystem more affordable and accessible, ultimately leading to greater profits for your own business.