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This may, overall, be good.

The Madpenguin interview TFA starts by pointing out a study that indicates Copyright infringement may be good for Microsoft.

.... We found that in countries where piracy is highest, Linux has the lowest penetration rate. The model shows that Microsoft can use piracy as an effective tool to price discriminate, and that piracy may even result in higher profits to Microsoft!....

If you want to hurt the copyright cartels, obviously the best thing to do is discourage your friends from comitting copyright infringement and encourage them to by local and independently sourced music. and/or music or software that is under an open license. This also tends to result in more money staying in the local economy (good for you in the long run).

Just like Linux has forced Microsoft to produce better software, lower their pricing and even give at least lip service to 'open' (cough cough) standards, if your friends start ignoring content that is copy protected and going for stuff with permissive customer rights, then those companies are going to have to respond in kind to keep their market share.

What I liked about grokster was the peer-to-peer distribution network. What I disliked about it is that they openly encouraged copyright violation that effectively supported the mega-corps. This Supreme Court decision seems to open up the possibility of a peer to peer company that actually promotes independent music over the mass market pablum.

The thing is, at some point the value of the codebase is greater than the cost of giving up some of your rights in order to use it. When that happens then the GPL has a major, major advantage in that it creates a feedback loop.

This is laughable, but of course, it's been moderated up by /. knee-jerk meme replicators.

I don't think your "feedback loop" has any slight evidence of existing. In a recent economics paper here) "Harvard Business School professors Pankaj Ghemawat and Ramon Casadesus-Masanell (...) chose to explore the fundamental competitive dynamics question: Will OSS ever displace traditional software from its market leadership position? (...) Our main result is that in the absence of cost asymmetries and as long as Windows has a first-mover advantage (a larger installed base at time zero), Linux never displaces Windows of its leadership position."

Of course, you can say what you want, and if it pleases the Linux fanboys, you get modded up and your Karma explodes! Yay!

Also, read up on the commoditization of Linux and how it relates to IBM, HP, etc ("Smart companies try to commoditize their products' complements.") here

http://hbswk.hbs.edu/item.jhtml?id=4834&t=innovati on

For a propellerhead treatment of the question, there is this Hah-vahd link: http://hbsworkingknowledge.hbs.edu/item.jhtml?id=4 834&t=technology

Q: From your modelling, what can Microsoft do strategically to remain competitive against a product that is argued to be of better quality, is updated more frequently, and is free?

A: A few actions that the model suggests Microsoft could do to remain competitive are:

1. Increase its own demand-side learning.
1. Listen to the demands of the user community to better exploit the benefits of demand-side learning. Microsoft must facilitate communication between the user base and the company to have prompt feedback on the performance of its products.
2. Make an effort to incorporate improvements in the code (fix bugs and introduce new features) as soon as possible.
3. Reward those who propose improvements for the code. At the very least, Microsoft could publicly acknowledge those who proposed new features or discovered bugs.
2. Feed its direct and indirect network effects.
1. Support as much as possible the independent software vendor community so that the quantity and quality of complements is substantially above that of Linux.
2. Encourage competition between the different ISVs. The lower the prices of applications, the more appealing the Microsoft system will be.
3. Price discriminate. Give Windows and applications away to schools and universities so that users build their file libraries on Microsoft, not Linux.
3. Minimize the number of strategic buyers.
1. Let governments access the source code and give guarantees that sensitive data is treated confidentially.
2. Price discriminate. Give binary away to organizations and individuals who are not willing to spend money on Windows but who would be willing to use Linux because it is free.
4. Reduce costs to be able to sustain long periods of time with low prices.
5. Decrease Linux's demand-side learning.
1. Because the way to do this involves some questionable (from a legal point of view) actions, we will refrain from suggesting specifics.
6. Lessen Linux's direct and indirect network effects.
1. Make it as hard as possible for Windows applications to work on Linux.
2. Same for MS Office documents.
3. "Promote" Linux's code forking.
7. Infuse fear, uncertainty, and doubt into the Linux user community. For this to work, the statements must be perceived as credible. Credibility requires some past FUD announcements to be realized.
from: http://hbsworkingknowledge.hbs.edu/item.jhtml?id=4 834&t=technology

OK, shithead, please show me _one_ USA law that says a corporation _must_ "take any legal action that will maximise shareholder profit". You are talking out of your @ss. There are _no_ laws that force a publicly traded corp to do what you suggest. So get off your fairy-tale horse and stop beeing an @ss-hole.

Here you go

Don't mind the hippy sounding url, the article was first published in the January/February 2002 issue of Business Ethics and written by a corporate securities lawyer with 23 years experience.

