This is the third installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.
3. Competitor Lockout
Microsoft knows from its competitive experience that having the leading market share does not equate to market dominance. IBM, Lotus, WordPerfect, Novell, Netscape---all had overwhelming market share when Microsoft took them on. Asymmetric marketing goes beyond market share leadership to market ‘ownership’ or market rule-making, i.e. competitive lockout (all within the context of the law of course).
The best competition for an asymmetric marketer is zero effective competition. Zero effective competition means that while there may be alternative providers in the market category, they are not rule-defining competitors and can be ‘contained’. Microsoft has been very smart over the years in working out the specifics of this.
Here’s a few instances of what I mean by ‘rule defining’.
Licensing Model Rules: Per processor OEM Windows licensing that got Microsoft paid by a PC OEM whether or not a system had Windows;
Developer Rules: Undocumented or ‘unreleased’ features in Windows that provided them with an edge in applications development;
Encroachment Rules: Error messages that appeared when competitive products tried to co-exist with their products without their market permission. For example, Novell tried to sell Digital Research DOS to PC OEMs to run underneath Windows.
But I see the real muscle behind Microsoft’s lock-out power as the same common sense approach attributed to Hyman Roth, the fictional character in the legendary film the Godfather. The Hyman Roth character was modeled after Miami mob financier Meyer Lansky. And I quote, ”Hyman Roth always made money for his partners.” That’s the secret of a long term competitor lockout---Make money for your partners.
Where would Dell be without Microsoft? Where would the tens of thousands of 3rd party developers be without Microsoft? Where would the thousands of vertical system builders be without Microsoft? Where would millions of IT professionals be on their career track without the Microsoft Certification programs that empower technical professionals trained in Microsoft technologies to find employment in both up and down markets? Am I cheerleading for Microsoft? No. I’m simply asserting that if your business model ends up always making money for your partners, your efforts to foster a natural monopoly lockout in a given category are that much more effective.
In basic complexity theory, complex adaptive systems (from living species to economic markets) ‘self-organize’ in the presence of the right ‘catalyst’. The Microsoft ‘value chain’ has in fact self-organized around Windows and as a consequence, alternative or competitive technical solutions to the same problem are not relevant to the value chain. The catalyst is the economic model provided by the Microsoft franchise. That’s the strategy for an asymmetric lockout. When you develop your own partner program and business development initiative, don’t ask first ‘How do I sell more of my stuff’. Ask 'how do I make money for my partners'.
In the next installment, I’ll address the Microsoft best practice of market creation, the key to long term asymmetric advantage.
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