First mover

I was considering the difficulty of SME growth the other day. For the majority of IT it is very hard to break into the market. That is not to say impossible but very difficult. It led me to think how many of the really big successful companies have been around since the beginning and how many resulted from newish startups. It is hard to judge on a general note but what is clear is that once a particular IT 'function' is dominated it is hard to take market share. Why? I am no MBA but it strikes me that first mover really does take all if they play their cards right.

Look at the main functions. In terms of operating system the biggest and market dominator is Microsoft. Many OSs have gone and many have gone and none have dented MS significantly. They were the first main stream commercial OS for computers (ignoring the home computer market). If linux has showed one thing it is that first mover is almost impossible to remove.

IBM, again, around since the beginning of computing. IT services though is easier to compete against (EDS, Cap Gem etc) but still, IBM is significantly successful.

Oracle is leading the DB market and was there in the beginning.

So what is the trick to topple the corporations? Competing on product is hard. The cost of R&D is high and new products are either niche (so do not ever get to take on the big market shares by definition) or innovative versions of what the big guys produce in which case it is almost impossible to prevent them provding a similiar innovation into their product set making your obsolete and you unviable.

Dell got into the market not with their product quality or innovation but by simply (in my view) being able to produce at costs no other corp could reach from their bloated starting point.

If any of this has merit then it goes to show how bad Yahoo was. As one of the leading search engines it is incredible that it lost out to Google whose product was simply more innovative. Why could Yahoo not innovative to maintain market share? Who knows.

So how do you topple the giants? Views welcome. It cannot be through product. The giants are easily capable of copying anything you produce. Even if you have a patent if they want to copy it you then have to take them to court for YEARS and you will run out of money before you win and even if you win you lose as they will be out there and you will have been too busy fighting court cases.

The way to beat them must be the Dell approach. The big guys are simply not light enough to change fast. If you want to succeed you have to change either the way the product is delivered (so price) in ways that the corp guys cannot reduce to in time to compete (hard with their buying power) or change the market. If you cannot produce a product on equal terms with the corps then change the market so the customer base wants something different to what the corps supply and that you do. Fashion works this way. Don't copy Prada, produce something and change the fashion so yours is in and theirs is out.

Macs are doing that in my view. People like the interface. People no longer want what MS offers. By this I mean it is a technical product and Macs are a fashion lifestyle thing. MS will simply not be able to become a lifestyle product and for that reason MS will start to lose market share to Mac quite rapidly. Macs now produce things to be seen with. MS copy them but nobody will ever consider it cool to have the latest OS or software. Same for hardware. Nobody wants a clunky old black box. They want a cool looking device. Image and fashion. Company's no longer focus on product benefit, they change the fashion, they alter demand to the product they offer.

Web sites now need to do the same thing. web sites such as facebook are popular but they are not lifestyle. Not in a positive way. It did not change fashion or demand, it was simply first in. Future success will come from changing demand to position your product rather than changing your product to fit demand.

It will be interesting to see if any web sites will give this a go.