First mover (dis)advantage

I recently heard from an older computer user who was delighted that his hotel’s free WiFi simply worked with his notebook computer. Internet access on the road didn’t use to be so easy, either for hotels or their guests. Consider these three (hypothetical) hotels:

  1. In 1995, hotel #1 spent a lot of money to redo its digital phone system to make it compatible with computer modems.
  2. In 2000, hotels #1 and 2 spent even more money to run Cat 5 (Ethernet) cable to all of their rooms
  3. In 2005, hotels #1, 2, and 3 spent much less money to set up a few WiFi hotspots.

A quickie moral would be that hotel #3 came off better, since it ended up in the same place for a fraction of the cost, while the other two suffered from a first mover disadvantage. Reality, of course, is more complicated.: hotels #1 and 2 had five years to amortize each of their earlier investments. If those investments allowed them to steal guests from hotel #3, or to charge higher rates, then the investments may well have turned a net profit for the hotels.

The real moral is that the one that the extreme programming advocates push: build for today. As long as hotels #1 and 2 were investing in technology that their guests needed right away (rather than at some ill-defined point in the future), they probably came out OK. On the other hand, if a hotel were putting in technology just because, some day, it might be needed, it probably saw that technology superceded before it could bring in any return.

If this moral seems simple and obvious when applied to hotels, then why do architects ignore it sometimes when designing information systems for big enterprise and government? When we sell them on something like WS-* (or a REST-based data architecture), what criteria do we use to figure out whether we’re building for today, or for a tomorrow that may never come?

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3 Responses to First mover (dis)advantage

  1. Steve Loughran says:

    You can see a slightly effect in, say, the US mobile phone infrastructure vs. europe, the US colour TV infrastructure vs, again, Europe, or (arguably) the EU road infrastructure vs the US. Once you build something that works ‘adequately’ it gets fixed in the system, and becomes impossible to move forward. First movers who dont think ahead end up hard coding the first system design into their infrastructure and suffering long term.

    Another case is the UK cable TV people. If they had gone to fibre-to-the-house when they rolled out their cable (in the 1990s), they could do broadband data that would be fantastic, hundred megabit to the home. Instead they took the short term ‘coax is all we need for tv’ path and are left with 1/2 mbit/s bandwidth.

    So maybe, sometimes, you ought to either invest a bit more to get it right (the classic waterfall tactic) or wait a bit before rolling out your vast system. That is hard to do in a competitive world.

    Maybe the real trick is the lesson of the “how buildings learn” book: a good house/app/infrastructure is designed to evolve in ways you dont originally imagine. So start simple but be evolvable.

  2. Imran Anwar says:

    Very good point. As in the hotels example you gave, it is easy to assume the SLOW follower is best off, rather than the innovator or the fast follower. I bought a set of EIGHT Mac II fx computers (from Businessland, anyone remember them?) in 1989-90 at $8400 EACH. Actually had 160MB, I repeat MB, hard drives in some of them. Now I can get an iMac that is 1600 times faster for almost 15% of the cost. Yet, the USE I got out of my computers was worth a few million Dollars to me.

    Same thing when I built my home in NY. The builder was going crazt trying to figure out why I was wiring it for Ethernet. This was a HOME. The cost of the WIRING alone then was more than the cost of two wireless routers and some cards I bought. (The newer Macs all had Airport built in). Yet, even back then, as a work-at-home entrepreneur, it was so great to be able to use any room in the house, not just be tied to my “computer room”.

    To this day I do not assume a hotel will have WiFi… I check, AND, I even prefer to give my business to the ones who offer it free.

    So, it is surely good, as Steve commented earlier, to do it right if investing early, but one NEVER knows what “right” is and how much is “enough”. Well… any idiot knows better than to say “640K ought to be enough for anybody….” 🙂



  3. Fibre into the home is key. Any company still putting copper into peoples homes is wasting their time and not looking ahead. They will see!

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