The art of standards wars

California Management Review

Volumn , Issue 2, 1999, Pages 8-32

  Shapiro, Carl ^a   Varian, Hal R ^a  

^a NONE

Author keywords

[No Author keywords available]

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EID: 0033465403     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41165984     Document Type: Article

References (19)

1. For a lengthy discussion of railroad gauge standardization, see Amy Friedlander, Emerging Infrastructure: The Growth of Railroads (Reston, VA: Corporation for National Research Initiatives, 1995).
2. For further details on the Battle of the Systems, see Julie Ann Bunn and Paul David, "The Economics of Gateway Technologies and Network Evolution: Lessons from Electricity Supply History," Information Economics and Policy, 3/2 (1988).
3. In this context, Edison's efforts can be seen as an attempt to prevent or delay tipping towards AC, perhaps to obtain the most money in selling his DC interests.
4. A very nice recounting of the color television story can be found in David Fisher and Marshall Fisher, "The Color War," Invention & Technology, 3/3 (1997). See, also, Joseph Farrell and Carl Shapiro, "Standard Setting in High-Definition Television," Brookings Papers on Economic Activity: Microeconomics (1992).
5. A very nice recounting of the color television story can be found in David Fisher and Marshall Fisher, "The Color War," Invention & Technology, 3/3 (1997). See, also, Joseph Farrell and Carl Shapiro, "Standard Setting in High-Definition Television," Brookings Papers on Economic Activity: Microeconomics (1992).
6. For color TV to truly offer value to viewers, it was not enough to get set manufacturers and networks to agree on a standard; they had to produce sets that performed well at reasonable cost, they had to create compelling content, and they had to induce broadcasters to invest in transmission gear. The technology was just not ready for the mass market in 1953, much less 1950. Interestingly, the Europeans, by waiting another decade before the adoption of PAL and SECAM, ended up with a better system. The same leapfrogging is now taking place in reverse: the digital HDTV system being adopted in the U.S. is superior to the system selected years before by the Japanese.
7. For a fuller discussion of positive feedback, network effects, and network externalities, see Chapter 7 of Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy (Boston, MA: Harvard Business School Press, 1998). See, also, Michael Katz and Carl Shapiro, "Systems Competition and Network Effects," Journal of Economic Perspectives, 8/2 (1994); Brian Arthur, Increasing Returns and Path Dependence in the Economy (Ann Arbor, MI: University of Michigan Press, 1994).
8. For a fuller discussion of positive feedback, network effects, and network externalities, see Chapter 7 of Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy (Boston, MA: Harvard Business School Press, 1998). See, also, Michael Katz and Carl Shapiro, "Systems Competition and Network Effects," Journal of Economic Perspectives, 8/2 (1994); Brian Arthur, Increasing Returns and Path Dependence in the Economy (Ann Arbor, MI: University of Michigan Press, 1994).
9. For a fuller discussion of positive feedback, network effects, and network externalities, see Chapter 7 of Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy (Boston, MA: Harvard Business School Press, 1998). See, also, Michael Katz and Carl Shapiro, "Systems Competition and Network Effects," Journal of Economic Perspectives, 8/2 (1994); Brian Arthur, Increasing Returns and Path Dependence in the Economy (Ann Arbor, MI: University of Michigan Press, 1994).
10. We recognize, indeed emphasize, that building an alliance of customers, suppliers, and complementors to support one technology over another in a standards battle can be the single most important tactic in such a struggle. We explore alliances and cooperative strategies to achieve compatibility separately in Chapter 8 of Information Rules [Shapiro and Varian, op. cit.]. See, also, David B. Yoffie, "Competing in the Age of Digital Convergence," California Management Review, 38/4 (1996).
11. We recognize, indeed emphasize, that building an alliance of customers, suppliers, and complementors to support one technology over another in a standards battle can be the single most important tactic in such a struggle. We explore alliances and cooperative strategies to achieve compatibility separately in Chapter 8 of Information Rules [Shapiro and Varian, op. cit.]. See, also, David B. Yoffie, "Competing in the Age of Digital Convergence," California Management Review, 38/4 (1996).
12. For a discussion of the antitrust treatment of standards, see the Federal Trade Commission Staff Report, Competition Policy in the New High-Tech, Global Marketplace, Chapter 9, "Networks and Standards"; Joel Klein, "Cross-Licensing and Antitrust Law," 1997, available at www.usdoj.gov/atr/public/speeches/1123.htm; Carl Shapiro, "Antitrust in Network Industries," 1996, available at www.usdoj.gov/atr/public/speeches/shapir.mar; Carl Shapiro, "Setting Compatibility Standards: Cooperation or Collusion?" Working Paper, University of California, Berkeley, 1998.
13. For a discussion of the antitrust treatment of standards, see the Federal Trade Commission Staff Report, Competition Policy in the New High-Tech, Global Marketplace, Chapter 9, "Networks and Standards"; Joel Klein, "Cross-Licensing and Antitrust Law," 1997, available at www.usdoj.gov/atr/public/speeches/1123.htm; Carl Shapiro, "Antitrust in Network Industries," 1996, available at www.usdoj.gov/atr/public/speeches/shapir.mar; Carl Shapiro, "Setting Compatibility Standards: Cooperation or Collusion?" Working Paper, University of California, Berkeley, 1998.
14. For a discussion of the antitrust treatment of standards, see the Federal Trade Commission Staff Report, Competition Policy in the New High-Tech, Global Marketplace, Chapter 9, "Networks and Standards"; Joel Klein, "Cross-Licensing and Antitrust Law," 1997, available at www.usdoj.gov/atr/public/speeches/1123.htm; Carl Shapiro, "Antitrust in Network Industries," 1996, available at www.usdoj.gov/atr/public/speeches/shapir.mar; Carl Shapiro, "Setting Compatibility Standards: Cooperation or Collusion?" Working Paper, University of California, Berkeley, 1998.
15. For a discussion of the antitrust treatment of standards, see the Federal Trade Commission Staff Report, Competition Policy in the New High-Tech, Global Marketplace, Chapter 9, "Networks and Standards"; Joel Klein, "Cross-Licensing and Antitrust Law," 1997, available at www.usdoj.gov/atr/public/speeches/1123.htm; Carl Shapiro, "Antitrust in Network Industries," 1996, available at www.usdoj.gov/atr/public/speeches/shapir.mar; Carl Shapiro, "Setting Compatibility Standards: Cooperation or Collusion?" Working Paper, University of California, Berkeley, 1998.
16. We cannot explore cooperation and compatibility tactics in any depth here. We discuss tactics for participation in formal standard setting in Chapter 8 of Information Rules [Shapiro and Varian, op. cit.].
17. Even these companies have had losers, too, such as Microsoft's Bob, Intel's original Celeron chip, and Sun's 386 platform. Credibility and brand name recognition without allies and a sound product are not enough.
18. Manufacturers do the same thing when they pay "slotting allowances" to supermarkets for shelf space by checking that their products are actually displayed where they are supposed to be displayed.
19. Indeed, the strategy has been so successful that some have amended the name to "Embrace, Extend and Eliminate."