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Why Product Necessity & User Dependency Matter in Competitive Analysis

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Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.

 KEYPOINTS

🔑 Companies with mission-critical products or strong risk-mitigation capabilities tend to enjoy more durable demand and pricing power.

🔑 High habitual convenience and frequent user interaction create behavioral lock-in, even when products aren’t strictly “essential.”

🔑 True competitive strength often comes from customer dependency, not just market share or short-term growth metrics.

In competitive analysis, investors often focus on market share, pricing, and competitors. But one of the most underappreciated questions is far more fundamental:

How necessary is this company’s product in a customer’s life or operations - and how hard is it to live without it?

Companies with high Product Necessity & User Dependency tend to:

  • Retain customers more easily

  • Exhibit stronger pricing power

  • Recover faster during downturns

  • Suffer less disruption from new entrants


This is why, in my investment checklist, I explicitly evaluate whether a company’s products or services score highly on one (or more) of the following dimensions:


The Four Pillars of Product Necessity

  1. Product Necessity / Mission Criticality

    • Is the product indispensable to business operations (B2B) or daily life (B2C)?

    • If removed, would customers face severe disruption?

  2. Strong Pain-Point Solution or Risk Mitigation

    • Does the product prevent costly outcomes, stress, inefficiencies, or risks?

    • Would customers actively feel pain if the service disappeared?

  3. Addictive Utility / Habitual Convenience (B2C-focused)

    • Is the product psychologically sticky or deeply ingrained in routines?

    • Does it become the default choice without conscious decision-making?

  4. High Frequency of Use or Interaction

    • Are users engaging daily, weekly, or continuously in the background?

    • Frequency strengthens dependence, even if switching costs are low.

A company does not need to score highly on all four.But the strongest businesses usually dominate at least one, often two.

B2C Case Studies: Habit, Convenience, and Daily Dependency

i) Meta

Meta’s products (Facebook, Instagram, WhatsApp) are not mission-critical in a traditional sense.Yet Meta ranks among the most user-dependent companies in the world.

Why?

  • Extremely high frequency of use (multiple times daily)

  • Powerful addictive utility through social validation, content feeds, and messaging

  • Embedded into communication, social identity, and entertainment

Even without solving a “hard” problem, Meta’s platforms are psychologically indispensable for billions of users - a form of competitive strength that is difficult to replicate.

ii) Uber

Uber solves a real-world pain point: on-demand mobility and logistics.

Why Uber scores highly:

  • Strong pain-point resolution (transport availability, time savings, reliability)

  • High habitual convenience - once adopted, users default to it

  • Frequent usage for commuting, travel, and food delivery

Uber isn’t infrastructure-level critical like electricity or semiconductors - but in dense cities, it becomes functionally essential to daily life, especially for users without cars.

B2B Case Studies: Mission Criticality Over “Addiction”


i) Alphabet

Alphabet is a rare case where both B2C and B2B necessity coexist.

  • Google Search: near-universal daily usage, foundational to information access

  • Android & Chrome: embedded infrastructure for billions of devices

  • Google Cloud (GCP): mission-critical workloads for enterprises

Alphabet’s strength is not emotional addiction alone - it is structural dependency.Many businesses and individuals simply cannot function efficiently without its tools.



ii) Microsoft

Microsoft exemplifies enterprise mission criticality.

Products like:

  • Microsoft 365 (Outlook, Excel, Teams)

  • Azure Cloud

  • Enterprise software & infrastructure

…are deeply embedded into workflows.


Key insight:B2B software does not need to be addictive. It only needs to be too costly, risky, or disruptive to remove.


Once Microsoft becomes the backbone of communication, data, and operations, switching is no longer a casual decision - it becomes a strategic risk.


Investor Takeaway

When evaluating a company’s competitive position, ask:

  • Would customers panic if this product disappeared tomorrow?

  • Does it prevent meaningful downside risks?

  • Has it become a default habit rather than a conscious choice?

  • How frequently do users interact with it?


Companies with high Product Necessity & User Dependency often enjoy:

  • More durable demand

  • Stronger moats than surface-level competition suggests

  • Better downside protection in volatile markets


This checklist helps separate “nice-to-have” businesses from those that are truly embedded in daily life or operations - a crucial distinction for long-term investors.



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