Comment by shadowsun7 | Hacker News Reader

Comment by shadowsun7 | Hacker News Reader

I loved this article, but after thinking about it for a bit I realize that there is an argument for going free. Two pretty strong ones, in fact.

1) If you want to get acquired - and we're talking about a big acquisition here - it would do to go free so you manage to score a big-enough user base to get noticed. And so the bigger company is interested in acquiring you not only for your technology, but also for your users. (That said, acquisition may be a risky bet.)

2) Going free also makes sense if you want total market dominance. In which case, free is really the only way to go. The writer is speaking from the POV of a micropreneur, and it makes sense for him to retract his free plan (in fact, it makes sense for 37signals/the 37signals model to do so too).

But if you're in the position of being the next Facebook, going free and dominating the market is really the best thing to do. (Or Youtube, or Google, or Flickr).

You find lots of users, lock out the competition, and then you can figure out how to monetize.

Which only goes to show that there are all kinds of businesses out there, and the advice you read on the net really should be done through the context of your particular business and/or market.

Going free also makes sense if you want total market dominance. In which case, free is really the only way to go.

No it's not. The other way is to make the best damn product in the market. I hate to give cliched examples, but since we are talking market dominance, see Windows, Adsense and iPod.

I can see iPod and Adsense, but Windows? Windows won for very, very different reasons. When Windows first appeared, it was far from the best product on the market. It won because it was already everywhere (because of DOS). Microsoft practically invented the "give it away to ensure market dominance" game (Ok, slight hyperbole there). It took the court system to slow them down.

I agree. I think it would be almost impossible to introduce a new, non-free OS now since from day 1 it would have to be not only better than Linux and BSD, but significantly better.

Agreed. From the point of view of the customer, Windows is free since it is bundled with their computer and cannot be unbundled. (There now are some chinks in that bundling armor, but not much.)

What consumer OS on affordable computers (that leaves Macs out) was/is better than Windows?

It took the court system to slow them down.

That was not for their dominant desktop OS, it was for using their monopoly to push IE and server products.

You can call out Microsoft on dodgy anti-competitive behaviour in some respects, but you cannot take away credit for building the solid product that is Windows. Heck, even now after goofing up with Vista, they are back with Windows 7.

I much much much prefer desktop linux, I would hesitate to call windows decent, let alone by far the best.

Yet I have still found it as much as impossible to buy a computer without windows preinstalled.

I prefer and use linux too, but the typical HN user doesn't represent the consumer market.

> I much much much prefer desktop linux

So do I, but that Linux didn't exist when Windows became dominant; it came much later.

and even now, it lacks the beauty of OS X, which is rather unfortunate.

I use Xubuntu, and it's the best damn work station I've ever used, but sometimes I wish gtk apps were a bit more beautiful.

OS/2.

OS/2 wasn't good enough, unfortunately. It was very expensive at the start -- and then there was OS/2 Warp which was ok, but not compelling. If the world were as web-enabled as it is now, it might have been fine -- the way it was -- you needed all of your software to work, and it didn't.

Even Windows 95 wasn't great (especially for programmers) -- it was Windows NT 4.0 that was good enough to use to get work done. It was a combination of being less crashy and having more native software available.

Definitely not good enough. OS/2 would not even install on some PCs from IBM without major effort.

OS/2 leaps to mind...

Windows won because DOS was already everywhere. It wasn't the best product. I would argue OS/2 and Macintosh were pretty significantly better. It's not a coincidence that it took this long (Windows 7) for MS to produce a decent operating system - they are now having to compete on quality. But you don't even have to buy the argument that Windows was sub-par. It doesn't matter, because that's not why MS won.

Just as MS used the omnipresent Windows platform to push Office, IE, and countless other products (with varying success) they used DOS to push Windows. That is why Windows won.

There's nothing dodgy about it - the point is there is more than one way to win the market, and being the best product is pretty far down on the list.

>Windows won because DOS was already everywhere.

Actually previous poster made a good point with Vista problems - after a few years of bad press and Apple being a favorite, MS made a killing with Windows 7. Not for free.

