Very often, we have products designed to offer a similar service that are unfortunately not compatible with one another. This was the case of records and CDs, and more recently, with devices to play video in VHS and DVD format.
Objectively, in these two examples, we can say that one of the technologies is clearly superior to the other. So if we have to choose between the two technologies with no prior conditioning factors, we would be in no doubt about which to use.
Due to complementarities, however, for those who used the outdated technology, the switch was very expensive at the time. Those with vinyl records who wanted to change to CDs had to first buy a CD player and then buy their records again on CD if they wanted to play them using the new technology.
In general, due to complementarities and network effects in the world of ICTs, switching from one version of a product to a different and incompatible one is expensive, to the point that we will possibly continue to use the old technology for a long time unless we consider the improvement in quality to be very significant.
Naturally, with computers and particularly with software, these switching costs can be significant. They include the costs of learning new programs when we are already used to a given version. This is the reason why programmers tend to make new programs that are similar in appearance and operation to the programs we are already familiar with.
Similar programs
The OpenOffice word processor mimics Microsoft Word, which, in turn, imitated an earlier program, WordPerfect, which did the same with WordStar (i.e. the most popular word processor of the time in each case); Microsoft Excel mimics Lotus 1-2-3, which, in turn, imitated a previous program, VisiCalc. And we could continue with many other examples.
Given the costs of switching from one product to another, if incompatibilities arise, consolidated companies with a solid customer base can be tempted to inflate these switching costs, making it harder for customers to switch products or suppliers.
Switching costs
Years back, when rival companies emerged, the old telephone monopolies tried to force their customers to change their telephone number if they wanted to switch suppliers (the idea was that customers would not want to incur the cost involved in communicating the change of number to everybody they knew).
Similarly, with software, consolidated companies are tempted to make their products incompatible with those of their rivals.