Date: Mon, 12 May 1997 14:45:34 -0700 (MST) From: Terry Lambert <terry@lambert.org> To: dennis@etinc.com (dennis) Cc: terry@lambert.org, msmith@atrad.adelaide.edu.au, hackers@FreeBSD.ORG Subject: Re: if_de.c ???? Message-ID: <199705122145.OAA08399@phaeton.artisoft.com> In-Reply-To: <3.0.32.19970512164753.00c39a40@etinc.com> from "dennis" at May 12, 97 04:47:56 pm
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> >Actually, you seem to be complaining about the fact that using parts > >with public specifications commoditizes the hardware. This is true, > >but it's not a bad thing. After all, many companies make lots of > >money selling commodity items. Like kitchen utensils. [ ... ] > >If you think DEC isn't going to sell those specs to "Joe Schmoe" in > >order to protect SMC's market, then you have another thing coming. > > Horse Hockey! This is the old IBM PC problem....who is going to establish > the market if noone can make enough margin to pay for the initial marketing? Actually, this isn't the IBM PC problem. This is the IBM PS/2 MCA problem: invent a closed interface and your customers will go elsewhere. > Companies like DEC will have to make business decisions about whether > they want to have a handful of OEMs or sell to the general public. I > think that there will be "limited" agreements, in which the > manufacturers of ASICs keep the specs under wraps for a year or two, > letting the marketing companies recover their investments, and then > flood the market for the taiwanese clone manufacturers. This presumes that somehow the "taiwanese clone manufacturers" can ride on the backs of the marketing companies. This is an unlikely scenario -- each company must do it's own marketing. This also assumes that the company that comes out with something first is somehow at a disadvantage... and that's what patents are for, if they truly have unique R&D value to recoup. If not, then they are simply milking the margin until competition commoditizes the hardware, and then probably moving on to greener (non-commodity) pastures every so often to keep ahead of the wave. What we are really talking about here is companies which *delay* new technology deployment so that they can reap as much margin as they can get away with before they move on. This is very similar to the practice of selling business names to liquidators, and then they push as much crap through the channel as they can to trade on the value of the name (or in this case, the new technology) before moving on to vulch the next carcass. I have no sympathy for such companies, who ride the price bubble from product to product. The best example in this line of discussion so far was the Matrox board, and its similarity to the Phillips sample implementation that comes with the chip data. What investment did Matrox need to recoup that justified such a high margin and protectionism, such as you describe here? None. The ramp-up costs are the same for the clone vendors as for Matrox... a production line is a production line, and it's nothing more than an issue of how long you can keep an inflated margin before you have to do honest business. Personally, I don't think these companies have a "right" to inflated margin, and if I were in the boards business, I'd be happy to establish my legal department as a profit center by sueing these vendors under Sherman for price-fixing, if similar non-disclosure agreements were not offered generally to all interested vendors. If DEC sells something to one company in an open market agreement, they are required by *law* to provide similar open market agreements to all other vendors who wish to enter into them. If you are saying that "the fix is in", then with you as a board vendor, I urge you to get into the business of suing, because if you're right, it will be terrifically lucrative for you: if nothing else, the FTC fines for your competitors anticompetitive practices will drive up his costs, and you will be able to charge less for your product than he is able to charge for his. Regards, Terry Lambert terry@lambert.org --- Any opinions in this posting are my own and not those of my present or previous employers.
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