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cdixon | The inevitable showdown between Twitter and Twitter apps

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People usually think of business competition as occurring between substitutes – products that serve similar functions for the user.   Famous substitutes include Coke and Pepsi, and Macs and PCs. In fact, especially in the technology sector, some of the most brutal competition has occurred between complements. Products are complements when they are more valuable because of the existence of one another – e.g. hotdogs and hotdog buns, PCs and operating systems. There is inherent tension between complements.  If a customer is willing to pay $2 for a hotdog plus bun, the hotdog maker wants buns to be cheaper so he can capture more of the $2, or lower the price of the bundle and thereby increase demand.  (For a great primer on competition between complements, I highly recommend this Joel Spolsky post.  I’ve also been writing about complements, here and here). Microsoft is famous for destroying companies that offer complementary products, either by bundling complementary apps with Windows (Wi

People usually think of business competition as occurring between substitutes – products that serve similar functions for the user. Famous substitutes include Coke and Pepsi, and Macs and PCs. In fact, especially in the technology sector, some of the most brutal competition has occurred between complements. Products are complements when they are more valuable because of the existence of one another – e.g. hotdogs and hotdog buns, PCs and operating systems. There is inherent tension between complements. If a customer is willing to pay $2 for a hotdog plus bun, the hotdog maker wants buns to…

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