Customer lock-in happens from inside or out

Earlier this month my brother, father, and I went to Macworld in San Francisco, waking up at 4:00 AM on Tuesday to get into Steve Jobs’s keynote. We were amazed by the iPhone — definitely under the influence of Steve’s Reality Distortion Field. It wasn’t until the Cingular CEO took the stage (snore) that I realized how tired and hungry I was.

During the keynote, I was especially impressed by the idea of developing applications for the iPhone since it runs Mac OS X. Turns out that will not be a possibility; the phone is locked from outside developers.

There are two kinds of customer lock-in: by the company or by the customer. (Who holds the knob of the one-knobbed door.)

Some companies lock in customers with contracts, cancellation fees, and being difficult to work with — mobile phone companies, cable TV companies, 1and1.com, and Tivo.

Other companies lock in customers by building phenomenal products and platforms, fostering great communities, and inspiring loyalty (even evangelism) — Apple, WordPress, Bluehost.com. Customers don’t want to leave companies like these; they lock themselves in.

At $500-600, I’m not convinced a locked-down iPhone is right for me. (Maybe.) But if I had the ability to develop applications for an always-on, Internet-connected device, I’d lock myself in.

Bonus: This Nightline video covers the announcement of the iPhone, including an exclusive with Steve Jobs. From :37 to :40 (or 5:16 to 5:13) you can see my father walking along 4th Street early Tuesday morning while my brother and I waited in line. (He brought us back Denny’s.)

3 replies on “Customer lock-in happens from inside or out”

  1. @Blake

    True, I’d probably do well to put Apple in both categories because of the iTunes Music Store. (DRM is another form of lock-in I didn’t mention.) I find the DRM annoying, but I often prefer the convenience of the iTMS over waiting for a physical CD to arrive from Amazon. The ITMS DRM is reasonable enough, and if it works with the most popular music player then it doesn’t feel like lock-in to most people.

  2. “Other companies lock in customers by building phenomenal products and platforms, fostering great communities, and inspiring loyalty (even evangelism) — Apple, WordPress, Bluehost.com. Customers don’t want to leave companies like these; they lock themselves in.”

    I see your point, but the lock-down of iTunes/iPod ACC files isn’t for the sake of consumers, it’s for the sake of the company. Not saying proprietary tech is wrong, but the belief that Apple doesn’t lock-in consumers seens to stem from you bedazzlement with them. You did go to MacWorld and get up at 4am to see Steve Jobs afterall.

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