The relevant passage would be

In short, the law creates corporate purpose. That purpose is to operate in the interests of shareholders. In Maine, where I live, this duty of directors is in Section 716 of the business corporation act, which reads:

...the directors and officers of a corporation shall exercise their powers and discharge their duties with a view to the interests of the corporation and of the shareholders....

Although the wording of this provision differs from jurisdiction to jurisdiction, its legal effect does not. This provision is the motive behind all corporate actions everywhere in the world. Distilled to its essence, it says that the people who run corporations have a legal duty to shareholders, and that duty is to make money. Failing this duty can leave directors and officers open to being sued by shareholders.

You can also find some more general background on the subject here. Harverd Business School reputable enough for you?

Oh, and what you were referring to, the giving of money for hurricane relief, is called instrumental corporate social responsibility. It is permitted if the CEO is able to demonstrate that the philanthropy generates increased shareholder value, generally through there being more value generated by the resulting public goodwill than was lost by the expenditure.

Wow, don't you look stupid now. Who was the dumb asshole again?

Here's an interesting article from the Harvard Business Review.

http://workingknowledge.hbs.edu/pubitem.jhtml?id=3 520&t=technology

Pretty much Nicholas Carr postulates that IT has become a commodity and that companies can't get compettitive advantage out of it, however he does note that managing a commodity badly can rapidly remove compettitive advantage. Therefore companies should be tight fisted with IT spending, follow not lead and focus on what could go wrong rather than looking to the future.

IT's rapidly becoming another utility, soon you'll pay by the Mb for web services! I guess our job will be just like that at the other utilities, make sure the stuff in the pipes or wires keeps flowing, be it data, gas or power!

Here's his new rules for IT managers...

Spend less. Studies show that the companies with the biggest IT investments rarely post the best financial results. As the commoditization of IT continues, the penalties for wasteful spending will only grow larger. It is getting much harder to achieve a competitive advantage through an IT investment, but it is getting much easier to put your business at a cost disadvantage.

Follow, don't lead. Moore's Law guarantees that the longer you wait to make an IT purchase, the more you'll get for your money. And waiting will decrease your risk of buying something technologically flawed or doomed to rapid obsolescence. In some cases, being on the cutting edge makes sense. But those cases are becoming rarer and rarer as IT capabilities become more homogenized.

Focus on vulnerabilities, not opportunities. It's unusual for a company to gain a competitive advantage through the distinctive use of a mature infrastructural technology, but even a brief disruption in the availability of the technology can be devastating. As corporations continue to cede control over their IT applications and networks to vendors and other third parties, the threats they face will proliferate. They need to prepare themselves for technical glitches, outages, and security breaches, shifting their attention from opportunities to vulnerabilities

1. if they are available as UMD-Rs (they could lock down the PSP to make the media open but the player closed/DRMed... to keep their medai wing happy)
2. if they price them right (both pre-loaded UMDs and UMD-Rs)

Anybody remember this? Dood has a great natural feel for products.

Email the Admissions Office and cc the school newspaper if you think these folks are getting a raw deal! (Just click the link and hit send).

If I read that my confidential information was publicly available on a website without my consent, I'd be angry and would check it out to see if it were true. If so, I'd ask the company hosting the website to remove my information. Is that unethical? I THINK NOT! Denying those 119 applicants admission to the business school on those grounds is wrong on so many levels!

We seek candidates who have the highest ethical standards

I was under the impression that business school applicants already have bachelor's degrees, and sometimes other advanced degrees. I don't think any of the people involved were 18 years old. Harvard Business School's admission requirements page lists "Self-reported transcripts from all undergraduate and graduate academic institutions attended (full- or part-time)". The implication of this and other statements is that you're expected to have prior degrees or work experience, or both. I doubt anyone is going to HBS right out of high school.

Just a clarification.

Ok - I swear I'm going to stop beating this dead horse after this one. That other idiot author -- Lerner -- it looks like he's been IP law for years TOO (I mean besides teaching about it). I mean look at the scholary journals publications since 1997!

http://www.people.hbs.edu/jlerner/publications.htm l

This guy may be writing the source material for when you go to law school. I'm just assuming that since you work in IP law, you must be an legal assistant or something (otherwise you would have been hitting me over the head with "I am a lawyer, neener neener!").

Anyhow, cheers. It seems like this one is pretty well covered. Jaffe and Lerner are not some slouchy IP know-nothings; You might even call them experts in their fields. You sure showed me with those 'expert wheat farmer' anologies.

they are legally required to put profits for their shareholders above all other considerations

No. You're wrong. Why do so many people think this? They are responsible to their shareholders in that they cannot willfully or illegally lose their shareholders money. They do no have to forsake their values.

