Category: Economy

Regulator’s dilemma

Latest Economist summarizes elegantly the problem of the regulator:

The tempting answer is to try to wriggle free from the dilemma with a compromise that would permit innovation but exert just enough control to squeeze out financial failure. It is a nice idea; but it is a fantasy… They are paid less than those they oversee. They know less, they may be less able, they think like the financial herd, and they are shackled by politics. In an open economy, business can escape a regulatory squeeze in one country by skipping offshore. Once a bubble is inflating many factors conspire to discourage a regulator from pricking it.

The article talks about financial markets. I’d say the same applies to almost any markets where the regulator has a major role. Take for example intellectual property or consumer protection.

Why commodity computing is a socialist fad

Some two days ago I started to read Nick Carr’s (an American IT-guru of “IT doesn’t matter” -fame) article on FT. It’s excerpt from his new book Big Switch. I guess you don’t have to buy the book to get his argument. It was actually already present in IT doesn’t matter: the commodification of computing and especially software.

The argument is not new and I have never understood it. The first time I saw it was maybe in early 1991 when I received the first subscribed copy of Tietokone-magazine, the local computer magazine aimed at PC enthusiasts and professionals. On the cover there was a bunch of monitors and keyboards but the central units were notoriously missing. The claim was that this is the future of computing. WTF?! These fucking dumb “clients”?! I remember I almost canceled my order right away. I just knew that this claim was so wrong. And even if it would have been to the right direction I definitely hoped that this bad omen would never materialize.

But now we are at it again, just in a bit different form. I did have problems with Carr before but now that I read his latest work I understood he’s just another John Dvorak. Carr’s problem are analogies that sound nice but do not work in practice at all. His most prominent analogy is to compare software with electricity. Yeah, hundred years ago or so electricity became commodity. Some companies disappeared. And – Carr says – the same is now happening to software. Microsoft is disappearing. Software is becoming commodity like Gmail and Gaps, or whatever they are called. Right?

I say Carr mixes up the Internet with software applications without understanding their basic differences. Internet is commodity, correct. It’s like public roads. But most software applications are not commodity. My software applications are like my car, they are stand-alone engines fed by my over-powered personal computer. I don’t use Google’s apps, and I won’t. I know this is costing the society resources but so are all those millions private cars not running at the moment (or run by just the driver). I’m not taking collective traffic because it simply does not deliver. End of argument. Socialism failed, and so did Nick Carr.

Nokia v. Apple

There’s a lot of fuss about mobile platforms at the moment. You have Apple, Google, Nokia and Microsoft (in alphabetical order) throwing in their bets. Here’s my 5 cents.

First off, I see the game as Nokia v. Apple, the market leader against the most interesting entrant in years. Google has so far nothing and Microsoft is simply not interesting.

Second, I see the critical difference to be the openness of the platform. Be careful with the official double-talk. Apple wins hands down. They are already years away from Nokia. Here’s why:

  1. It’s the same proved unix you learned in the school, not some obscure Symbian with flavors
  2. It’s the same proved open source tools you learned in the school, not some obscure proprietary Nokia development-toy-kit
  3. It’s full root access to read-write-execute anything, not some obscure Nokia-limited access to the core system with minimum-hundred-of-bucks-year Nokia application signing

Just look at the community evolving around iPhone. No Apple support at all. Still, there are nice easy-to-use installers and hundreds of useful applications to fix what Apple left out (or did not have time or resources to include). I had perhaps one external application (C64 emulator) on my previous Communicator, mainly for testing and demo purposes. Now I have several, and all in relevant use.

You want a good example of open developer-lead innovation, look at iPhone. It lives on because that’s the nature of the community. It does not need Apple, or any other big brother, for that matter. You want a good example of a company-pumped artificial “developer ecosystem”, look at Symbian. Without Nokia, it dies.

As a Finn, I can only hope that Nokia would finally adopt their Linux-experiment (used so far only in the N800 tablet) into their latest phones. That would mean some serious investment in openness. I don’t actually see much options for them now. Opening up Symbian wouldn’t mean anything. It’s a technological dead-end.

Update 23.11: I learned from a student who sells handsets in one of the major malls in the Helsinki region that during the last six months just one customer bought an N800 and another once asked it. She sells about 20 handsets every day, half of them being the N95. Some have even asked for an iPhone even though it has been available only in the United States. – Another student noted that he had been trying to “develop” out of curiosity a hello-world application to his Nokia phone with Nokia’s tools for two days without success.

Commission v Microsoft 6-0

The long-awaited judgment in the Microsoft case came out an hour ago. It’s 160 pages on my printer. Quick analysis says this complex case was decided “according to what the prosecutor claims.” Among the highlights:

  1. The mere holding of any type of intellectual property right or trade secret is not an “objective justification” to deny the provision of any information
  2. Non-disclosure of interoperability information would cause negative effects on the incentives to innovate – Microsoft only presented “vague, general and theoretical arguments on that point” (para 698)
  3. “…standardisation may effectively present certain advantages, it cannot be allowed to be imposed unilaterally by an undertaking in a dominant position…” (para 1152)
  4. “Microsoft does not show that the integration of Windows Media Player in Windows creates technical efficiencies”(para 1159)