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19 December 2001

Pinto's Point: The dichotomy of open standards

By Jim Pinto

The definition of a "standard" is simple: operating characteristics everybody follows. Standards provide openness and interoperability among products from different vendors, reducing products to the level of commodities. Hence, end users are the primary beneficiaries. However, no single user is large enough, or strong enough, to demand and set horizontal standards.

The idea that committees composed of users and vendors can set standards is futile. Users may perhaps be able to collaborate, but few can invest the time or expense necessary to drive a standard. And vendors seldom agree. They are, after all, in direct competition with one another, each seeking to develop technology and market advantages over the others.

The intrinsic problem is this: Vendors need and want proprietary differentiation to generate higher profit margins. Technology development is expensive, and everyone understands the financial rules for expense amortization or write-off. Once the status of a standard is achieved (through technology and/or marketing leadership, or timing) other vendors will simply be required to conform, giving the clear proprietary (and financial) advantage to the owner, or consortium, that controls the standard.

These conflicting objectives continue to cause endless debate. To help clear the confusion, we must understand that technology developers need to recoup their investment through one of the following rules:

• Rule 1: Licensing the technology. This may be through up-front fees for technology transfer or per-copy sales of ASIC chips, hardware, software, or firmware.
• Rule 2: Making everything open and free to expand involvement. The developer is far ahead on the learning curve, and followers contribute to the leader's leadership.
• Rule 3: Introducing "free" open technology to combat the entrenched position of a dominant market leader.

Some vendors "pretend" they are simply giving away their technology freely for everyone to utilize. Take a look at Profibus. Siemens is the original developer of Profibus and continues to gain advantage through its proliferation (Rules 2 and 3). And Siemens continues to sell Profibus chips (Rule 1). Meanwhile, Siemens followers believe that what they support is indeed "free and open."

The Rockwell strategy in making DeviceNet and ControlNet "open" follows a combination of all three of the rules. It allowed other vendors to purchase or license its hardware, software, and firmware (Rule 1); it expanded involvement through gaining several followers, all eager to find new ways of connecting to the installed Rockwell base of PLCs (Rule 2); and Rockwell was combating the encroachment of Siemens-dominated Profibus and Phoenix Contact-sponsored Interbus into its U.S. backyard (Rule 3).

When someone uses Profibus, they have to use Siemens chips. It would be very difficult and expensive to make a Profibus product interoperable without using Siemens chips.

Similarly, people have made DeviceNet products interoperable without using Rockwell tools -- but they would need to develop their own software. And, it would be virtually impossible to make ControlNet products without using Rockwell chips -- and those chips would be very expensive to develop.

There is one exception to Rule 2: The U.S. Government (ARPA) really gave away the Internet-and caused a new revolution. Perhaps there is a lesson to learn there.

Behind the byline

Jim Pinto is the founder of San Diego-based Action Instruments. You can browse his writings and commentary at JimPinto.com, or e-mail him at jim@JimPinto.com.