Thursday, June 30, 2005

Web services market - wide open for open source

The current push by big players in the software world to create and/or control the emerging SOA or WebServices market via MetaStandard standardisation seems to be a tactic learned from the producers of consumer electronics. The consumer electronics markets are managed, technology is presented in an orderly, even evolutionary manner. Revolutionary innovation is kept from the masses until the existing markets are saturated, the innovation is then rolled out across the board. (Ok, it is not that bad, antitrust guidelines prevent it getting too much like collusion, see Carl Shapiro's standards paper for a nice discussion of the issues.)
It makes good sense, the market is huge; the pie is big enough for all the players and the customers like the illusion of choice. Sure there are exceptions once in a while but in the main, there is order.
I imagine it works like this, the major players share much of their R+D. They decide and standardize in advance, the technologies that they will support and license from each other. They publish the standards (to ensure the network effect), market, manufacture and release the products, continue R+D and repeat the process.
In consumer electronics, this model works because the capital costs required to develop, manufacture and distribute a new product are real barriers to entry. The R+D embodied in the standards is very hard to reproduce by some one outside the club.

In software, much of this is turned on it's head. The value of software is in the design. Good design takes experience, domain knowledge and skill. Once the design is embodied in code, the R+D job is mostly complete. The costs associated with manufacturing and distribution are close to zero. Marketing too, can be very cost effective with the web amplifying the word of mouth effect.

The emerging specifications for WebServices are very close to design, this is part of the nature of software and part of the nature of an interoperability specification. By standardisation, the "men in black" are creating a market but they are also designing a solution, one that is very easy to replicate.

Why then, are they taking control of the standardisation process?
Is is simply because they realize that the end game is domain knowledge and customisation or are they just ensuring that the market gains momentum fast, a rising tide to lift all boats (and hence their super tankers)?

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