The Power of the Default

Today, Microsoft announced that users of iPads had downloaded Office for iPad 27 million times since its introduction.  It has been available just 46 days.  Think of it – that is about 587 thousand downloads per day, or 408 downloads per minute (even in the middle of those 46 nights).  408 downloads, every minute for 66,240 minutes!  Is Microsoft Office really that good that so many people have rushed, and continue to rush, to get it?  iPads already can use Google docs, and Apple has made its iWorks suite of Pages, Keynote and Numbers free, so there are certainly credible alternatives.  But Office is the default for documents, presentations, and spreadsheets in business – and the power of being a default is almost impossible to over-estimate.

In the old days of technology the saying was “no one ever got fired for buying IBM.”  It was the safe product to purchase for business computing – no matter what Amdahl or Burroughs or Sperry, or Unisys or any of the other early mainframe companies did, they only were able to make sales around the edges while IBM gained by far the largest market share.  Only a disruptive product – the personal computer removing tasks from corporate mainframes and shifting them to many individual desktops – could break the stranglehold that IBM had on corporate computing.

For a while Sony was the default music player – remember the walkman?  Sony could not make the devices fast enough and no one wanted to purchase any other brand.  Walkman was the default – to buy something else required a compelling reason.  Only a disruptive product – the iPod with its ability to put (as Steve Jobs proudly proclaimed) “5,000 songs in your pocket” broke that stranglehold that Sony had on portable music players.

Later, Apple introduced the iPod, and suddenly it was the new default for music players.  And Apple’s growth accelerated to rates never before seen in a large company.  And that growth was stopped only because Apple obsoleted its own product, the iPod, when it put a music player – essentially a software iPod – in the iPhone as an app.

As a venture capital investor, I look for a company that is addressing a very large market and that has the ability to establish itself as a default.  Usually, the companies do not succeed – but when they do, you have a “tiger by the tail.”  That is a company that you hold onto with both hands and ride to wherever it takes you.



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