The Universal Stylus Initiative - markets and complementary products

This week, Google have added their name and support to the Universal Stylus Initiative (USI) - a group of major tech companies attempting to get everyone to adopt a universal set of protocols when creating the styluses used to interact with tablets and touch-screen computers.

Currently, there is no standard hardware specifications for a stylus in the same way that, say, USB ports or Bluetooth connectivity have become universally developed for most modern devices. What's interesting about the USI, however, is that there are some firms who are definitely avoiding a universal approach. Apple, Microsoft and Samsung, who have the lions share of the markets in tablets, smartphones and touch-screen computers, have not signed up to the USI and continue to develop their own styluses and ensure that their own devices can not be used effectively with third party hardware.

One reason for this could be that the use of styluses remains fairly niche - they're used by some businesses and individuals as a direct replacement for pens to create artwork or designs digitally rather than on paper. The keyboard and mouse remains the most significant form of interaction for computers and smartphones primarily use the 'pressing' of a button, icon or link for interaction. There isn't a huge demand for universal styluses in the same way that people now expect to be able to transfer data (e.g. through a USB stick or wirelessly). Fewer people are making decisions about which tablet or laptop to purchase based upon stylus-style interactivity (although Microsoft's Surface laptop does use this interactivity as a major part of its marketing). It also allows these firms to charge a premium price for a stylus that works effectively with the mother device.

As such, styluses are an example for economics students of goods that may be classed as complementary to hardware such as tablets but with a very small (less than 1) negative value for cross elasticity of demand. A change in price for the stylus may impact upon its demand but it will have very little impact on the demand for the tablet.