Of course, Microsoft used DOS to push Windows and perhaps OS/2 was better in some ways, but the Wikipedia article suggests OS/2 lost because Windows was better in some important ways.

The collaboration between IBM and Microsoft unraveled in 1990, between the releases of Windows 3.0 and OS/2 1.3. Initially, at least publicly, Microsoft continued to insist the future belonged to OS/2. Steve Ballmer of Microsoft even took to calling OS/2 "Windows Plus".[9] However, during this time, Windows 3.0 became a tremendous success, selling millions of copies in its first year.[10] Much of its success was because Windows 3.0 (along with MS-DOS) was bundled with most new computers.[11] OS/2, on the other hand, was only available as an expensive stand-alone software package. In addition, OS/2 lacked device drivers for many common devices such as printers, particularly non-IBM hardware.[12] Windows, on the other hand, supported a much larger variety of hardware.

http://en.wikipedia.org/wiki/OS/2

The other question to consider is why another PC OS didn't come up to compete with DOS/Windows considering that Microsoft actually helped open up the hardware ecosystem. A dominant player with most of the "market share" need not stop a new better player (see web search). Maybe it's worth acknowledging that making a good OS is a hard problem which MS cracked better than the rest.

There were other PC DOS, but MS had something up their sleeve: http://en.wikipedia.org/wiki/DR-DOS#Competition_from_Microso... and http://en.wikipedia.org/wiki/AARD_code

    Windows won because DOS was already everywhere. It wasn't
    the best product. I would argue OS/2 and Macintosh were 
    pretty significantly better.

No, they weren't.

The hardware requirements OS/2 were higher, Windows had better drivers support and provided better tools for developers. And the real battle was in '94 when IBM released OS/2 Warp. In '95 it was already game over.

People weren't using OS/2 for the same reasons they wouldn't go for Win NT 4. It was technically superior, but incompatible with what people wanted.

Win 95 had the same quality as Mac OS ... both were pieces of shit that got the job done, the difference being that you could get Win 95 for a better price and that it was future-proof (Win NT was already on sale for businesses).

IMHO, with Windows Microsoft only had 2 fuckups ... Windows ME and Vista. For all the other versions Microsoft just provided what consumers wanted.

It seems a lot of people forget just how crummy mac os was before x.

I used OS 7.x for a good while, and it was generally speaking not better than its contemporary, windows 95.

In fact it might have been even worse, at least as far as multitasking and stability go.

Windows 98 SE was actually a fairly good system as long as you didn't overtax its somewhat limited multi-tasking ability & ran it on high quality hardware (far less crash prone than Mac OS 8.x)

GEM OS was a contender too iirc.

Why the downvote?

http://en.wikipedia.org/wiki/Gary_Kildall#IBM_dealings

Market dominance goes to the best-executed whole product, not the best generic product in isolation of market dynamics. Making the best product is only half the equation. Startups also need a market strategy that works.

Windows was free (preinstalled) for end users since at least 3.0 IIRC. Adsense is essentially free for publishers. Both it and Adsense have huge positive network effects. Not to say that they weren't best products on the market when they got traction, but still.

Adsense is essentially free for publishers.

That's a strange way to look at it. Publishers are selling space to Google for a cut of the Adsense revenue. Google is selling contextual ads within those spaces to advertisers.

What's free in that?

I really think there is a missing piece of context here. If you are creating the next social application charging for your application would be counterintuitive since you are banking on the number of users.

On the other hand if you have an application that actually makes money for someone or saves money (in other words translates to direct dollar amount) you might be better off charging as long as your user base perceives the value they get out of your application as more than what they pay for it.

I really think that me-too-free app mentality has to change. Startup founders (especially micro ISVs) need to understand the fact that coming up with a business model is the core of the business not an afterthought.

Not always true, though. History is littered with examples of products that gained traction not because they were better, but because they were free. (See: BIND vs Jeeves, Stanford's Unix vs Berkeley's Unix, Minix vs Linux, Apache vs Microsoft/Netscape)

At one point in all these product's lives they were lousier and smaller as compared to their competitors. But they won out because the low barrier to adoption (read: free) drove usage, and from usage, more improvements.

