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Standards As A Competitive Arena

Standards As A Competitive Arena. October 27, 2003. Sources of Communications and Technology Standards. Pre-design discussions to ensure consistent implementation of shared technology ( rare) Formal decisions by an official standards group (ISO model--tends to be very slow)

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Standards As A Competitive Arena

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  1. Standards As A Competitive Arena October 27, 2003

  2. Sources of Communications and Technology Standards • Pre-design discussions to ensure consistent implementation of shared technology (rare) • Formal decisions by an official standards group (ISO model--tends to be very slow) • Parallel open implementation and voluntary consensus around standards in practice • Internet model • Proprietary solution comes to dominate and becomes de facto standard (vendor model)

  3. International Standards Organizations • ISO (International Standards Organization) is the core standards organization - www.iso.ch • each nation has a member body • in the US it is ANSI (American National Standards Institute) - www.ansi.org • use of the standards is written into law and guides governmental buying as well as technical and product development in many industries

  4. International Standards Organizations Telecommunications • International Telecommunication Union -www.itu.int • agency of the United Nations • sponsor of the World Radiocommunication Conference (WRC) • IMT-2000 is a standard that unifies spectrum for all mobile communications worldwide

  5. National and International Bodies Industry Associations Consortiums, Forums, Alliances Companies, Corporations The Standards Food Chain Standards Specifications

  6. What Factors Drive Standards Adoption • Need for buy-in by critical mass of technology providers, vendors, and customers (ADSL --high speed telecom technology) • Perception and reality of global marketplace and connectivity requirements (3G mobile phones) • Mass marketplace acceptance (Internet) • Lack of viable alternatives by current leaders • Genuine spirit of cooperation

  7. What Undermines Standards • Rapid pace of technical breakthroughs and adoption cycles • Length of time required to discuss and come to consensus around any consistent approach or solution • Deliberate blocking by key stakeholders to protect financial or competitive interests • Availability of several comparable and competing technologies

  8. Benefits of Standards • Opens the field to more providers and typically expands the market/customer base • Accelerates technical advances because more developers are motivated to adopt and develop for a standards-based platform • Makes life easier and cheaper for consumers • Provides interoperability between product generations and geographic locations

  9. So Why Not Just Standardize Everything? • Biggest advantage goes to companies that can develop and patent/protect certain technologies or solutions and then get them adopted as standards • Strong vested interests/investments in a variety of existing proprietary technology • Interest in protecting domestic markets or national distinctiveness

  10. Standards Competition in Practice • Third Generation Wireless • W-CDMA vs. CDMA2000 • What if the best technology doesn’t win? • Windows on every desktop, every server AND every mobile phone? • Microsoft competitors don’t want THOSE standards • Role of Open Source technology • Internet and WWW • Linux

  11. Standards versus Patents

  12. Patent Growth: A Look at the Numbers • 10 year history of utility patent applications and patents granted by the US Patent Office • Leading patent applicants by corporation • Percentage of international patent applicants

  13. Patented By IBM • IBM’s annual patent-licensing royalties rose 3,300% -from $30 million in 1990 to nearly $1 billion by 1999 • This $ 1 billion per year represents one-ninth of IBM's annual pretax profits. • To match that net revenue stream, IBM would have to sell roughly $20 billion worth of additional products each year, or an amount equal to one-fourth its worldwide sales. • Many other IT companies are now trying to replicate IBM’s patent strategy

  14. The Intellectual Property (IP) Decision Grid Standardize Dangerous Middle Ground: No Clear Business Model... Buy Sell Protect

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