“Closed” technology ecosystem may be best for your brand

by Tony Fannin, CEO/Partner, BE Branded  |

This is a little off my area of expertise, but I find it very interesting. One of the big divides in the tech world is “open” vs. “closed”. It is Facebook vs. Google. It is iPhone vs. Droid. It seems of late, the “closed” platforms are winning out when it comes to brand value and dominating their respective categories. I’m speaking of Apple and Facebook. These have been the two hottest brands in the last few years. As of 2010, Apple is considered the most valuable brand in the world. Facebook may blow away all previous records in their upcoming IPO, including Google.

These two companies have turned their backs on “common wisdom” that in today’s tech world, you can’t be profitable by building walled gardens. The accepted norm is to give away your stuff and sell advertising space. Thus far, the “open” system doesn’t seem to be delivering on their utopian promise. The vast majority of tech companies who are based on the “free” economy are struggling to post a profit even after being in “business” for 3 or 4 years. Though they have a bazzilion users, companies such as Twitter, Foursquare and YouTube are still trying to make their first penny of profit. There are thousands more smaller companies and independent sites who are trying the “open” model with similar results.

There’s no doubt the “open” ecosystem has great benefits that are admirable, but as a business, they are not even in the game yet. One of the biggest disadvantages, ironically, is one the open ecosystem had started. Because these platforms are now in the hands of the “many”, developers need to “dumb down” their apps, programs, etc. to the lowest common denominator. That results in a less than stellar user experience and functionality. Also, because of low entry barriers, you invite jerks, hackers, and malware into your conversations, programs, and ecosystem which screws up the brand experience.

Time has shown that the “open” ecosystem doesn’t last for long if a company wants to live on. Eventually, they need to start walling off their garden in order to generate profitable revenue and to protect their reason for being. No too many of these sites’ ultimate goal is to share their technology so that someone else can take it, make it much better, then make the original company irrelevant, but that is what ends up happening if they don’t start becoming a closed ecosystem after a period of time. Even Google is a walled garden when it comes to their money maker (that’s why they keep changing the secret sauce in order to stay one step ahead of the hackers.).

So why am I commenting on this subject? It ultimately comes down to brand experience. If a company is truly serious about delivering an extraordinary experience, creating a walled garden may be your best approach. It is also your most profitable approach. A brand can only generate the love and loyalty and turn their customers into raving fans by delivering great experiences. An “open” ecosystem is not able to do this over the long haul.

Sometimes, you need to be “closed” minded to win.

www.bebranded.net
317-797-7226

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About Be Branded

Tony Fannin is of President of BE Branded, an integrated marketing firm who helps clients BE Somebody to their customers. If you aren't somebody, then you are commodity.

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