1. Timetable 20.9. Introduction, Sakari Luukkainen
27.9. Solution Business, Case Sun Microsystems, Topi Talonen
4.10. Market Dynamics of Telecom Industry, Sakari Luukkainen
Standardization Strategy, Sakari Luukkainen
Case GSM, Sakari Luukkainen
R & D Management, Sakari Luukkainen
1.11. Linking Business Thinking with Research, Teppo Paavola
8.11. Product Strategy, Sakari Luukkainen
Platform Leadership, Sakari Luukkainen
Case Nokia Symbian Product Platforms, Lea Lahti
29.11 Technology Foresight, Sakari Luukkainen
Examination
© Sakari Luukkainen

2. Content Cooperation and Compatibility (Varian chapter 8)
Waging a Standards War (Varian chapter 9)
Information policy (Varian chapter 10)
Case ERMES paging system standardization
© Sakari Luukkainen

3. Generic Network Strategies
Control Openness
Compatibility Controlled Open
migration migration
Performance Performance Discontinuity
play
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4. Cooperation and Compatibility
Expanded network externalities
Reduced uncertainty
Reduced consumer lock-in
Competition for the market vs in the market
Competition on price vs features
Competition to offer proprietary extensions
Component vs systems competition
© Sakari Luukkainen

5. Who wins and who loses from standards?
Consumers
Complementors
Incumbents
Innovators
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6. Standard setting organizations
International Telecommunications Union (ITU)
Instititute of Electric and Electronic Engineers (IEEE)
Telecommunications Industry Association (TIA)
European Telecommunications Standards Institute (ETSI)
The Internet Engineering Task Force (IETF)
3rd Generation Partnership Project (3GPP)
Open Mobile Alliance (OMA)
Liberty Alliance
World Wide Web Consortium (W3C)
© Sakari Luukkainen

7. Tactics in standard setting
Do not automatically participate
Keep up your momentum
Look for logrolling opprtunities
Be creative about cutting deals
Beware of vague promises
Search carefully for blocking patents
Consider building an installed base preemptively
© Sakari Luukkainen

8. Building alliances – relative advantage
Time-to-market
Manufacturing cost
Brand
Edge in development
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9. Building alliances Assembling allies Interconnection among allies
Negotiating a truce
Cases of Ethernet, Postscirpt, PDF, ActiveX
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10. Standard war
When two incompatible technologies struggle to become a de facto standard
These wars may end in
- truce (56 k modems)
- duopoly (video games)
- fight to death (VCRs)
© Sakari Luukkainen

11. Classification of standard wars
Rival Technology
Your Technology Compatible Incompatible
Compatible Rival evolutions Evolutions vs revolution
(DVD vs Divx, (Lotus vs Excel, dBaseIV
56k modem, Unix) vs Paradox)
Incompatible Revolution vs evol Rival evolutions
(Nintendo 64 vs PS, Netscape vs Explorer)
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12. Key Assets in Standards War
Control over installed base of customers
IPR
Ability to innovate
First mover advantage
Manufacturing abilities
Complementary products
Brand
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13. Tactics in standard wars
Preemption
Expectations management
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14. After winning Staying on your guard
Commoditizing complementary products
Competing with your own installed base
Protecting your position
Leveraging installed base
Staying ahead
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15. After losing Adapters and interconnection Survival pricing
Legal approaches
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16. Competition policy Priciples Implications for strategy
Mergers and joint ventures
Co-operative standard setting
Single-firm conduct
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17. Direct government intervention
Achieving critical mass
Universal service
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18. Case ERMES (Enhanced Radio Message System)
ETSI standard for high-speed paging (6250 bit/s) was introduced in the beginning of 1990´s
Legacy systems based on Pocsag radio interface (512,1200, 2400 bit/s)
ITU recommended global status
Open, coordinated and consensus-based technical standardisation driven first by big operators (BT, FT, Telefonica…), no licence, 7 open interfaces
From manufactures participated early Tecnomen, Motorola and Ericsson, later Glenayre
VHF band in 169 MHZ, increased capacity per channel, roaming, type approval, many access methods, value added services e.g. true group messaging
© Sakari Luukkainen

19. Case ERMES
after de-facto standard FLEX was introduced cooperation changed quickly to standard war – evolution vs. revolution
using FLEX required licence payment
two way FLEX and ERMES
US companies had large and advanced paging domestic market (low mobile penetration) and succeeded also in FLEX promotion in Asia
European PTT´s started to invest in small ERMES pilot networks by running parallel Pocsag, larger networks by new operators
ERMES was also promoted in Asia, success only in the middle east
Tecnomen was market leader in ERMES infrastructure, efficient open migration product strategy, influence to the standardized interfaces
© Sakari Luukkainen

20. Case ERMES
Motorola was market leader of paging terminals, ERMES terminals were more expensive and larger than in Pocsag, no economies of scale
Introduction of CPP (Calling Party Pays, no fixed subscriber fee) service in mid 90´s increased subscriber base parallel with massive marketing campaigns, but did not create long term traffic and revenue for operators
SMS started to influence as a substitute service, virtuos cycle of GSM/SMS
No critical mass reached, no further investments in infrastructure expansion or pager R&D, paging into vicious cycle
Currently most european operators have discontinued their paging service
© Sakari Luukkainen

21. Conclusions
Market and committee based mechanisms – strong standardization culture differences between USA and Europe
Success requires economies of scale and network externalities – leveraging domestic markets parallel with early setting of global objectives
Market aspects for new services have to be considered early in the standardization process: enduser real needs, threat of substitutes, service / terminal pricing and availability, system life cycle, network roll-out strategy
Modular open system architecture, scalability, open service platforms
The role of governments in the creation of global standards
© Sakari Luukkainen