Open Blog Rerun: “Avoid the single supplier document taxes”

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Since I’m traveling this week and not likely to post much, I’ve scheduled some entries like this to point to some of my personal favorite blog writings.

Here’s today’s blog blast from the past.

Title: “Avoid the single supplier document taxes”
Date: February 28, 2007

When customers are restricted to a single supplier for anything, they pay taxes. The first tax is the difference between what they must pay to that supplier vs. the theoretical cost to them if multiple suppliers existed and prices had to be competitive and lower. This is real money, and small and medium size businesses are especially vulnerable because they often lack the negotiating leverage to get suitable volume discounts.

Customers also pay an innovation tax. When the single supplier only improves the product enough to maintain income from product version upgrades, customers miss out on the competition between suppliers between who can create better products with genuinely useful and new features. The sole vendor has limited reasons to improve the product. Fresh ideas from new players are kept out of the product category. This is bad.

One Comment

  1. Go Symphony. That’s a fresh idea, just like cellphones are a fresh idea after decades … maybe a century … of telephone handsets tied down by wires.

    Of course it’s nice if we pick up some trade in the Lotus Notes business … move the value into the infrastructure … where IBM’s strengths lie.

    I’m sure ATT want to do more than just hand out cellphone handsets at no charge, too. If they could drive the cost of cellphone handsets down, would they insist you sign a contract ? How low would their cost of acquisition and distribution have to go, to make it viable just to put them in with the PennySaver ?

    “Value” is shifting, and “Profit” with it. Disappearing from one place, and popping up in another.

    Sell into growth, if you can.

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