Business, Legal & Accounting Glossary
A commitment by a lender guaranteeing a specified interest rate for a specified period of time. also called rate lock.
Lock-in, or vendor lock-in, results in customer dependency on a particular vendor for the availability of specific products (goods or services). In a lock-in situation, switching over to a different vendor would mean a significant increase in costs. Lock-in prevents a market barrier to entry. This may lead to antitrust action against the producer enjoying a monopoly. Examples of products that experience a lock-in situation include cameras, automobiles, and SIM locking.
Lock-in situations can also be created by offering loyalty programs. For instance, frequent flyer programs offered by different airlines can ensure that member passengers do not opt for flights offered by its competitors. Even points offered by a credit card company can make a customer perceive an extra financial loss if a switch is made to a rival credit card company. Vendor lock-in is a common feature within the computer and electronics industry. Vaporware is a vendor lock-in technique used by popular software companies.
The interchangeable lens of cameras is a good example of a vendor lock-in situation. Many camera manufacturers hold patent rights over the mechanism by which lenses are attached to cameras. As long as patent rights exist for a camera manufacturer, a monopolistic situation is created for the sale of the lens.
Vaporware is a technique which entails the announcement of products that are scheduled to be launched sometime in the future. Advertisements are launched announcing plans for development of a certain product. This technique is more commonly used by famous software companies.
Vendor lock-in is quite rampant in the software industry. Many popular software companies create a lock-in situation for their products by creating file formats that make it difficult to change data into other formats. Use of free software can help in countering vendor lock-in situation induced by software companies.
rate lock
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This glossary post was last updated: 20th November, 2021 | 0 Views.