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Column: The dichotomy of open standards

In the industrial automation business, everyone agrees that communications network standards would make life a lot easier—products from different manufacturers would work together.

End-users continue to ask for interoperability as a means to achieve vendor independence. But that is the exact opposite of what all the primary suppliers want. Standards turn proprietary products into commodities, with lower profit margins.

The search for a fieldbus standard is a typical example of the futility of trying to set standards. The dream of a unified fieldbus has never emerged, simply because the vendors could never agree—each group of vendors pushed their own favorite. The international committees dragged the debate on and on, until several different industrial networks were approved as “standards.”

The definition of a “standard” is simple—operating characteristics that everybody follows. Therein lies the rub. Someone has to be the leader, to develop the standard that others follow.

The idea that committees composed of both 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 can seldom agree, because they are in direct competition with each other, each seeking to develop technology and market advantages over the other.

Standards provide openness and interoperability between 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.

Vendors want proprietary differentiation, which generates higher margins. Technology development is expensive. Once the status of a standard is achieved—through technology, 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.

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

Rule 1: Licensing the technology. This may be through up-front fees for technology transfer, or per-copy sales of application specific integrated circuit (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.

Consider some of the famous “open” battles. The DOS operating system became a standard (and made Microsoft rich) through the myopic munificence of IBM. IBM thought it would sell personal computer hardware to catch up with Apple, but the hardware soon became a commodity.

Some vendors pretend that they are simply giving away their technology freely for everyone to utilize when in reality they are encouraging others to use it as a standard. One example is Profibus: Siemens is the original developer of Profibus and continues to gain advantage through its proliferation (Rule 2). And, Siemens continues to sell Profibus chips (Rule 1). Meanwhile, the 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. Rockwell allowed other vendors to purchase or license its hardware, software and firmware (Rule 1); it expanded involvement through gaining a bunch of followers, all eager to find new ways of connecting to the vast Rockwell (Allen-Bradley) installed base of programmable logic controllers (Rule 2); and, Rockwell was combating the encroachment of Siemens-dominated Profibus and Phoenix Contact sponsored Interbus into their U.S. backyard (Rule 3).

There is one exception to Rule 2: The U.S. Government’s Advanced Research Projects Agency (ARPA) really gave away the Internet—and caused a new revolution. Perhaps there is a lesson to learn.

Jim Pinto is an industry analyst, commentator, writer, technology futurist and angel investor. jim@jimpinto.com

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