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Is an "Open" Strategy Right For You?

open.jpgSome critics called Amazon's Kindle electronic book reader overpriced and poorly designed, while others hailed it "the book of the future." There may be truth on both sides of the debate, but nonetheless, consumers have spoken, and their response has been highly favorable. Now there's just one thing standing in the way of Kindle's market domination, according to Harvard Business: openness.

But Kindle operates in a closed universe, and that's why it probably won't succeed in the long term as currently constructed. It's easy to see why Amazon went with the "closed" strategy: Amazon makes money controlling the transactions and the content. That's why iPod requires you to use iTunes and that's worked out pretty well for Apple. For similar reasons, Facebook doesn't let users extract to other social networks all the information they've invested in the site.

Going with a closed strategy is often only a short-term solution. The demand for content can create pressures that force a company to open its devices or face competition from new products or platforms that trumpet their openness. For example, the success of Facebook and MySpace are responsible for the demand that Google's OpenSocial initiative addresses. Facebook this summer anticipated the demand for open social networking platforms by enabling third parties to build applications that run on it. Salesforce.com is also headed down the path to openness with its application exchange. Firefox has gained market share against Microsoft's browser in no small part because it's open to plug-ins.

In almost every case, markets tend toward openness. Being closed works sometimes, but because it's almost always done for the benefit of the company and against the interest of users, openness is almost always the right long-term strategy.

The article goes on to list four indicators an "open" strategy may be right for you. If this applies to your industry, it's worth taking a look.

(Open image courtesy of elliottcable, cc 2.0)

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