Google's Real Innovation: Recognizing The Power Of Complementary Goods
from the the-nicholas-carr-enigma dept
However, where he goes off track is in suggesting that this is somehow a unique situation and there isn't much to learn from it. Instead, he should be pointing out that this is the key insight that plenty of companies should be paying attention to -- as the key to building sustainable competitive businesses in the digital age is understanding the economics around complementary goods. Almost every successful business recognizes this and learns to exploit it. Intel always did a great job of this, building up businesses that seemed unrelated, but were always about driving more advanced uses of computing to increase the demand for more chips. As we've discussed at great length, the entertainment business has always been about using content to sell complementary goods, whether it's movies to sell admission tickets or DVDs or music to sell concerts and CDs. The newspaper business has always been about that too. Using "the news" as a complementary good to sell eyeballs to advertisers. In fact, Techdirt's own business is based on this core concept as well -- though, I'll leave it as an exercise to the reader to figure out how (and, no, it has nothing to do with advertising).
Carr, unfortunately, leads people astray by suggesting that understanding complementary goods isn't important unless you're Google. He is right to point out that this is a key point to Google's on-going success (rather than the silly things the press often talks about, such as its free food and "20% time"), but he's way off in suggesting that there aren't important lessons that others can learn from this recognition of basic economics concerning complementary goods.