Most large companies have noticed a trend; that products alone are not that profitable any more. Nor are they a protectable form of business innovation anymore. This is because a physical device (and ostensibly its language of form) is the easiest thing to copy in China. Instead, the enlightened corporation works to create a platform. A platform is a system that is modular in some way, and its modularity can be extended by other companies who do so to make money – for themselves.
Increasingly analysts are referring to this business dynamic as an ‘ecosystem’. Different word. Same general idea. Microsoft found a surprise (platform) on its hands with Kinect. Surely they intended third party development on a new gaming system platform. But were clearly surprised and initially unnerved by the developers that were attracted to the ecosystem. They were even more surprised by their motivations. Jenna Wortham explains:
Companies respond to this kind of experimentation with their products in different ways — and Microsoft has had two very different responses since the Kinect was released on Nov. 4. It initially made vague threats about working with law enforcement to stop “product tampering.” But by last week, it was embracing the benevolent hackers.
“Anytime there is engagement and excitement around our technology, we see that as a good thing,” said Craig Davidson, senior director for Xbox Live at Microsoft. “It’s naïve to think that any new technology that comes out won’t have a group that tinkers with it.”
Microsoft and other companies would be wise to keep an eye on this kind of outside innovation and consider wrapping some of the creative advances into future products, said Loren Johnson, an analyst at Frost & Sullivan who follows digital media and consumer electronics.
“These adaptations could be a great benefit to their own bottom line,” he said. “It’s a trend that is undeniable, using public resources to improve on products, whether it be the Kinect or anything else.”
Microsoft invested hundreds of millions of dollars in Kinect in the hopes of wooing a broader audience of gamers, like those who enjoy using the motion-based controllers of the Nintendo Wii.
Word of the technical sophistication and low price of the device spread quickly in tech circles.
Building a device with the Kinect’s capabilities would require “thousands of dollars, multiple Ph.D.’s and dozens of months,” said Limor Fried, an engineer and founder of Adafruit Industries, a store in New York that sells supplies for experimental hardware projects. “You can just buy this at any game store for $150.”
On the day the Kinect went on sale, Ms. Fried and Phillip Torrone, a designer and senior editor of Make magazine, which features do-it-yourself technology projects, announced a $3,000 cash bounty for anyone who created and released free software allowing the Kinect to be used with a computer instead of an Xbox.
Microsoft quickly gave the contest a thumbs-down. In an interview with CNet News, a company representative said that it did not “condone the modification of its products” and that it would “work closely with law enforcement and product safety groups to keep Kinect tamper-resistant.”
That is not much different from the approach taken by Apple, which has released software upgrades for its iPhone operating system in an effort to block any unsanctioned hacks or software running on its devices.