Vendor lock-in

Published: 07.08.2023

When you start building your company, IT is usually not something that you want to worry about. Email hosting, website hosting, maybe hosting a web application, it all takes a lot of time and energy.

This is what gets most people to turn to the tech giants to take these worries out of their hands. Tech giants offer you easy single-button solutions, that do exactly what you need them to do. It’s very easy to purchase extra hosting products or create new environments. However…

Big tech companies have a habit of vendor-locking their users.

In economics, vendor lock-in, also known as proprietary lock-in or customer lock-in, makes a customer dependent on a vendor for products, unable to use another vendor without substantial switching costs.
“Vendor lock-in”. Wikipedia, Wikimedia Foundation, 27 May 2023, https://en.wikipedia.org/wiki/Vendor_lock-in

Vendor lock-in is a way of making your customers dependent on products/services, because the customer won’t be able to switch to a (better) supplier without making substantial switching costs or putting in a lot of effort. Vendor lock-in does require the current solution to not be the optimal solution. When the current supplier is already the most optimal supplier, but they are still preventing from switching; it’s called “vendor dependency” which can be just a frustrating.

A great example of a vendor lock-in is what Apple did when iTunes first came out. When you purchased music from the iTunes store, this music could only be listened to via the iTunes app or on an iPod. Vendor lock-in on separate consumers is usually less of a problem than company vendor lock-ins

For some businesses vendor lock-in might not be too big of a deal, it will merely be an inconvenience. But for other companies it can become catastrophic.

When you use custom software that is dependent on, for example, a tech companies API and then the company changes their API; it could mean that your custom software will not longer function. This could mean that your entire business process goes on hold, or you have to make an investment to switch to a different supplier or rebuild your software to comply with the new API.

Investments to escape from a vendor lock-in are usually many times greater than choosing the right provider in advance.

And what can we do for you?_

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