LINFO

Vendor Lock-in Definition

Vendor lock-in, or just lock-in, is the situation in which customers are dependent on a single manufacturer or supplier for some product (i.e., a good or service), or products, and cannot move to another vendor without substantial costs and/or inconvenience.

This dependency is typically a result of standards that are controlled by the vendor (i.e., manufacturer or supplier). It can grant the vendor some extent of monopoly power and can thus be much more profitable than would be the absence of such dependency.

The term is commonly used in the computer industry to refer to the situation that can occur due to a lack of compatibility between different hardware, operating systems or file formats. Such incompatibility can be intentional or unintentional.

A specific way in which lock-in can be created is by a dominant company developing file formats that make it difficult for its users to convert their data to other formats. It is also wise for the developer to at the same time proclaim that its file formats are standard, and to even participate in standards making organizations.

Another technique is the use of vaporware. This is the announcement or even advertising of products which are claimed to be planned or under development but which are never actually supplied. Or if they are supplied, they lack some or many of the promised features and performance. When used by a dominant software company, vaporware can be effective in persuading customers not to switch to competitors' products, and it can also be effective in persuading competitors to not try to develop products with similar features and performance.

The costs of lock-in can be severe. They can include (1) a substantial inconvenience and expense of converting data to other formats and converting to more efficient, secure and inexpensive application programs and operating systems. They also include (2) a lack of bargaining ability to reduce prices and improve service, (3) vulnerability to forced upgrades and (4) the corruption, or even loss, of critical data while attempting to convert it.

The best way for an organization to avoid becoming a victim of vendor lock-in is to use products that conform to free, industry-wide standards. Free standards are those that can be used by anyone and are not controlled by a single company.

In the case of computers, this can usually be accomplished by using free software rather than proprietary software (i.e., commercial software). Free software is software that is not only available to anyone at no monetary cost but also for which the source code is freely available to anyone to use for any purpose. Source code is the original form of software as written by a human in a programming language; this form allows the software to be easily understood and modified by other programmers.

Free software is safer because it usually complies with free standards. It is also safer also because it can be modified to be made compatible with other standards, for example, in the event that standards that were thought to be free turn out to have problems with hidden patents.

Manufacturers of electronic products have long realized the importance of having a second source (i.e., alternative source) for each type of component, material or other input. Actually, a more appropriate term might be multiple sources because it can be better to have even more than two choices. Now, more and more businesses and other organizations are realizing that having second sources is likewise important for computer software. The availability of a second source is more or less guaranteed by using free software and software that conforms to free standards.

Although lock-in can benefit individual vendors and industries that engage in it in the short run, it can also become harmful to them in the long run. The classic example is the battle among the various proprietary flavors of UNIX to lock their customers into their own versions as well as their own hardware. Moreover, because of differences in and idiosyncrasies of each of these versions, it is almost always necessary for each user to purchase costly support contracts from the vendors. This resulted in a severe negative effect on the entire UNIX market and in a substantial loss of market share to the Microsoft Windows operating systems.

One of the major ways in which Linux differs from proprietary Unix-like operating systems (e.g., Solaris and HP-UX) is that it does not make any attempt to lock users into the vendor's hardware. This is because it runs on standard hardware. Moreover, it is not necessary to purchase support from any specific vendor, because support is available from a variety of sources, including for free on the Internet.