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Key Matchups in the Open System vs. Closed System Game

March Madness, i.e. tournament season in U.S. men’s college basketball, may be over but as a native cheesehead, I am still reeling over Wisconsin’s loss in the championship game to Duke [pause for booing here]. What’s even worse is that until the last few seconds, I was convinced that my Badgers had a chance. Why? Because Wisconsin was winning a key match up; national player of the year Frank Kaminsky was making freshman phenom Jahlil Okafor look phenomenally average. But alas… Duke won by five.

Withdrawal from college basketball has me looking for key match ups in other contests. Take team Open System verses team Closed System. While open system devices have been available for a few years now, second generation devices with closed, capsule-like e-juice tanks are now hitting convenience store shelves. As well, companies like NJOY and Haus who have previously only sold cig-a-likes are now selling open systems in mainstream retail channels. These changes have set the stage for another classic contest.

In the coming months the key match up that I’ll be watching is NJOY’s vape pen vs. Logic Pro in the c-store channel. Logic Pro, a closed system, is the newer kid on the block. But the advantages of a closed system are that they’re easier to refill (just replace the tank) and they won’t leak like an open system device. As well, c-stores are not ideally suited to sell open systems because conventional wisdom says that they are harder to use and require more hand holding for new customers. Thus conventional wisdom would have us predict that Logic Pro would dominate in the c-store. But if NJOY can sell devices and juices in this low-touch environment, then I believe this is an indicator that “mainstream” consumers (picture the baby boomer who wouldn’t be caught dead in a vape shop) are accepting of open systems.

If NJOY can be competitive in this match up, then they and other open systems brands may just change the game. Evidence that open systems have a place in the approximately 150,000 U.S. c-stores, and thus the mainstream, might draw economic interest from other brands and maybe even change the public perception of these devices from toxic fume makers to viable reduced-risk products.

Like any good rivalry the open system versus closed system contest features two teams with different styles and strategies. Open systems allow users to put any e-juice from any brand in the tank, giving a platform to a variety of juice makers from ultra-premium brands through to bathtub mixes that attract the ire of anyone interested in quality; the blessing and curse of freedom. One could argue, though, that this business model allows for increased consumer choice and thus, satisfaction. And keep in mind that open systems have driven growth of the entire vape market recently.

On the other hand, closed-systems users are restricted to e-juices sold by the device maker and thus they employee the razor-razor blade business model. While this might encourage repeat purchase, it might also alienate consumers who are looking for choice.

The obvious flaw in my analogy is that Kaminsky won the match up but Wisconsin lost the game. To that I say, thank goodness that the open vs. closed contest is not a zero sum game; the winner does not necessarily take all. If NJOY and Logic Pro can both capture sizable market share, then there may be room for closed and open systems in the mainstream because well… different strokes for different folks. 

Stay tuned for more updates.