Date: Sun, 21 Nov 1999 16:45:03 -0800 From: "David Schwartz" <davids@webmaster.com> To: "Brett Glass" <brett@lariat.org> Cc: <freebsd-chat@FreeBSD.ORG> Subject: RE: Judge: "Gates Was Main Culprit" Message-ID: <000001bf3482$d08ce270$021d85d1@youwant.to> In-Reply-To: <4.2.0.58.19991120195344.0452f8d0@localhost>
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See Brett, you're as good at reasoning as you are at slander. > At 12:18 PM 11/16/1999 -0800, David Schwartz wrote: > > >Right, this is progress. If you want the features of Kodak > >Advantix, you > >need an Advantix camera. And that means you need Advantix film. And of > >course, your film processor needs a machine that can process > >that film. To > >get the advantages of newer technological developments, you need a new > >everything. This is really evidence that Microsoft does not operate by > >locking people into inferior developments but actually by continually > >reinventing its products to keep them leading edge. > > Ironically, you've picked an example that proves exactly the opposite. > As any photographer or photofinisher can tell you, Advantix has no > significant technological advantages over good old 35mm film -- just > a few gimmicks. The real reasons Kodak introduced Advantix were as > follows: I suppose it depends upon what you mean by 'significant'. While Advantix is not exactly revolutionary, it provides several advantages over normal 35 millimeter film. Many of them don't particularly help professionals, but they do help amateurs. For one thing, Advantix film's loading is foolproof. A lot of amateurs have thought that they were shooting film when actually the film wasn't loaded all along. Anyone whose lost a one-time oppurtunity to capture something important to them on film knows how annoying this can be. Advantix also offers an indicator on the roll to let you know if the film is unexposed, partially exposed, or fully exposed. Many Advantix cameras offer 'mid roll change', allowing you to easily change rolls of film even if they are partially exposed. With a 35mm camera, if you put in ASA800 film and then need to take a few shots at ASA100, you're pretty much screwed. I'll leave it up to you to determine how significant these features are. They're not exactly groundbreaking or revolutionary, but I would say that they are significant. > (a) To recapture a larger share of the photofinishing market just > before selling off its photofinishing business. This maximized the > price it could ask when it spun off Kodalux. The Advantix cartridges > had a few features which were patented, as well as other quirks which > made them incompatible with existing processing equipment. None of > these made the product significantly better. But because of the > patents, Kodak could either bar other photofinishers from processing > the film or charge them high prices for equipment that was compatible. > > (b) To increase its market share in the film business by preventing > other film manufacturers from making the film. (Or, again, to charge > those manufacturers royalties on every Advantix cartridge they shipped.) > > (c) To drive makers of competitive photofinishing equipment (including > minilabs) out of the market by refusing to let them make > Advantix-compatible equipment. Alternatively, Kodak could charge them > big bucks for the "privilege," sapping their profits. > > Consumers suffered as a result of all of these tactics. Our local photo > shop, which had a Norita minilab, couldn't do Advantix film, and so had > to ship the film to someone with expensive Kodak equipment -- usually > Kodak's own Kodalux division -- for processing. Not only did this cost > more; it was far slower than the one-hour service we could get on 35mm > film. The photo shops were hurt as well; their inability to use their > existing equipment on Advantix film cost them business. > > With all of these drawbacks, and only trivial advantages, how did Kodak > get consumers to adopt the Advantix film format? Simple: They dumped > cameras, just as Microsoft dumped IE. Kodak even paid camera > manufacturers to bring out Advantix cameras, just as Microsoft paid ISPs > to force their users to use IE. In other words, we are all lock into 35mm film, cameras, and processing. Kodak attempts to break this lock in, and you condemn it. Whose side are you on? I thought lock in to inferior technologies was the problem here. Assume for the moment that Advantix is superior to 35mm film. Assume further that we are somehow 'locked into' 35mm film due to tipping effects. (I won't buy an Advantix camera, even though it's better, because I can't get the film processed nearby. And my nearby photo store won't buy an Advantix film developer because no one has Advantix cameras. And so on.) Obviously, these network effects would be costing Kodak money. If it could break the lock in, and lock us all into Advantix instead, Kodak would be better off. And (in this hypothetical), so would we, because Advantix is assumed superior to 35mm. The way to break the lock in is simple -- at least for a little while, you subsidize the superior technology -- enough to break the lock in but not so much that is exceeds the additional value of the technology. The idea is, by breaking the lock in, you can reap the lost profit oppurtunity that the superior technology represents. Note that there is no advantage whatsoever to these tactics unless the technology for which you are breaking the lock in is superior. If not, there are no profits to obtain. The only money that can be made is the difference between the value of what we are using now and the value of the technology you are offering. If the offered technology is less valuable than what it replaces, there is no advantage to the attempt at replacement. This is consistent with the clear market data which shows that Microsoft's attempts to promote IE were unsuccessful until IE reached feature partity with Netscape. So the very tactics you are complaining about are the only ones that can break a lock in situation. If you don't like lock in, support the tactics that defeat it. > Kodak's tactics were unethical in that they manipulated markets and hurt > consumers. And most likely illegal even in the absence of a monopoly. Hurt consumers? How so? How does breaking lock in affects hurt consumers? Actually, consumers benefit by having lock in broken by subsidy. This allows consumers to garner sufficient coordination to switch to a superior technology. It's these exact types of processes that helped us all move from Apples to PCs, from 16-bit machines to 32-bit machines, and so on. As for illegal, perhaps so. But this indicates that the law makes it very difficult for companies with genuinely superior products to overcome network effects. 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