Standards Wars - PowerPoint PPT Presentation

About This Presentation
Title:

Standards Wars

Description:

Not much of a direct network effect since they all interconnect ... Ericsson (TDMA) has AT&T, SBC , Bellsouth. Qualcom (CDMA) has Bell Atlantic, US West, etc ... – PowerPoint PPT presentation

Number of Views:250
Avg rating:3.0/5.0
Slides: 20
Provided by: halva
Category:

less

Transcript and Presenter's Notes

Title: Standards Wars


1
Standards Wars
  • Hal R. Varian

2
Examples
  • Historic
  • RR gauges
  • Edison v. Westinghouse
  • NBC v. CBS in color TV
  • Recent
  • 3Com v. Rockwell/Lucent
  • Microsoft HTML v Netscape HTML
  • Writeable DVDs
  • AOL et al Instant Messaging

3
Classification of Wars
4
Examples
  • Rival evolution
  • VCRs (Sony/Betamax)
  • Video games
  • Rival revolutions
  • IRC v IM
  • Evolution v. Revolution
  • Windows 98 v. BeOS

5
Historical standards
  • Cost side standardization
  • Auto parts standardization c. 1910
  • Risk avoidance for suppliers
  • Economies of scale for manufacturers
  • Lack of interest on part of Ford/GM
  • Role of SAE

6
Recent Standards Wars
  • AM stereo
  • Auto industry invested, radio didnt
  • Digital wireless phones (1998)
  • Europe GSM
  • US GSM, TDMA (cousin of GSM), CDMA
  • TDMA 5 million
  • CDMA 2.5 million
  • GSM 1 million
  • Not much of a direct network effect since they
    all interconnect through the PST

7
Standards Wars
  • Ericsson (TDMA) has ATT, SBC , Bellsouth
  • Qualcom (CDMA) has Bell Atlantic, US West, etc
  • Performance play strategy
  • How big are the network externalities?
  • Geographic scope
  • Investment is sunk, systems already interconnect

8
Standards Wars, contd.
  • 56K modems
  • US Robotics x2 attempted preemption
  • Rockwell/Lucent K56 Flex
  • Expectations management, switching costs
  • Settled Dec 97 estimated then would triple size
    of market

9
Current standards
  • Educational software (Fred B)
  • XML
  • XML1.1 (W3). Issues unicode, backward
    compatibility
  • CBL, FXML, LegalXML,MML,MathML (see oasis.org)S
  • DVDs (4.7 gigs)
  • DVD-RAM plain data, written over, not movies
  • DVD-RW works for video, need to be erased
  • DVDRW written over, like big floppy
  • Blu-Ray DVD (27 gigs!)s
  • Hollywoods rearguard action

10
Key Assets
  • Control over an installed base
  • Intellectual property rights
  • Ability to innovate
  • First-mover advantages
  • Manufacturing
  • Strength in complements
  • Reputation and brand name

11
Two Basic Tactics
  • Preemption
  • Build installed base early
  • But watch out for rapid technological progress!
  • Expectations management
  • Manage expectations
  • But watch out for vaporware!

12
Once Youve Won
  • Stay on guard
  • Minitel
  • Offer a migration path (Apple/Intel)
  • Commoditize complementary products
  • Intel
  • Competing against your own installed base
  • Intel again
  • Durable goods monopoly

13
Once Youve Won, contd.
  • Attract important complementors
  • Leverage installed base
  • Expand network geographically
  • Stay a leader
  • Develop proprietary extensions

14
What if You Fall Behind?
  • Adapters and interconnection
  • Wordperfect
  • Borland v. Lotus
  • Translators, etc
  • Survival pricing
  • Hard to pull off
  • Different from penetration pricing
  • Legal approaches
  • Sun v. Microsoft

15
Microsoft v. Netscape
  • Rival evolutions
  • Low switching costs
  • Small network externalites
  • Strategies
  • Preemption
  • Penetration pricing
  • Expectations management
  • Alliances

16
Standards setting process?
  • Disclosure of relevant IP
  • But who enforces?
  • If IP exists and is incorporated into standard,
    under what terms is it licensed?
  • W3C RAND
  • IETF Royalty Free -gt RAND
  • What if there is misrepresentation?
  • FTC-Dell case

17
Policy issues
  • FTC subsequent complaints
  • Rambus failure to disclose in JDEC meeting
  • Sun-Kingston case
  • Stronger disclosure rules chilling effect? Or
    weaker ruleschilling effect?

18
Lessons
  • Understand the type of war
  • Rival evolution
  • Rival revolution
  • Revolution v Evolution
  • Strength depends on 7 critical assets
  • Preemption is a critical tactic
  • Expectations management is critical

19
Lessons, continued
  • When youve won the war, dont rest easy
  • If you fall behind, avoid survival pricing
Write a Comment
User Comments (0)
About PowerShow.com