Chapter 8. THE ART OF STANDARDS WARS

Carl Shapiro and Hal R. Varian

Standards wars – battles for market dominance between incompatible technologies – are a fixture of the information age. Based on our study of historical standards wars, we have identified several generic strategies, along with a number of winning tactics, to help companies fighting today's – and tomorrow's – battles.

There is no doubt about the significance of standards battles in today's economy. Public attention is currently focused on the Browser War between Microsoft and Netscape (oops, America OnLine). Even as Judge Jackson evaluates the legality of Microsoft's tactics in the Browser War, the Audio and Video Streaming Battle is heating up between Microsoft and RealNetworks over software to deliver audio and video over the Internet. The 56k Modem War of 1997 pitted 3Com against Rockwell and Lucent-Microsoft's Word and Excel have vanquished WordPerfect and Lotus 1-2-3 respectively. Most everyone remembers the Video-Cassette Recorder Duel of the 1980s, in which Matsushita's VHS format triumphed over Sony's Betamax format. However, few recall how Philips's digital compact cassette and Sony's minidisk format both flopped in the early 1990s. This year, it's DVD versus Divx in the battle to replace both VCRs and CDs.

Virtually every high-tech company has some role to play in these battles, perhaps as a primary combatant, more likely as a member of a coalition or alliance supporting one side, and certainly as a customer ...

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