Wednesday, 30 April 2008

How to Stop Competing

Filed under: Business of Software — Jan Goyvaerts @ 15:41

Two weeks ago I gave some tips on how to compete against free software. All of these tips are in fact essential things that every Micro-ISV has to do to become or stay successful.

But wouldn’t it be nice if you could stop competing alltogether and have the whole market to yourself? You can! Don’t try to come up with something totally new. It’s unlikely you’ll pull that off. And if you do, it’ll take an enormous amount of effort to convince the world that people need what you just built.

To stop competing you have to divide the market. Instead of trying to be all things to everybody, pick a specific market segment that’s not very well served yet. Choose a small segment. If you try to grab 10% of the pie, the incumbents will compete among themselves to defend their share of the remaining 90%. If people in the 90% group complain you’re ignoring them, that’s a good thing. Send them a friendly reply that other solutions are better for them. Stay focused on your 10% of the market, which really is 100% from your point of view.

To leave the competition behind, you have to be the best. If your product offers a solution that’s better than anything else, then you’ll find many loyal customers. Being the best becomes an achievable goal if you divide the market first.

I regularly get complaints that PowerGREP is too complicated. While I certainly try to make PowerGREP as easy to get into as possible, I’ll never dumb it down. That’s because PowerGREP is aimed at people who have already outgrown the simple grep tools. It’s for people who want the complexity. Or rather: for people who’ll pay the price of complexity for power and flexibility. In that niche, PowerGREP can be the best. There are lots of simple grep and search-and-replace tools already. I have no intention of competing with those. PowerGREP will never be the world’s best-selling grep tool. It doesn’t have to be. It only has to sell well enough to keep Just Great Software in business, which it certainly does.

The VHS vs. Betamax story is often told as “proof” that the best doesn’t always win. But the best did win. Betamax had better picture quality. But VHS could record feature-length movies on one tape early on, and many companies produced VCRs. VHS had the features that most people cared about. But Betamax did not have dramatically better picture quality to carve out a loyal niche of videophiles who’d put up with short tapes and vendor lock-in to get a sharper picture.

Don’t offer easy solutions for crowded markets. Tackle a difficult problem for an underserved market.

For more thoughts on the subject, read former indy game developer Steve Pavlina’s article How to Beat the Competition.

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