The application ecosystem: ten lessons learned

Computer Industry Report, Feb 19, 1999 by Henry Morris

Vendors fail to recognize that a product with many uses may still be a complementary product. For example, marketing slides for repository products positioned the repository at the center of a wheel with spokes for system management, application development, or enterprise applications. The slide implied that the repository was the lead product and each of the spokes represented a complementary product. In reality, buyers were willing to pay far less for the repository than for the software related to any one of these spokes. This showed that the repository was a potential complementor to a variety of ecosystems (each represented by a spoke). However, the repository could find its natural complementary role only if the supplier specialized the repository for easier integration with the lead product of a solution. Recent history has proven this point. One independent repository company after another has been acquired by a variety of ecosystem leaders. (For example, Viasoft acquired Rochade for year 2000 redevelopment, and Platinum Technology acquired Brownstone and Reltech for data warehousing, system management, and application development.)

* The more-is-less effect. A lead vendor that defines its ecosystem too broadly risks being perceived in the market as too complex or too expensive.

Data warehousing suppliers such as Teradata or Red Brick have positioned themselves as meeting enterprise data warehousing needs and have succeeded in winning large projects. However, they often miss out on projects of smaller scope. Such projects include follow-on activities to a large implementation such as dependent data marts. IDC found that both Teradata and Red Brick need to increase their mindshare among data mart buyers.

* The less-is-less effect. A lead vendor that defines its ecosystem too narrowly will fail to meet the prevailing market requirements of a solution.

For example, the data mining tools market is limited to those adopters with the expertise or resources to apply the technology. From the perspective of most would-be buyers, data mining tools in and of themselves do not constitute a solution. Many data mining vendors recognize this market reality and are now looking at participating as complementors in broader ecosystems. A broader solution includes links to OLAP tools, predefined models or templates within the data mining software, and even packaged analytic applications.

* The ecosystem-merge effect. When a market leader with a well-developed ecosystem successfully incorporates the core technology of a niche ecosystem's leader, the niche leader, along with its complementors, will seek new roles as complementors to the market leader.

For example, the incorporation of spatial information management technology within relational databases threatens the ecosystems built around the more niche-oriented spatial databases. The players in the spatial information management market have a choice: They can either fight a losing battle against the market leaders in the mainstream database market or seek to find new roles in helping mainstream market leaders spatially enable the database in addition to providing associated spatially enabled development and information access tools.