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Saturday, September 27, 2003
The wrong strategy for a network market, part 676:
Yahoo blocks 3rd party IM clients.
Note to Yahoo management: Remember all that stuff they taught you in b-school about expanding the pie? Remember all that stuff about locking in your user base? Remember all that stuff about users deriving network externalities? Remember all that stuff about path dependency and increasing returns and winner-take-all markets? Your strategy is almost going to ensure that your users migrate to other networks, Trillian exploits the above mechanisms, and you get slowly frozen out of the market in which you killed your own first-mover advantage. Nice one!!
Here'a an idea for a strategy: if Trillian is going to reduce you to a commoditized bitpipe, how about innovating with the strategic intent of co-opting Trillian, leveraging the massive competences you already have: integrated portal technology, intuitive usability, huge user base, and brand.
Lesson: Don't cut off your nose to spite your face. Your competitors will love you for it.
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