standards: microsoft, netscape- is there a third way?

Are there any examples where someone created a broadly deployed standard and did not in time become either MS (high, expensive barriers to entry to use/support the standard, hence hated but wealthy) or Netscape (low barriers to entry, hence loved but dead?) I really can’t think of any, but I’d love to know of any examples out there. Not just software; could be hardware, or really any network effect.

I ask because I firmly believe open standards are a net societal good, but it seems to me that traditional capitalist economic incentives may fail to create this particular good, and I’m interested in what kinds of tweaks might be necessary (or not) to see this happen, while maintaining the best of the competitive, entrepreneurial tech industry.

(I’ve actually turned on comments for once; lets see how spammed they get :)

13 thoughts on “standards: microsoft, netscape- is there a third way?”

  1. I wouldn’t say loved, but the broadly deployed standard of gasoline/petroleum has allowed for a competitive (though sometimes cartel like) environment where there are multiple suppliers of what is essentially the same end product. However there are various business models built up around it. There is self service and full service, gas stations which act as a variety of convenience stores, mechanical services etc.

    On the IT side I think Sun has achieved something similar with Java in that there is basically no margin in the provision of the end product (the JRE) but there is a whole competitive industry built around systems that run Java apps, multiple development environments (eclipse and netbeans), training services, applicaton development companies etc.

    I am hoping the same thing happens around the Gnome UI (with Moz OOo et al) with HAL so that the end user has a fairly consistent experience irrespective of the underlying kernel (Linux, BSD, OpenSolaris). The hardware developers can compete on fat vs thin and functionality deployments, training organisations do their thing, commecial app developers can deliver function via the browser

  2. (X)HTML? Granted, some companies tried to “hijack” it with proprietary extensions that still causes a lot of incomtatibility headaches, but finally it prevailed as an open standard and now it’s getting back to it’s roots–being a document markup language instead of a pretty website styling language. Hmm? :)


  3. How about all the “real” standards out there – the M system for screws and bolts, for instance; the GSM cellular standard; or the ISO/DIN standard for paper sizes? They were developed by “nobody in particular” – a working group of a government backed org – either with nobody with decision power having an important horse in that particular race, or with the standards effort undeway only once competing interests realized the benefits of cooperation on the issue.

    Common to these is a semi-neutral third party organization to steer the process, an organization with direct or indirect teeth in the form of heavy regulatory and/or purchasing power. Such an organization, incidentally, also removes quite a bit of the risks for any one company to push for a given standard over the competition.

  4. XML & prolly some other w3c standards.

    Check out metalink (XML based) for file distribution. It’s not widely deployed yet, but there are about 6 programs that support it so far.

  5. Sure: the various “standards groups”. IEEE-754 floating point numbers are almost universal. Unicode. ASCII. Most hardware standards (USB, 802.11whatever…). The list goes on.

    In practise these tend to be a small group of experts from a group of interested parties who get together to try and make life easier for themselves. 90% of the time the standard disappears into oblivion – usually because the standard doesn’t actually make life easier for anybody.

    It’s not exactly an entrepreneurial system, and that shows at times, but when everyone actually works towards a common goal (rather than e.g. trying to make sure their IP is mandated) it seems to work out.

  6. MIDI.. still used decades after release. A fine example of an industry cooperating for the greater good. Ok, MIDI is a slow serial protocol which drives people nuts in these days of sample-accurate sync (btw.. SOLVED for the software case now that JACK has MIDI), but every keyboard/sound module still has MIDI.

  7. There is a difference between the standards that are created by a consortium of several companies or by an official standardization body (ISO, ANSI, IEEE, IETF, W3C, …) and the ones that start as a de-facto standard promoted by a single company.

    In the first category, there are plenty of examples of relatively open and free standards that worked well. But I assume that Luis is more interested in the second category.

    Maybe the GIF format could be a good example? Promoted by a single company (CompuServe) before becoming so widespread (if we ignore the Unisys patent issues).

  8. there’s a nice article on different approaches to standards-setting in the US and Europe, in the edited collection “Varieties of Capitalism” (can’t remember the author). Basically the US tends to have standards set by a bunch of firms, while (surprise) the Europeans tend to develop standards bodies and do it in a more regulatory way.

  9. Here’s a few examples:

    TCP/IP – no-one got rich, went broke.

    NFS – from Sun, well managed standard, set free, but protected, Sun didn’t get rich off it

    The IDE or SCSI busses – no idea who came up with these, but unlikely to have become MS or Netscape.

    And, as someone said, all those standards out there that we use every day but never think about – standard gauge railways, standard tyre connections on car axles, standard nut & bolt sizes.

    Standards typically come about because you have two complementary industries interconnecting – the car manufacturer wants to make sure any tyres can be put on his care, the tyre manufacturer wants to make sure the consumer can use his tyres with any car.

    In the case of the web, the interchange is between web servers and web clients – but neither are really a good example of the type of competition you get among tool-makers or bathroom fitting manufacturers. For software, there isn’t the healthy competition of several operating systems, so all the manufacturers just make sure they work with the most used one. If there were 10 competing OSes, we would see a lot more standards in how hardware interracts with the operating system, because neither OS developers nor hardware manufacturers would want to multiply their efforts to support all hardware.

  10. Initially, I wanted to suggest some of the examples others already posted: metrc standards, left-side vs right-side traffic, power supply standards, etc. But since you have many of those, two additional remarks, just slighly related to the initial question.

    First, any true standard is a public good: You cannot exclude one from using it, and there’s no rivelness. As such, it suffers from a free-rider problem, and thus nobody acting economically (max u(x) s.t c

  11. Oops, cut off! Here’s the rest:

    f(x)) has an incentive to provide a public good. Thus, your conclusion (“a traditional capitalists system is inferior for providing a public good”) is neither a surprise nor new.

    However, you seem to be looking at situation where the inventor can exclude people from using a ‘standard’, thereby making it a club good. Again, it’s no surprise that anybody acting economically will turn a public good into a club good if he can. Otherwise, the free-rider problem will soon make him a poor inventor (assuming no price differentiation).

    Second, what you fail to provide is an argument why a public good is superior to a club good. You just seem to assume this by writing “open standards are a net societal good”.

    So, it might be worth thinking the other way, too: How many volunteer projects were indeed successful in creating an open standard? IIRC, many of the Open Source ones were just fighting eachother; in the best tradition of engineers who disagree what’s the best technical solution althought the economy might be better off with only one solution. Think office formats (Koffice vs. GOffice), KDE vs. GNOME, etc. If you’re looking at it this way, it might be useful to also examine whether a closed standard is inferior to no standard.

    Btw, since you asked for “tweaks”: The wikipedia page about public goods show a number of proposed solutions in the literature.

    I wasn’t sure whether I understood you correctly, so please excuse if you’ve already thought about the things I mentioned but just didn’t post them here.

  12. It seems to me that Netscape didn’t disappear because they created a standard, but because they were competing with MS and lost (obviously it is not that simple, courts have ruled that MS acted illegally etc. but even in the complex version I don’t understand how you attribute their demise to a standard).

    Redhat (along with many other Linux distributers) has been involved in the creation of many standards (e.g. defacto standards) and they’re still profitable. I guess that most successful open standards are not directly attributable to a single company and therefore it’s hard to ask whether the company that created them is still profitable.

    It will be interesting to see whether Sun can make money with StarOffice now that OO and the ODF standard that it spawned is gaining traction in the market.

    (P.S. Spam Karma 2 fixed my WP spam problems with amazing efficiency)

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