Technology Standards: letting the consumer decide?

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Description

Standards are specifications that determine the compatibility of different products. Companies develop specification for new technologies in the hope to build new products that can be sold to consumers.
Another way to gain revenue is buy selling licenses to other companies who can implement the specification into their products so that their product is compatible with the original equipment manufacturer(OEM). Most companies strive to gain a lot from setting standards, it gives them power in the market and enough revenue to develop new standards and better products.

Consumers play a large role in the success or failure of a standard, but it is not left to chance that the consumer decides which standard to adopt and which to let go. It depends on the kind of strategy the company uses to convince the consumers about their standard.
Another key role is set aside for other supporting companies that support the standard and adopt it into their own products and therefore create a bigger bases to promote the new standard.

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Inhibitors

  • Patents
  • Law Suits
  • Government regulations
  • Consumer acceptance
  • Competitors

Paradigms

On the one hand standards have there use, the make it easy for a lot of companies to produce the same products where the media can be interchanged by everyone. On the other hand companies rival each other till one standard becomes the winner or a combination is developed to incorporate in different devices.
In the game console industry standards are made with each new console. Interoperatibility is only possible with older models of one company's game console. Does the consumer really decide what standard a company should adopt? Not in a long shot, but standards are what make companies different from each other.

Experts

  • Stango, Victor (2004) The Economics of Standards Wars
  • Varian, Hal R. (1998) Standard wars

Timing

Standards are not new for us, although it's also a phenomenon of the last couple of decades. Before that standards were developed and than mass produced by all the companies. Some of the standards that can be distinguished are the radio and television.
The first real standard war started in the 1980s when the different video standards were introduced, of course everyone knows the VHS standard overcame all its competitors but still didn't really posses the superior quality over its competitors, like betamax did.
After that most of the standards where set in the music industry, where as the DAT tape, minidisc and DCC are some examples of the products that didn't survive. The Compact Disc (CD) was widely accepted as the standard to exchange music.
In the digital era, the Digital Versatile Disc (DVD) was accepted as being the best medium to carry movies and other video content, whereas the Laserdisc standard was never widely accepted mainly because of it size comparable with a LP. Recordable DVD brought a new fight between major companies one group came with the DVD-RAM standard where other came with DVD+R and DVD-R, eventually the last two became interoperatible.
Nowadays one of the biggest wars is between the use of the Blue-Ray standard or the HD-DVD where both standards have big companies supporting them.

Web Resources