Alex Weinstein
On Growth, Product, and Leadership
Offer a Conversion Path!

I’ve had a curious experience with Amazon EC2 recently, and it made me think of a the process of adoption of new systems and services. In short: it doesn’t matter how good your product is, if it’s too hard to switch from the old way of doing things to your new-and-revolutionary gizmo. Let me share two stories.

Microsoft Word vs WordPerfect, 1991. Out of the gate, WordPerfect is a giant with almost 50% market share. Microsoft just released a “better  mouse trap”; they also know that the competitor’s product has massive adoption, and Word will hit a big wall because of the incompatibility of the two document formats. If a customer buys Word, they can’t open their old WordPerfect documents:

“No matter how good Word is, I have to buy WordPerfect anyway to have access to my old stuff. Damn, I already spent money on one word processor.. Why do I need another?..”

Microsoft does the smart thing: they write adapters for WordPerfect import AND export. Now, if you are an early adopter of the new-and-amazing MS Word, you can still send documents to your dinosaur friends. The barrier has been lifted, the purchasing decision is now to be made only on merit; with this single move, they were able to wipe away most of the network effect advantage of their competitor.

Fast forward to 2012. VMWare and on-premise virtualization providers are under attack by platform-as-a-service vendors, first and foremost, Amazon EC2. Amazon has built a cost-effective, scalable, very advanced mouse trap. It’s not a perfect replacement – but it’s better in many ways. Lots of Amazon’s potential customers today are using various on-premise virtualization solutions. And yet, 6 years after the launch of EC2, there is still no way to take my VMWare Linux box and upload it – seamlessly – into EC2.

No wonder that only under 5% of top 5000 websites by traffic are using Amazon EC2 today.