We’ve been living in a bundled world. ESPN packaged with Nickelodeon, healthcare tied to employers, learning wrapped up in colleges and degree programs. We’ve grown up surrounded by so many bundled products and services that it’s easy to become blind to the flexibility and value presented by unbundling.
Bundling can occur for a couple of reasons. One scenario is when companies try to force consumers to buy something they don’t really want by packaging it with something they do — like albums that only contain one good song. But bundling can make sense when transaction costs for individual products or services (monetary or otherwise) are too high to justify buying those products separately.
As Internet-based technologies reduce transactional inefficiencies, we have new opportunities to abandon unnecessary bundling in favor of choice and flexibility. We’re seeing this disruptive effect everywhere — from entertainment to work to enterprise technology.
Consider television; instead of shelling out for bloated cable packages, we can now handpick just the channels, just the shows, or even just the individual episodes we want. This year, we will reach a key inflection point where the number of cable television subscribers is eclipsed by the number of Internet subscribers, supporting the notion that, when given a choice, consumers prefer à la carte options.
Unbundling is also changing something very personal: the way we manage our health. In the past, losing your job usually meant losing your health insurance, but the trend of medical care unbundling from employers is clear. As this occurs, patients, rather than employers, are becoming the customers, and healthcare is morphing to resemble a consumer service — giving individuals more choice and more control.
Higher education offers a bundle of different value propositions — tuition, housing, athletics and so on — for one large comprehensive fee. But à la carte education presents a viable alternative to the traditional, and extremely expensive, college experience by streamlining learning without the cost of a full degree program. Both Khan Academy and General Assembly only require students to commit to a course at a time. Harvard and Yale now offer online certifications, suggesting that even top institutions see the value of unbundled learning.
From Monoliths to Microservices — Smaller Is Better
Unbundling is reshaping the tech world too, dismantling monolithic structures into smaller, more agile and innovative units. At a macro level, we’re in the early stages of a great unbundling taking place within technology companies. eBay and PayPal have amicably parted ways. Dell went private to be more nimble and aggressive, while Symantec split into two public companies.
In turn, this large-scale decoupling influences unbundling at much more granular levels in the enterprise, a trend that is proving critical in addressing the problems caused by the aging codebases and clunky software architecture. The difficulty maintaining legacy technology means that companies have accumulated vast amounts of technical debt, making it harder for talented developers to do their jobs, and stifling innovation as a result.
For massive enterprises, unbundling represents a key countermeasure against inertia and stagnation, as well as a valuable strategy to battle more agile competitors — innovative startups who aren’t bogged down by the same legacy technical debt and the engineering bureaucracy that comes with it.
Every Company Is a Tech Company
We’re seeing real, tangible value in breaking down monolithic architectures across different industries. For the consumer, unbundling is all about flexibility and choice — only paying for the products and services you actually want. But for the enterprise, unbundling is a key driver of innovation.
The reality is that today, every company is a technology company. No matter what your business is, technology is either giving an advantage to you or to your competitors. By moving away from macro-services and unwieldy legacy tech, enterprises can be as nimble and responsive as startups.