Are you curious as to why some technologies and products that embody superior technology fail in the marketplace, so that you can participate in products that have both good technology and are successful? Are you interested in why the industry increasingly revolves around consortia like W3C, OMG, IETF, etc? Are you curious as to why there is a battle being waged between Microsoft and "everybody else", and the government is even getting involved? Would you like a better understanding of the industry structure and operation, so that you can operate more effectively within it? Would you like to develop an understanding of strategies and tactics to cope with standardization, industry consortia and collaboration, and competition? Would you like to collaborate with a cross-disciplinary group of students to address such these issues? Come join us for CS 294-3, EE290X, BA296-11, and SIMS 290-2 this spring.
Today the design of successful products in the computing and communications industry has to take into account many non-technical as well as technical factors. In industry and its technologies are affected by many crosscurrents, such as standards, industry consortia, economics factors that are peculiar to these industries, the management of intellectual property, etc. Any successful product must complete in an industry where a number of complementary products have to interoperate to provide value to the customer. Increasingly design effort stresses less core infrastructure and more applications, where an understanding of the user needs and where the application fit with complementary and competitive products is the key to success or failure. Overall these non-technical issues are, along with the technology itself, major considerations in product strategies and success.
Scope: Industries addressing both applications and infrastructure, software and hardware, for computing, networking, and especially networked computing.
Time: MW 9:30-11, 202 South Hall (new electronic flexlab), 3 units
Format: Primarily instructor lecturing and instructor-led class discussion, also a few outside speakers from the Berkeley faculty and from industry.
Grading: Weekly homework and WWW exploration, group project, quizzes, takehome midterm and final.
Instructors: H. Varian (Economics, Business, and Dean of SIMS), D. Messerschmitt (software and networking, former Chair of EECS), D. Hodges (semiconductors, design, and equipment, EECS and former Dean of Engineering)
The industry structure consists of many types of suppliers and customers, including products and services, software and hardware, applications and infrastructure. The industry is moving away from large vertically integrated suppliers to a fragmented structure with many more specialized suppliers coordinating themselves through open interface standards, consortia, technology alliances, etc. The merger of the telecommunications, networking, and computing industry, results in massive changes to both industries. Whole new industries are emerging around enterprise applications and electronic commerce.
Examples: PC, desktop software, CORBA/DCOM and Java, intranet applications, semiconductor (catalog and asic) and design industries, enterprise resource applications, business process reengineering, electronic business
The economics of software and information content involve large economies of scale through low cost of reproduction. The result is a need for unusual market strategies, including value pricing and versioning. Semiconductor design and manufacturing faces unique challenges of large capital investments, international competition, and government support.
Examples: Selling WWW content, software applications, semiconductors, complementary software and hardware
A large number of complementary products must interoperate for successful applications in network computing. The result is that both customers and suppliers experience lock-in to existing products and solutions. Many products in this industry have the characteristic that they offer more value as more people adopt them (network externalities), resulting in positive feedback that rewards successful products and punishes unsuccessful ones. Together, these effects result in winner-take-all effects, and draw the attention of the antitrust enforcers. Much of the current industry structure demonstrates the imprint of these effects.
Examples: Microsoft vs. the rest of the software industry, legacy databases, Internet telephony and other networked applications, broadband access to the Internet
Because no one company provides a complete solution, and many software and equipment products must interoperate to achieve a successful application, industry coordination mechanisms like standardization, alliances and consortia are increasingly important. Individual companies face difficult decisions as to proprietary technology vs open, de facto, and de jure standards. In view of winner-take-all effects, waging standardization battles are critical to success, and require special strategies.
Examples: Java, OMG, IETF, MPEG, CORBA/DCOM, semiconductor design systems
Copyright laws enable software developers and content producers to maintain ownership and control of their products, and patents allow companies to prevent others from copying their innovative ideas. Managing intellectual property is a key strategic issue for companies, with many contradictory considerations. Networks and digitization introduce many new challenges for information suppliers, with the need for revisiting the laws as well as new technologies like trusted systems. The patenting of software is a major issue for the industry and government. Often industry cooperation and standardization run directly counter to enforcing patent protection.
Examples: Postscript, Java, MPEG, integrated circuits
Government-sanctioned monopolies and regulation have been a fixture of the telecommunications industry for many years. There are many issues relating to the winner-take-all effects in this industry, and the balance between free enterprise, regulation, and anti-trust laws is difficult to manage. Government national security and law enforcement concerns have led to major tension with the software industry over security and encryption. Companies must keep in mind these issues in setting their strategic direction.
Examples: Windows 95, crypto policy, local telephone competition and broadband Internet access
Most real-world industry initiatives involve some mix of the issues above. Some broad case studies will be used to study the inter-relationship of these issues.
Examples: Electronic commerce, smartcards, middleware, semiconductors and design systems, Internet telephony, broadband Internet access, network computer