In economics , VENDOR LOCK-IN, also known as PROPRIETARY LOCK-IN or CUSTOMER LOCK-IN, makes a customer dependent on a vendor for products and services , unable to use another vendor without substantial switching costs . Lock-in costs which create barriers to market entry may result in antitrust action against a monopoly .
* 1 Examples
* 2 Variations
* 2.1 Technology lock-in * 2.2 Personal technology lock-in * 2.3 Collective vendor lock-in
* 3 See also * 4 Notes * 5 References * 6 External links
Main article: Criticism of Microsoft § Vendor lock-in
Microsoft's application software also exhibits lock-in through the
use of proprietary file formats .
Main article: Criticism of
Prior to March 2009, digital music files with digital rights
management were available for purchase from the iTunes Store , encoded
in a proprietary derivative of the AAC format that used Apple's
FairPlay DRM system. These files are compatible only with Apple's
iTunes media player software on Macs and Windows , their iPod portable
digital music players, iPhone smartphones , iPad tablet computers ,
In January, 2005, an iPod purchaser named Thomas Slattery filed a
suit against Apple for the "unlawful bundling" of their iTunes Music
Store and iPod device. He stated in his brief: "Apple has turned an
open and interactive standard into an artifice that prevents consumers
from using the portable hard drive digital music player of their
choice." At the time Apple was stated to have an 80% market share of
digital music sales and a 90% share of sales of new music players,
which he claimed allowed Apple to horizontally leverage its dominant
positions in both markets to lock consumers into its complementary
offerings. In September 2005, U.S. District Judge James Ware approved
Slattery v. Apple Computer Inc. to proceed with monopoly charges
against Apple in violation of the Sherman
On June 7, 2006, the Norwegian Consumer Council stated that Apple's iTunes Music Store violates Norwegian law. The contract conditions were vague and "clearly unbalanced to disfavor the customer". The retroactive changes to the DRM conditions and the incompatibility with other music players are the major points of concern. In an earlier letter to Apple, consumer ombudsman Bjørn Erik Thon complained that iTunes' DRM mechanism was a lock-in to Apple's music players, and argued that this was a conflict with consumer rights that he doubted would be defendable by Norwegian copyright law.
As of 29 May 2007 , tracks on the
As of January 6, 2009, all four big music studios (
* Many printer manufacturers claim that if any ink cartridges,
beyond those sold by themselves, are used in the printer, the warranty
of the printer becomes void. Lexmark goes further , making ink
cartridges that contain an authentication system, the purpose of which
is to make it illegal in the United States (under the DMCA ) for a
competitor to make an ink cartridge compatible with Lexmark printers.
* Test strips for glucose meters are typically made for a specific
make or model. Strips designed for
Accu-chek devices, for example, are
incompatible with meters from other manufacturers. This lack of
standardization can lead to problems especially in developing
countries , where glucose meters and their associated strips are a
K-Cup single-serving coffee pod system was covered by a patent
MONOPOLISTIC COLLECTIVE POPULAR TERM
No No N/A
Yes Technology lock-in
Yes No Vendor lock-in
Monopolistic Whether a single vendor controls the market for the method or technology being locked in to. Distinguishes between being locked to the mere technology, or specifically the vendor of it.
This class of lock-in is potentially technologically hard to overcome if the monopoly is held up by barriers to market that are nontrivial to circumvent, such as patents, secrecy, cryptography or other technical hindrances. The heat equation describes one particular dynamic of smoothening a spatially distributed parameter. Depicted: A simulation of temperature on a two-dimensional surface. Collective Whether individuals are locked in collectively, in part through each other. Economically, there is a cost to resist the locally dominant choice, as if by friction between individuals. In a mathematical model of differential equations, disregarding discreteness of individuals, this is a distributed parameter system in market share, applicable for modeling by partial differential equations , for example the heat equation .
This class of lock-in is potentially inescapable to rational individuals not otherwise motivated, by creating a prisoner\'s dilemma — if the cost to resist is greater than the cost of joining, then the locally optimal choice is to join – a barrier that takes cooperation to overcome. The distributive property (cost to resist the locally dominant choice) alone is not a network effect , for lack of any positive feedback , however the addition of bistability per individual, such as by a switching cost, qualifies as a network effect, by distributing this instability to the collective as a whole.
As defined by
Technological lock-in is the idea that the more a society adopts a certain technology, the more unlikely users are to switch.
* The continued prevalence of the
PERSONAL TECHNOLOGY LOCK-IN
Technology lock-in, as defined, is strictly of the collective kind. However, the personal variant is also a possible permutation of the variations shown in the table, but with no monopoly and no collectivity, would be expected to be the weakest lock-in. Equivalent personal examples:
* A person who has become proficient on
COLLECTIVE VENDOR LOCK-IN
There exist lock-in situations that are both monopolistic and collective. Having the worst of two worlds, these can be very hard to escape — in many examples, the cost to resist incurs some level of isolation from the (dominating technology in) society, which can be socially costly, yet direct competition with the dominant vendor is hindered by compatibility.
As one blogger expressed:
If I stopped using Skype, I'd lose contact with many people, because it's impossible to make them all change to software.
there is (…) the danger that people will settle on
* Proprietary file formats that have become widespread on the web :
Embrace, extend and extinguish