Here on a beautiful sunny spring day in California, I had the pleasure of visiting a few small wineries and tasting the wares of the local vintners. Peering through each glass of delightful ruby liquid, I found myself taking careful note of the characteristics of each wine. Did the wine have "legs"? How was its "nose"? Did the taste explode in you mouth like a cornucopia of fruit and flowers? The evaluation process was both complex and personal.
Perhaps buying IP has some common elements to that of selecting a wine.
Let's start with so-called Standards IP, like USB or PCI. These are the Cabernet Savignon and Chardonnay's of the IP world. Every winery bottles them as the public appetite for such standards is steady. However, every winery is different and their product varies dramatically even though the grapes may be genetically identically. In the end it's not the grape that is the differentiator it is the skill of the wine master whom can get it just right. In Standards IP it is the skill of the architect and the design teams which can take an industry standard technology and produce a differentiated product that "tastes good" to the customer. It goes beyond functional correctness of the product and more into more subtle areas like how easy is the IP to integrate, how good was the support, how easy was the company to do business with? A bad experience in any of those areas can leave a bad taste on customer's palate. (cracker please...)
Another sort of buying behavior is related to the prestige associated with the brand of the product you're buying. There is a certain kind of message you are sending your guests when you serve Chateau Lafite Rothschild Pauillac that is different from serving a Charles Shaw (also know here in California as "two buck Chuck".) When I worked at Tandem Computers, sales used to complain about customers who chose inferior machines because "nobody ever got fired for buying IBM." I suppose in the IP world the modern equivalent would be that no one is ever fired for buying ARM. Perhaps people have a soft spot for three-letter acronym companies. More likely, these companies have done a good job of making people feel comfortable that there is value associated with the big price tag. As a business professor of mine once said "People just want to pay more", explaining that given equivalent products people will pay more money for the one that makes them feel better about themselves after the purchase is over.
I feel that the IP market selects its winners very quickly. It indexes the players according to the quality of the products, the stability of the company, and the overall customer experience. Winners will command higher prices for this value and soon find themselves on the top shelf.
