Complementary-asset dependence is a switching barrier that arises when replacing a product also means replacing what was built around it: the applications that run on it, the files in its format, the supplies it takes or the procedures staff learned. Those extra costs keep customers in place even when a rival is better.
Lost complements push the real price of switching well above the price of the replacement, so customers stay even when a rival is better on its own. Windows is the classic case. Court findings in 1999 counted over 70,000 Windows applications, and users would not move to the Mac even after a sustained price rise because leaving meant replacing applications, files and skills. IBM's OS/2 stalled at about 2,500 applications.
The barrier lasts only while the complements can't move. Adapters, open standards and data portability let them travel to a rival, which weakens the lock without any change to the incumbent's product.
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
Applications barrier to entry
Also tagged: Qualtrics · Slack
| What it is | How to tell it apart | Example | |
|---|---|---|---|
| Complementary-asset dependence | Switching breaks the software, files, supplies or procedures that depend on the product | List what stops working after a switch and what rebuilding it costs | Windows applications keeping users off the Mac |
| Switching costs | Any value a customer expects to lose by changing to an alternative | The broad category; this page covers losses from complements that stop working | SAP and Oracle ERP |
| Platform network effects | Users attract developers and complement makers, whose work attracts more users | Explains how complements accumulate; dependence asks what breaks when a customer leaves | Apple's App Store |
| Author | What they call it / where it appears |
|---|---|
| Neumann | A Taxonomy of Moats — Complementary-asset dependence |