In recent years, blockchain technology has grown and developed well beyond cryptocurrencies such as Bitcoin and Ether: distributed ledger technology has already seen viable use cases in finance, not just in the peer-to-peer crypto transactions, but also in data management and identity verification, and industries from mining to retail to shipping have embraced blockchain for its ability to generate smart contracts, create immutable yet transparent records of the passage of goods through the supply chain, and streamline document handling processes. To date, however, most of these use cases have remained in the enterprise sphere, and few crypto projects have seen mainstream consumer adoption.
For a way forward, I’d suggest that we look back. In the mid-1990s, Microsoft was already a juggernaut in PC technology and software, and it was looking to become a company that would reign over the internet. This was when the phrase “embrace, extend, and extinguish” was first used to describe their business model, and as John Markoff wrote in the New York Times in 1996, there was a growing concern that Microsoft “intend[ed] to subsume more and more of the Internet’s basic technology in Windows.” Early skirmishes in this battle were fought against Netscape Navigator and Java; Microsoft then faced off against Intel, its primary hardware partner. What was at stake? Whether a single organization should have control over setting up and determining the parameters for how various types of hardware and software would work together on the internet.
For a notable example of how Microsoft had already used the “embrace and extend” business model to innovate in the market is the development of Microsoft Office. The leading spreadsheet/database software in the 1980s was Lotus 1-2-3, which offered sophisticated macro functionality and the opportunity for third parties to sell industry-specific macro packages. In response, Microsoft embraced Lotus functionalities and launched Excel with the ability to load Lotus files and run Lotus macros. The real innovation, however, was bundling Excel with its word processor and presentation software to launch Microsoft Office. Office was priced competitively, letting Microsoft increase their market share, and by the time Lotus responded with its own suite of programs, Lotus Symphony, it was too late. Thirty years later, Microsoft Office is still the dominant productivity software for businesses and individuals alike, even on machines running Apple hardware.
In the end, of course, even though Microsoft did not always extinguish its rivals, the “embrace and extend” business model ultimately proved successful. Since then, the company has used its position as an industry leader, its ability to embrace competitor technology and extend use cases, to innovate in truly remarkable ways. This is what open apps should be aiming towards today.
Consider the common behaviors that consumers perform online. There’s online shopping, of course, as well as accessing media including movies, music, books, and video games. In addition, many consumers interact with their financial institutions online and are accustomed to providing and accessing personal financial information as a result. Finally, people are increasingly accessing government services online and using online portals to access their health care providers and manage their personal health information. All of these represent existing consumer behaviors that are ripe for disruption by open apps.
What’s holding open apps back? To gain mainstream adoption, to get to a point where individuals are regularly accessing, consuming, and creating content on blockchain platforms, open apps must be willing to emulate the Microsoft business model. This means embracing platform monopolies and building open apps on top. It means using the platforms first to extend their reach from the enterprise space into mainstream consumer usage, and then as the basis for further innovation. Only then will blockchain and crypto projects truly dominate their markets, as existing consumer habits are transformed so they work within the open app ecosystem.