Thanks for pointing those out, I hadn't thought of them and can perhaps be accused of survivorship bias. I don't know about the first two examples but isn't Linux actually better than Minix and Apache certainly better than Microsoft? In any case, this is a bit of an unfair comparison because these are examples of open source vs proprietary, not product quality primarily.

In the context of the OP's blog post, we are talking about winning in terms of building a profitable business, for which I believe building a good product and selling it is a better strategy than getting popular by giving away a crap product for free.

The gist of the matter is that you should be clear what you are selling:

* a product

* advertising space/lead generation (if you are free)

* yourself (acquisition)

I see most web startups are going for the second and third options, but it seems it is mostly out of fear and the status quo, not careful consideration of the pros and cons.

> I don't know about the first two examples but isn't Linux actually better than Minix and Apache certainly better than Microsoft?

When they first started out, both were lousier, scrappy, free products.

> In any case, this is a bit of an unfair comparison because these are examples of open source vs proprietary, not product quality primarily.

There is nothing unfair about this comparison. Releasing free products and making money on other things has always been a viable way to compete against bigger, more established players. See: http://www.joelonsoftware.com/articles/fog0000000056.html

Oops, I meant: http://www.joelonsoftware.com/articles/StrategyLetterV.html

Hope this helps.

But Linux wasn't started with that motive and I guess neither was Apache.

Was IIS even out there when the first version of Apache was released?

Cheap(er) almost always beats better/best when the market is large. Walmart, fast food, webbrowsers. The main way a less cheap product wins a mass market is through massive advertising. Specialized and niche markets are different.

I'm not sure what your examples where suppose to illustrate. Both Windows and Adsence rule because of the (practical) monopoly positions of their creators. iPod's only one that may have dominated for being the better product but If google started giving away crappy media players they would quickly out dominate iPods.

What I take from the article and from your comments is that Freemium is a great idea for any product that relies on network effects, either to create a more useful product or to provide a strong exit. But with any other type of product, it would make sense to put the Freemium aside. It's probably easier to try paid only (with or without trials) first, rather than starting with Freemium and dealing with the fallout of cutting off free users later on.

Yep - you hit on the key difference: go freemium if your business needs network effects.

Marketplaces, social networks, ebay, etc - basically anything where the site becomes more valuable the more people use it.

Good point on 2) total market dominance !

I wonder if Twitter would have had a chance at all if they required payment for participating (even as little as $5 a year would probably be too much for it to take off) ?

World of Warcraft dominates the MMORPG market. Why? they created the best damn product.

Go free to get lots of broke users if you want to help scammers serve ads to those users.

WoW also offers a lot of free months to players. Sign up a friend, both of you get free months.

I almost said "and WoW isn't the best damn product," but that depends on your definition of 'best.' It almost mirrors the Mac/Windows thing. Connoisseurs tend to scoff their noses, yet they just keep on selling...

WoW is a mediocre product executed _perfectly_.

http://www.metacritic.com/search/game/world+of+warcraft/resu...

Define mediocre.

Maybe 'not innovative' would make more sense. WoW is a great game, and I have a ... long and very personal history with it. But it's a Blizzard game; their MO is to make the most average game possible, but make it incredibly polished. Many of my fondest memories are of Blizzard games, but (as of late) they're rarely innovative.

WoW is the gold standard of fantasy MMOs. It just doesn't do anything new or interesting; it only does a small set of things, but does them very, very well.

So, basically, Blizzard is the 37signals of game companies?

I would agree with that assertion.

World of Warcraft has a couple of other things going for it though.

1) Network effects. If you've got friends who play WoW then that's a major reason for you to play it even if there is something better out there. Of course you could all move to the better thing but they won't because...

2) "Loyalty". Anything where people invest time which can not be transferred (for instance in levelling up characters) tends to incur loyalty, if only because they don't want to start over.

Agreed. Also, there is the value perception. When players have to sort through all these MMO games to play, the paid ones stand out over the free ones. (for those players with limited time to play, and can afford to pay)

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