No, you're naive. The basic naivete comes from your language, in fact. "They do not have to forsake their values." Sure, they don't. But there's a _lot_ of pressure to do so.

Do you really believe people think this because they are whacky? Take a look at this passage from an article from the Harvard Business School:

Generating corporate virtue

By now, the story of Malden Mills and its owner, Aaron Feuerstein, is so familiar that the company name has become a sort of shorthand for corporate benevolence. The tale briefly told: In 1995, a fire destroyed Malden Mills' textile plant in Lawrence, an economically depressed town in northeastern Massachusetts. With an insurance settlement of close to $300 million in hand, Feuerstein could have, for example, moved operations to a country with a lower wage base, or he could have retired. Instead, he rebuilt in Lawrence and continued to pay his employees while the new plant was under construction.

"Why don't more companies act that way?" is a common reaction when people first hear the story. It is much too simplistic to reply that Feuerstein is a better person than most. Whatever Feuerstein's relative level of virtue, he had far fewer shareholders to answer to than the average CEO. Feuerstein's only shareholders are himself and several members of his family, who presumably share his willingness to sacrifice profits for the sake of the employees' wellbeing. (Feuerstein was perhaps too willing--Malden Mills filed for bankruptcy protection last November.) The typical CEO of a publicly held corporation, by contrast, is accountable to thousands of shareholders.

My purpose here is not to denigrate the share-owned corporation, which is a fundamental building block of democratic capitalism, but to acknowledge that its legal structure imposes certain priorities on its senior leaders. If they fail to maximize earnings for shareholders, managers risk removal by the equity holders to whom they report. Worse, failure to serve shareholders' interests puts the corporation in jeopardy of being acquired by a stronger company or losing access to capital markets. In theory at least, self-interest and self-preservation ensure that no rational executive will engage in activities that clearly erode shareholder value.

For an interesting approach to the problem (and it does exist!), check out the article.

firstly, what a snide and useless remark.

It is quite easy to find information that supports Sydney as a global business city.

Australia is the 11th largest economy in the world and Sydney its largest, most international city and the economic capital. Set on Port Jackson Harbour, the city has a long history of trade, commerce and finance.

Many multinationals have their Asian-Pacific headquarters in the city, including Price Waterhouse Coopers, Compuserve and BT. Others such as IBM, Coca-Cola and Unilever have offices here.
Taken from here

Sydney is often included along with other noted business cites such as singapore.

Sydney is attractive for its language diversity, and Morgan Stanley has located some of its back-office operations there. Tokyo and Hong Kong are both a bit too expensive for such operations

it is becoming increasingly common for Chinese companies to raise money not just on the Hong Kong market, but also in other markets such as Sydney or Singapore.
Taken from here

And other information from NSW.gov site.

# the most multicultural city in the Asia Pacific
# 70% of the nation's top 250 IT&T companies are headquartered in Sydney
# base for 44% of regional call centres in the Asia Pacific
# lowest unemployment rate in Australia
# major Asia Pacific financial centre
# information communications technology capital of Australia
link

And
Australia is once again among the leading nations in terms of economic growth. For the second year running, the worldwide executive opinion survey conducted for the IMD World Competitiveness Yearbook considered Australia's economy as the most resilient in the world.

Of the 53 authorised banks with operations in Australia, 40 are based in Sydney. This includes nine of the 11 foreign subsidiary banks in Australia and the 10 largest investment banking groups. Major foreign banks with operations in Sydney include JPMorgan Chase, ABN Amro, Citibank, and Deutsche Bank. Other global banks have established highly successful back office operations in Sydney. These foreign banks benefit from Sydney's time zone advantage, spanning the close of business in the United States and the opening of the European trading day.

Taken from here and here

Cheers

indeed...part b of your argument is actually used by a harvard business school prof to argue against the RIAA's claim that free music piracy hurts sales. as is said in the article, many online sites appeal to groups that are "money-poor but time-rich." indeed slashdot fits the bill.

unfortunate, because I think roads should be toll based. and I think that if I was a guy whose only passion is drawing comics, I'd rather get paid a little less by everyone than have to take the time to do some marketing.

The Harvard Business Review ran an article recently claiming that illegal downloads aren't hurting the music industry's bottom line. In fact is supposes that it may help, from an economic sense. I submitted as an article but alas rejection :)

Music Downloads: Pirates--or Customers?

Professor Felix Oberholzer-Gee and co-author Koleman Strumpf floored the disbelieving music industry with their findings that illegal music downloads don't hurt CD sales. Oberholzer discusses what the industry should do next.

