Wednesday, March 20, 2024

Exhibits #37, #38 of Commoditize Your Complements

The concept via  Strategy Letter V by Joel Spolsky

Once again: demand for a product increases when the price of its complements decreases. In general, a company’s strategic interest is going to be to get the price of their complements as low as possible. The lowest theoretically sustainable price would be the “commodity price” — the price that arises when you have a bunch of competitors offering indistinguishable goods. 

So: Smart companies try to commoditize their products’ complements.

If you can do this, demand for your product will increase and you will be able to charge more and make more.

Applied to Facebook via Strictly VC [06-16-23]

Meta wants other companies to freely use and profit from new AI software it's developing, and it's working on ways to make the next version of its open-source large-language model available for commercial use, says The Information. The outlet notes that the move could prompt a feeding frenzy among AI developers who want alternatives to proprietary software sold by rivals Google and OpenAI.

Applied to Apple via Apple Releases AI Research Paper, Apple + Gemini? [03-18-2024] 

First, Apple has long been open about core technology undergirding their products, from WebKit (Safari’s browser engine, which was later forked to create Chromium, Chrome’s browser engine) to LLVM (compiler technology that is used throughout the industry) to Swift (Apple’s preferred programming language). It is very much in Apple’s interest to contribute to and benefit from communities around core technologies.

Second, what Apple is very secretive about are products. Ergo, MM1 is not a product for Apple; it’s a model — or a precursor to a model — that will be used by Apple to make products, which the company will be very secretive about! To put it another way, Apple’s isn’t competing with OpenAI here; they are commoditizing a complement (while, not quite, at least not yet, but moving in that direction).