Nick Carr has an interesting post on his site about the common strategy in the technology industries of commodifying competitors' revenue streams: Fighting Free With Free. It seems the tables have turned as IBM and Yahoo! play the game with Google, which itself is practiced in the art. They're giving away, for free, technology that Google charges for.

Google currently charges $9,000 for a specialized search appliance - a piece of hardware called Google Mini - that can index up to 300,000 documents. The IBM-Yahoo offering undermines the market viability of the Google box in its current form, or at least at its current price, and also poses a threat to the efforts of corporate search specialists like Autonomy to expand into the small-business market...

While not addressing IP, Carr raises an important issue in IP policy- the ability of IP holders to leverage their assets in ways resembling notions of “free:” Microsoft can offer non-assertion covenants to facilitate development of a standard but still enforce those patents elsewhere, Apple may freely license its DRM to some music services but not others to form strategic partnerships, Google can give away a product to consumers and retain the right to prevent competitors from copying the technology.

In these scenarios, where firms seemingly set aside the IP system or disavow their IP assets, they are actually differentiating commercial exchanges to maximize returns. Such arrangements are integral to IP doctrine, but often ignored by critics of “propertization” who see things as “IP vs free.” Call these self-interested decisions, Schumpeterian strategies or cold-calculated capitalism clothed in amiable terms such as "free;" just don’t call them some kind of revolutionary movement.

posted by Noel Le @ 8:13 AM | Markets: Business, Investment & Innovation

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