Business Models

While reading about WiMAX (technology I am working on currently), I came upon many posts which said that one major factor favoring Sprint is that it is open to embracing an open business model unlike traditional cellular companies which embrace a closed walled business model. This led me to do a little Googling and find out what these business models are.

Closed Business Model:

You buy a product at a discounted price and you sign a deal that you would use that product for at-least some time during which the company would recover much more than the discounted amount. For ex. For ex. I buy a Mobile connection from a company where I get a SIM for Rs. 1000 and a number. If after 6 months I find company is NOT GOOD, I cannot SWITCH easily as I have given the number to almost everyone. Cool for them but I AM STUCK.

Open Business Model:

You buy a product at a price from the market with no strings attached. You are free to go anywhere, as and when you desire. For ex. I buy a Mobile connection from a company where I get a SIM for Rs. 1000 and a number. If after 6 months I find company is NOT GOOD and other companies support NUMBER PORTABILITY, then I can go to a vendor whom I find is good. Cool for me as I AM NOT STUCK.

Open Business Model is the best for customers. They owe their allegiance to anyone who provides the best services according to them and encourages COMPETITION. It gives them the freedom to try out different options before freezing their likes and dislikes. I would hate it if a company told me before recruiting me that I would need to sign a bond to stay with it for 2 years. Chey......... They are themselves laying the foundation for me to resign sooner than later!