Editorial

Idea-Center or Cost-Center

Donald G. Perrin

Technology is a major driver for change and paradigm shifts in business, industry, government, and education. Each responds differently to change. Business is concerned with profits and market share; Industry on production cost and quality; Government on regulation and human services; and Education on ideas and social impact. Collaboration between these four areas (BIGE) facilitates change; philosophical differences are impediments to the change process.

An innovation that benefits one group may be detrimental to another. The development of civilization is largely due to “survival of the fittest” whether in health and physique, language, warfare, trade, productivity, systems of government, politics, economics, education, intellect, or some combination of these. Tensions caused by innovation can be destructive; they can also afford opportunities for alternative changes that bypass or replace the roadblock.

Academia is a crucible in which ideas are developed, tested, and propagated. Business and industry are more concerned with practical applications, marketing and sales. Sometimes there is collaboration with academia and sometimes they compete. Government’s role is to stimulate collaboration when it is in the national interest and to arbitrate on infractions or differences. At the end of the day, all of these groups are dependent on each other.

Technology has made piracy a way of life for individuals and nations who otherwise could not afford or have access to the benefits of that technology, and also for the greedy. Traditional methods of control such as legal action or making the product “copy proof” have had little affect. In some instances technology and innovative business practices provided a solution. For example, mass marketing of movies on videotape reduced the cost so low that piracy was less attractive. Competition between video rental and cable television expanded markets and reduced cost. Extraordinarily low rental cost for DVDs, now facilitated by mail exchange, makes ownership or piracy even less attractive. Similarly, Internet delivery of films to theatre screens or home theatre further reduces cost, improves security, technical quality and service and stimulates consumption.

The Internet facilitated sharing of music at an unprecedented level through NAPSTER and similar services. A successful legal action against NAPSTER and individuals had little impact. It was eventually recognized that NAPSTER had pioneered a new business model. The Apple IPod emerged and was tremendously successful. It made music accessible and portable so people could listen to their favorites at any time anywhere. Again it was based on low cost and delivery via the internet. But the public wanted more – higher quality, and ability to copy to other devices. On April 2, 2007, Steve Jobs announced a change that will affect the entire music industry:

EMI Music’s entire digital catalog of music will be available for purchase DRM-free (without digital rights management) from the iTunes® Store (www.itunes.com) worldwide in May. DRM-free tracks from EMI will be offered at higher quality 256 kbps AAC encoding . . . customers will have the ability to download tracks from their favorite EMI artists without any usage restrictions that limit the types of devices or number of computers. . . Purchased songs can (now) be played on …  iPods, Mac® or Windows computers, Apple TVs and soon iPhones, as well as many other digital music players.

The iTunes Store features the world’s largest catalog with over five million songs, 350 television shows and over 400 movies. The iTunes Store has sold over two billion songs, 50 million TV shows and over 1.3 million movies, making it the world’s most popular online music, TV and movie store. http://www.apple.com/pr/library/2007/04/02itunes.html

The lead-article this month is about open source software. In my recent visit to Australia I was surprised to find computer software from American companies such as Microsoft and Adobe was notable for its absence in many institutions of higher learning. Compared to the United States, the cost of these products was greatly out of proportion to personal income and academic budgets. There was obvious resentment against these highly profitable companies and tremendous interest in development of open-source software.

Apple computer made major inroads into academic markets in its early days by providing extensive services and price breaks for academia, which was a major stimulant to customer loyalty and future business. Microsoft realized that academia and its graduates needed major incentives to adopt Microsoft products, and in 1997-98 initiated a program priced so low that it would ensure Microsoft was a dominant force in education and training in the United States.

As suggested earlier, the greatest benefits of technology result when BIGE - business, industry, government, and education – collaborate. Open source is not necessarily in competition with commercial development, as the following example illustrates:

Linux and IBM have partnered to drive the open standards revolution, moving business beyond the limits of proprietary software and hardware solutions. The entire IBM Systems product line is Linux enabled, making it easy for any size business to take advantage of the power of open standards.
And because Linux is an open operating system it benefits from a broad developer base, making it one of the fastest growing operating systems in the world. To simplify your business even further, Linux supports greater and growing interoperability between diverse software and hardware technologies, which leads to a reduction in IT management costs.                    http://www-03.ibm.com/systems/browse/linux/