Making Monopolies by Owning Clients

There has been much industry debate over whether or not it is necessary to be a first mover in a particular e-business market in order to succeed. Those who say it is argue that being a first mover allows you to build the requisite momentum behind your idea while your rivals are left playing catch-up. Those opposing that view believe that being a first mover can actually be a disadvantage to you; while you find your way in an emerging market, your competitors can sit back and learn from your mistakes.

Both of these viewpoints, however, ignore one category of first mover:

Companies that have an idea and get the market sewn up before anyone else even realizes what is happening.

There are two ways of achieving this, as our story by Ephraim Schwartz shows.

The first is to sign exclusive deals with the only companies in a position to make your idea a reality, as Ten Square has done by allying with gas companies and gas pump manufacturers. The second way, which is possible for only a few lucky companies, is to be the sole company capable of offering such a service, as is the case with General Motors Corp.: It makes the cars, so it can dictate the e-business services offered in them.

What links these two scenarios is that in both cases the company with the idea also controls the client device. Although anyone can throw together an e-business Web site accessible via a PC and a browser, once you move beyond the PC, you either need to control the client yourself or quickly make friends with whoever does.

As Schwartz's article points out, you can WAP-enable your Web site, but you're wasting your time if you don't sign deals with mobile phone service providers.

So in this post-Windows era, with everything from refrigerators and ATM machines to vending machines becoming Internet-enabled, the companies that succeed will be those that spot the uses to which these clients can be put early on and act before anyone else does.

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