Standards, Business and Growth.

Strange as it may seem, once upon a time IBM sold scales and other useful things a retailer might want to have. Over the years the focus of the company changed to adopt new technologies, including large computers. A problem soon arose in that each version of the hardware used it's own unique software and nothing was really reusable. This affected not only IBM but all the other players in that market. IBM then took a punt... they decided to standardise and generalise the systems and offer a range that to all intents and purposes would be interchangeable. Buyers could start with a small system and swap it out for a bigger one as their needs grew while still protecting the investment they had already made in developing programs for the small system. The market loved the concept and pretty soon IBM was the biggest player around.

But while the IBM systems were standardised and protected the customers investment, it was IBM's standard. IBM owned it and controlled it and the other industry players couldn't get a look in. While it could be argued that this is just capitalism and the market operating at it's finest, the reality was that the cost of entry into that market was beyond the reach of almost everyone. Pretty soon there wasn't any real competition in that space and the prices of the systems grew accordingly, as did the profits.

And then IBM was convicted in the US of anti-trust violations under the Sherman Act. It is notable at this point that this conviction did not kill the company. There were however a number of remedies that were placed on IBM. One of these was that the hardware and software interfaces (API's if you will) were to be published so that others could implement them. IBM of course "protected the stakeholder investement to the full extent of the law" but it this information was duly published and suddenly all sorts of systems and peripherals appeared in the market. It got to the point where you could power off an IBM mainframe, unplug it, plug in a competitors mainframe, power it up and everything would work just as before. Literally plug compatible. And it didn't stop there. You could write programs for a completely different architecture and as long as you spoke to the IBM system in the prescribed manner, stuff worked.

And strangely, the overall market started to grow again, and with it IBM's share.

It also helped that IBM made some mistakes. The assumption that IBM was unassailable in the market was one. Another was that PC's were only a fad and real work could only be done with a mainframe. IBM did very nearly collapse in the early 1990's but it was a result of these assumptions that drove that near failure, not the remedies from the anti trust case.

In order to recover and survive some major changes in IBM policy were made. It had been noted that companies like SAP, Seibel and others would not partner with IBM on joint solutions because IBM would then try to muscle the deal and shut them out. A core policy was formed that IBM would not compete with it's customers or business partners. As a result of this a number of divisions and software units got sold off and IBM concentrated on hardware and software "plumbing" and services delivery while leaving the actual applications to the customer.

The overall market started to grow again, and again with it grew IBM's share.

There were still mistakes to be made. Token Ring networks and the Systems Network Architecture are, even today, technically elegant solutions for example but the market chose other methodologies.

And then IBM got a clue. Open Standards and Open Source. True, from a legal perspective some Open Source applications still give IBM lawyers conniptions (just who is Debian for example) but Open Standards? There is value there.

So IBM uses Open Standards wherever possible. This allows IBM and everyone else to compete on their merits on a level playing field. There are some markets where IBM just cannot compete but they are due to the size of the market rather than any technical restrictions or artificial restrains of trade.

What IBM and others have found is that with agreed, unencumbered base standards, business and opportunities grow. The encumberance itself can take many forms. It might be a license fee, an IP issue (or threat) or even just the amount of conformance required. What does occur over time is that given a choice of standards, the less encumbered standard is the one that gets used by the industry.

And every time the new, unencumbered standard takes hold, the overall market grows...

So, how about it Microsoft? We can see from the IBM experience that being a convicted monopolist in the US doesn't actually kill you and that if you take the time to participate in the market rather than control it you just might find your business has a future... just like everyone else's.