A discussion about the software industry and their coders

This is my first post on key or interesting points in my favorite Tech Business books.

Information Rules, A Strategic Guide to the Nework Economy by Carl Shapiro and Hal Varian is amongst my favorite books on Technology Management.

Unlike many other books, Information Rules focuses on explaining the Economic and Business Principles underlying the networked Tech Business instead of comparing the merits and de-merits of competing Technologies.

Here are what I think are 10 Key Points about the Information and Networked Economy as covered in Information Rules:

1) Information is costly to produce but easy/cheap to copy and distribute. Example a block buster Godzilla DVD could be copied onto multiple DVDs at home. Napster and Kazaa challenged the Music Industry by allowing peer-to-peer sharing of MP3 music files by individuals.

Business Impact: Apple Computer Inc. (APPL) has leveraged this aspect of the Information economy into its clever business model around iPods and iTunes. Apple Computer Inc. earns money on its iPod music player. It sells songs to be played on the iPod for just 99 cents from its iTunes web site.

Thus, Apple to uses the Internet to distribute songs from iTunes rather than Physical distribution channels and CDs. Till about end of 2003 Apple Computer Inc. made no money from iTunes but the blazing growth in sales of Apple iPod's led Apple to post best quarter and best revenue in the Company's history in Oct 2005. iPod sales have reached about 5 million units per quarter.  

2) Intellectual Property -- Manage IP to maximize the IPs value for the creater/owner of the IP rather than terms and conditions that maximize protection of the IP.

Business Impact: Linux could not have become a major callenger to Microsoft's (MSFT) Windows Operating System without the Open Source Model. Microsoft is struggling to respond to Linux's growth due to its stringent IP policy protecting Windows OS and has even let some governments view the Microsoft Windows/ Microsoft Office 2003 source code throug its GSP program.

To Continue...