So then you prefer the Liberal myth that one can only achieve success by suckling at the taxpayer teat?

No, I prefer the myth that I am the chosen one; specially favored among all creation.

An irrelevant and unrealistic example. That implies that the investors have no other investments besides the risky one to choose from.

For all the posters who take analogies too literally, a little research would probably have clued you in that I was referring to recent results in economics and finance which indicate that individual ability is not the only driving factor in wealth distributions, more info here. I am not arguing against personal responsibility or merit, merely pointing out that there are financial forces as inevitable as the curvature of spacetime which shape the course of events as well. The upshot is, whether everyone is equally able or not, as long as there is a chance of failure in investment activities, wealth will not be evenly distributed. In fact, as time passes, inequalities will increase, this has nothing to do with taxation, victimization or the availability of a good insurance policy. There are quite a few corollaries to consider as well, but I'll let you return to your ad hominem straw man attacks now.

According to well-known economists Josh Lerner and Jean Tirole, in an article recently published in the Journal of Industrial Economics, open-source software development needs to overcome a number of difficult problems before wide-scale adoption of open-source solutions in industry and government becomes feasible. Two of the more serious problems with open-source software are the "forking" of open-source projects and the orientation of open-source products towards high-end users.

He then proceeds to define "forking" in this context:

The forking of open-source projects occurs when passionate disputes between open-source software developers over product design lead to the splintering of projects into a multitude of varieties. With proprietary software, forking generally does not take place since development is centralized within a firm and disciplined by market forces. Relying on a current open-source product design is, therefore, inherently risky.

So it seems that he is referring more to project splitting than forking.
The paper in question, The Scope of Open Source Licensing states:

Forking refers to an internal threat of competing groups moving in different directions and producing incompatible versions of the same initial open source project. It is unclear to us how license type will affect the probability of forking or the effectiveness of the original project leader's response; this topic may reward future research.

Which is, IMHO, a valid concern, although not a major one since it occurs very infrequently.
Or possibly, you would like to argue that Josh Lerner and Jean Tirole are also "idiots who don't know what they are talking about"?

Regardless, the "forking" issue is not the major one.

Sauer's article addresses the possibility of Israel's Ministry of Finance abandoning the currently used commercial software in favor of open-source alternatives and their argument that the move will save Israeli taxpayers up to 60% of the cost of continuing to do business with Microsoft and other proprietary software companies.

Sauer says that

There is a common misconception that open-source software, such as Linux, is cost-effective because it can be freely loaded on as many computers as desired without incurring additional license fees. In fact, software license fees comprise only a small percentage of the total cost of ownership (TCO) of software. Most estimates place software acquisition costs between 5% and 8% of TCO. TCO is dominated by costs related to customizing systems, maintaining and servicing systems, and training systems personnel.

He then continues to point the real problem:

>worlds biggest and worlds most influental company

Excuse me? MS is not the biggest and hardly the most influential.

That would be General Electric, and MS is way down on the list from them.

However, Harvard likes to think that Gates is the most influential business leader... - HBC has to tag along on someone's coat tails, after all.

You seem to forget the Insurance industry, Medicine, and Securities. CEOs, yea, they're accountable too. The private sector is as filled with leaches and the clueless. We are only aware of the Government ones because they are accountable to us, the taxpayer.

Many IT products (e.g., PCs, databases, web servers, CRM systems, etc.) are now commodity items. Any company can purchase these such products. For this reason such software no longer provides any strategic advantage. In fact not having such software, even momentarily (your web farm goes down) is a risk that must be well managed.

Specialized software for a given industry segment is available to any company in that industry segment because the vendor seeks to maximize his sales. So even specialized software within an industry confers no strategic advantage.

specialized software developed in-house provides little or no strategic advantage because:

• companies that create innovative software pay unduly for it's development. They get an early version with many bugs. An old saying: "You can always tell the pioneers, they're the ones with arrows in their backs." In your example, the cost of developing, patenting and defending innovative software and any interfaces are just the sort of "arrows" that a pioneer might suffer.
  
• companies that wait and adopt innovative software at a later date buy it at reduced cost and with fewer bugs. Costs are lower and adoption is easier.
  

In Why IT Doesn't Matter AnymoreCarr states that

"The smartest users of technology--here again, Dell and Wal-Mart stand out--stay well back from the cutting edge, waiting to make purchases until standards and best practices solidify. They let their impatient competitors shoulder the high costs of experimentation, and then they sweep past them, spending less and getting more."

