Who benefits from standards?

Vendors want proprietary differentiation, which generates higher margins. Technology development is expensive and everyone understands the financial rules for expense amortization or write-off. Once the status of a standard is achieved (through technology and/or marketing leadership, or timing) other vendors will simply be required to conform - giving the clear advantage to the owner, or consortium, that controls the standard.

Rules for Open Systems

• Rule 1 : Licensing the technology. This may be through up-front fees for technology transfer, or per-copy sales of ASIC chips, hardware, software or firmware.

• Rule 2 : Making everything open and free, to expand involvement. The developer is far ahead on the learning curve and followers contribute to the leaders leadership.

• Rule 3 : Introducing "free" open technology to combat the entrenched position of a dominant market leader.

Industry examples

Everyone recognizes that Allen-Bradley (Rockwell) had the developers advantage when they made DeviceNet (and then ControlNet) "open". It is abundantly clear to all the members of the Open DeviceNet Vendors Association (ODVA) that the vast majority of sales of DeviceNet products are from A-B. Other "followers" of the standard, like Cutler-Hammer (who hired one of the original A-B developers of DeviceNet) had hoped to wrest leadership away from A-B through enhancing the standard. But, they simply poured their development and marketing dollars away till they recognized the futility of the exercise. It is almost impossible to unseat a market-leader through following.

The A-B strategy in making DeviceNet "open" follows a combination of all three of the rules. They allowed other vendors to purchase or license their hardware, software and firmware (rule 1); they expanded involvement through gaining a bunch of followers, all eager to find new ways of connecting to the vast A-B installed base of PLCs and controls (rule 2); and, A-B was combating the encroachment of Profibus DP and Interbus into their US backyard (rule 3).

Some think that there is another rule - submitting to user demands. The story goes that General Motors demanded that A-B make ControlNet "open" before they would use it. And A-B did just that - they made it "open" - and allowed GM to think that they were acquiescing to their demand. But, A-B was simply following the 3 rules, as they did for DeviceNet. To use ControlNet, you almost certainly need to purchase A-B ASICs and toolkits. Sure you can buy something vaguely similar from SST or other hotshot developers, but that is simply paying A-B through the backdoor (Rule 2).

Other famous "open" battles

There are several similar examples in the vast growth of the PC business - Unix and Windows; PC/AT bus and IBM PS/2; Novell and NT networks; EtherNet and ARCnet. Remember WordStar and then WordPerfect playing a losing battle against Microsoft Word and Excel? Well now, Scott McNealy has announced that Sun will be giving away their office suite to combat the entrenchment of Microsoft Office. Would you like to bet who will win that marketing battle?

Exceptions?

For your homework - see if you can trace which of the 3 rules are being used in each of the marketing battles in your own business. To lighten your burden, someone can perhaps give us a tune for this little ditty:

Industrial networks bring lots of gains But that brings with it lots of games The fieldbus wars cause a lot of fuss The Users want an Open bus The products made by Vendor A With Vendor B must plug-and-play The Vendors simply can’t agree To make a fieldbus cheap, or free The committees they just twist and turn They argue out and then adjourn De facto standards win all debates Ask Microsoft and Mr Gates.