"Hi, we are the standards brothers; Lenny, Lenny, and Lenny", said the three country buffoons that had just appeared in his room,
"We are what's happin'n now!"
Scrooge had a feeling he was going to be confused, as he looked at the triplets.
"I'm the advocate for formal standards," said one, "Too much overhead, lets form a new consortium," said the second, "No point, I will give away my product, and create a defacto standard before you can even hold a meeting." said the third, who immediately handed a CD-ROM to Scrooge in a shrink wrap binding with a label that said, "you will forfeit your soul to eternal damnation if you do not obey the following legal gibberish which you agree to by having read this label." "Gotcha," said number three.
"Come on fellows," responded an exasperated Scrooge. "Today life is simple, we buy PC's, with Intel chips from any number of manufacturers, and run Windows systems, Bill has shown us the way to satisfy customers, and make lots of money at the same time."
At the mention of Gates name, the three Lenny's struck a pose, one with hands over eyes, one over ears, the other with hands cupped around his mouth, and saying "Gotcha".
"Even Bill has a big investment in formal standards," replied Lenny (probably #1), "His language business, except for Basic, is quite dependent on standards. He can't get all those old applications over to his systems without them. Curiously enough, he isn't that interested in standards that might move applications off his systems to others. But he's taken a real interest in the Internet, now that can't be all that bad."
"Intel is a great example of using consortia to obtain what you need," continued Lenny (probability of #2 being 80%), "They have driven bus standards, I/O interface standards, all sorts of good things that makes selling patented, single source chips easier. The ideal world, standards that add value to your unique advantage. When they moved into the board business, they made it that much easier for the next level suppliers to ship the latest generation product that much sooner."
"I seem to recall joining one of those consortia," responded Scrooge. "They had something about relinquishing all patent rights. It bothered me a bit, but what could we say? We wanted to play in the game, and they made the rules."
"Well, most companies prefer to use patents when they have the right to do so," responded Lenny (# uncertain), "As we say, when we gotcha by the laws, your hearts and minds will follow."
"Tell you what," responded another Lenny, "Why don't you two go over there and decide if we should use a consortia or a formal SDO to get the next project done; Scrooge and I have some business to cook up." He then turned to Scrooge. "See, the only real way to get things done is to do them yourself. You want market share, then go for it. Dilly-dallying with your competitors to water down your ideas while they steal them isn't a wise move. Look at Sony with Beta video tape, a clear win, better stuff, and selling like hot cakes. Then these crazy VHS folks start getting in the picture, see, these are competitors, come up with something they will all build, get the movie folks to deliver on that format, while they are all off building boxes. Where does that get them? Sure the market increases by a factor of 100 when every town has a rental place, but the profits on the machines goes to hell in a hand-basket. Lets face it, do you want 60% margins, on thousands of machines; or 20% margins on millions of machines? "
"I think I may need my laptop to get a good picture of the difference," responded Scrooge. He tries to turn on his computer, only to find a set of 16 switches with lights above them along the side where the "1-0" on switch had previously been, a sticker across the screen said "MarleySafe protection, just enter your 16 bit password code in the switches to turn on system."
"Na, it's not a question of money, its a question of control! It's like the Tickle-me-Elmo folks said, 'if you've got the dolls, the customers hearts and minds will follow. Once you get control, then you get money. That's why you can give away software, because once the competition is gone, you have what we call 'a unique opportunity for re-positioning your product up market'
"But, if we establish formal standards," started Lenny (#1, no doubt), "we can get the much larger market, folks have confidence in buying. A bloom of secondary markets are created, like the retail outlets with the video tape. Then the market for the player technology expands, and so forth. The key is getting consumers to perceive the value of the standards, it's a question of education and, to say the dirty word, marketing."
"Hold on, why would I market standards!," responded Scrooge, "Market something that all my competitors have, cause if they don't it's not really a standard!"
"Because it helps you clarify your real value added. If you can say you conform to a set of standards for example VHS video tape, then you can focus the buyer on what is different about your product"
"Then some damn fool is going to suggest we standardize that, and there is no end to it."
"Right, if your value-added is sufficient to be required in the market, others will supply similar capabilities, consumers will get confused, delay purchasing, and we will need standards to move completely beyond that bump."
"I can stop em with patents!"
"Perhaps, no one said VHS was better than Beta, only that it was standard. It's rare when you can block a market with patents. That's why Grace suggested the reasonable fee, open licensing of patents associated with standards, you get a bit back from each competitor, and a lot back from the larger market."
"Hold on again," responded Scrooge, "Whether I go formal or consortia, I've got to get the buyer to recognize the standards, understand the value they bring, and then describe my value added on top of that. And, if there are third parties, like software or content suppliers, I've got to do the same with them. And, to make that standard, I've got to get my competitors into a similar state of mind, looking at a ten times larger market in a few years rather than how to get a bit of market share this next quarter?"
"Yes!" exclaimed two of the Lennys.
At this point a fourth, much larger, Lenny showed up, not fully, just a see-though image. "I'm from the government, and I'm here to help you." it said, and faded out.
"Huh? Who?" asked Scrooge.
"Oh him, he's been downsized. He used to work for the government, you know, the single largest buyer of computers; when they said they would buy something by the standards, they often did. When a user gets big enough, they can influence the standards a lot. Of course if other consumers understand that, they may join in. He still claims to have friends in high places, the FCC, for example, where standards start to get real teeth, congress, where the Telecommunications Bill talks about accredited Standards bodies as if they really existed, OMB circular 119a that gets caught in the same trap."
"I don't think I want him getting involved," Scrooge lamented, "I thought we got rid of him by pointing out that industry could do all of this themselves."
"If we can get competitors, buyers, content suppliers all to understand the value of doing standards, it helps to have a home that folks recognize for that," said Lenny (#1, probability 90%)
"Of course the government doesn't have any incentive to try to impose standards, after all, it's just the cost of doing the business of government, delivering healthcare, and providing quality education that's at stake. It's not like folks are parading in the streets calling on congress to fix computer interoperability problems, or establish a competitive market for information infrastructure."
"Gotcha", said the Lenny's in unison.
Stooge reached over to pick up the phone, found a device with three speaker/microphone type receptacles, and a set of instructions, which if he understood the alphabet, he'd realize were in Tibetan. He dropped it over the edge of the bed, pulled the pillow over his head, and tried to sleep.