Although I do not like what Carr says, I believe he is correct, that he has his hand on the pulse of IT, and that his articles will further strengthen what is already a trend in IT. For example see Does an organization have anything to gain from .Net? (published prior to Carr's work) wherein Carmine Mangione analyzes the strategic advantages and risks of moving to Microsoft's .NET platform. This and many other articles about IT's shift to a focus on risk-managment seems to indicate that Carr is correct.

Nicholas Carr, writing in a recent Harvard Business Review article, probably wouldn't agree with Moskowitz and Kern.

The original contents of this comment were clear copyright violation. They were cut & pasted from this site. This text has been removed at the request of the copyright holder.

This story is probably not substantive enough to merit it's own thread in a penguin parade, but makes for an interesting counterpoint to the usual MS bashing and crying.

"Microsoft products were consistently rated highly when compared to competitive offerings, a result that held true across different product categories and over time."

HBS Working Knowledge

Remember the browser war - cash rich company buying market share to create a monopoly, which they are successfully defending

I think we (the open source zealots) tend to see everything the way we would like it to be, rather than is.

The problem with the companies you list is, as you point out, that they have been attached to the teats of cash cows for too long and are vulnerable to disruptive innovations. You never hear the bullet that kills you.

Part of the problem may be that previously small, nimble companies become bloated, their management structures become unable to prune the dying limbs, usually due to internal politics, and turf wars.

It must be very difficult to fight a competitor (Linux) with no overheads, no fixed costs. Like a hydra - every time you attack it, it grows another distribution.

It is strange that IBM doesn't figure in your list (no I don't work for them), as despite its monolithicity, it managed to see the Linux steamroller, and managed to get on board, rather than view the process from ground level. More credit to them, as it must have been a very courageous leap in the dark at the time.

If you're arguing that no bank mergers occurred in the 1980's, history and I politely disagree with you.

I never said that banking deregulation or any other form of financial divestiture occured in the 80's. But the FACT, Sparky, is that all kinds of financial institutions went nuts with mergers and acquisitions, especially following the S&L scandals of the late 1980's.

I don't know if you're intending to troll, so do you have a point to make, or did you just want to raise my ire?

When you are through, you have no contacts, and zero assets ~

Yah -- that's the secret to the Harvard MBA. The schooling isn't what makes it special; it's the contacts. Heck, for $33k/year (which isn't bad considering Rice's Executive MBA is $65k/year!), it is almost a steal.

The original contents of this comment were clear copyright violation. They were cut & pasted from this site. This text has been removed at the request of the copyright holder.

Now there's an open-source project that's needed: an open-source replacement for Adobe Craprobat. Acrobat does only two things, display documents and send them to a printer, and it does both badly. There's an opportunity here. (No, DocBook isn't the answer.)

It's worth noting that most open-source projects are in areas where there are already commercial products, but the commercial products have problems that aren't being fixed. We don't generally see open-source projects breaking new ground. Linux, after all, is Unix Reimplementation #4.

(My original post got the tags stripped by a combination of browser, slashdot, and user error. Here's what it's supposed to look like:)

The original paper is at http://www.people.hbs.edu/jlerner/simple.pdf

Among their somewhat-obvious insights is the somewhat-obvious comment that some folks work on open-source as a way to gain professional prestige.

Business schools and economists have a reputation for having a firm grasp upon the obvious. However, the reason they stay in business, and aren't laughed out of intelligent company, is that so many people, especially other academics, don't.

People don't work for free. Sometimes, though, they are willing to take their rewards in a purely non-monetary fashion. In the case of politics, power is the reward. For many other people, the sense of satisfaction they receive from doing something useful is sufficient reward for lots of hard work. Ask any insightful volunteer coordinator at the Red Cross or other charity. Open source software is a form of charity - one is providing a "benefit to humanity" or other warm-fuzzy, while doing something which is interesting and challenging, and not receiving money for it. I hope the biz school professors who wrote the report are familiar with the literature on charity and non-economic motivation.

Of course, sometimes working on open-source can have economic motives. If I'm looking for a job, and I can point to my work on hWidgetFoo, I'll likely get a better(-paying) job than if I can't point to it. If I've been working on software for internal consumption, like at a manufacturer, there may not be a directly work-related product I can point to and say "Here's what I can do".

Both points are addressed in the paper, but most of it can be summed up by a quote from ESR near the beginning:

The "utility function" Linux hackers is maximizing is not classically economic, but is the intangible of their own ego satisfaction and reputation among other hackers.

Good economists recognize that non-economic incentives exist, but many economists ignore them because they're too hard to quantify.

The link in the parent post leads to a listing. To get the paper directly click here (pdf document)