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Fostering a Capacity for Compromise: Business, Government, and the Stages of Innovation in American Computing

IP.com Disclosure Number: IPCOM000129934D
Original Publication Date: 1996-Jun-30
Included in the Prior Art Database: 2005-Oct-07
Document File: 18 page(s) / 78K

Publishing Venue

Software Patent Institute

Related People

STEVEN W. USSELMAN: AUTHOR [+2]

Abstract

The remarkable history of the American computer industry can perhaps best be understood as a sustained drive toward miniaturization punctuated by a series of technical compromises. Even the most casual observer could likely identify the main course of change. Sustained improvements in manufacturing technology have enabled producers of solid state components to cram ever more circuitry into smaller spaces for far less cost. Riding the natural trajectory of this ";revolution in miniature,"; computer designers and programmers have produced machines of markedly increased capabilities and steadily diminishing expense [1]. Less appreciated, it seems, are the pauses along the way. For amid the ever advancing tide of miniaturization, the computer industry has periodically stabilized around a basic technological configuration involving standard components, logical design, and operating software. Each of these interludes has necessarily involved the same basic compromise. The potential for more rapid and more radical change at the technical frontiers of the industry has been sacrificed in exchange for the perceived benefits of standardization. These critical compromises have typically been orchestrated by powerful firms that dominated the market for computing. For much of the industry's history, giant International Business Machines Company (IBM) performed this vital function. Capitalizing on abilities it had developed in the electromechanical era of data processing, IBM quickly garnered over 80% of the market for electronic computers, a position it held for over a quarter century [2]. With the advent of personal or desktop computing, IBM came to share the role with Apple Computer, an upstart that had introduced a measure of predictability into the chaotic realm of individualistic hackers. More recently, the mantel has passed to IBM's former suppliers, Intel and Microsoft. All of these businesses have consistently demonstrated an ability to assert a degree of order over computing technology without unduly stifling subsequent development. Their capacity to do so has made them and the American industry the envy of peoples and nations around the world. Though this essential capacity for compromise has resided in private firms operating in a competitive marketplace, the federal government has had a significant hand in its creation and sustenance. During the early phases of the industry, military procurement programs helped foster a brand of competition that rewarded firms such as IBM. When the commercial market blossomed during the 1950s, the principal locus of government activity shifted to the Antitrust Division of the Justice Department. Through a variety of well-publicized consent decrees, lawsuits, and settlements, the Justice Department would, during the next four decades, persistently leave industry leaders intact while undoubtedly shading their subsequent behavior in more competitive and innovative directions. Meanwhile, as computer technology increasingly converged with that of communications, the regulatory apparatus of the Federal Communications Commission and its associated Congressional committees came into play as well. Using these three tools -- procurement, antitrust, and regulation -- the federal government established a framework that tolerated and even encouraged the emergence of dominant firms, so long as they exhibited a willingness to make useful tradeoffs between stability and innovation.

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THIS DOCUMENT IS AN APPROXIMATE REPRESENTATION OF THE ORIGINAL.

Copyright ©; 1996 by the Institute of Electrical and Electronics Engineers, Inc. All rights reserved. Used with permission.

Fostering a Capacity for Compromise: Business, Government, and the Stages of Innovation in American Computing

STEVEN W. USSELMAN

This article surveys firm behavior and competitive structure in American computing during the past 50 years and places the industry within the context of American political economy. It argues that leading firms such as IBM, Apple, and Microsoft have exhibited a capacity to strike compromises between innovation and stability. Through selective enforcement of the antitrust laws, government has tolerated and even encouraged such behavior. The computer industry has thus followed patterns established in other endeavors such as electric power and telephony.

Introduction

The remarkable history of the American computer industry can perhaps best be understood as a sustained drive toward miniaturization punctuated by a series of technical compromises. Even the most casual observer could likely identify the main course of change. Sustained improvements in manufacturing technology have enabled producers of solid state components to cram ever more circuitry into smaller spaces for far less cost. Riding the natural trajectory of this "revolution in miniature," computer designers and programmers have produced machines of markedly increased capabilities and steadily diminishing expense [1]. Less appreciated, it seems, are the pauses along the way. For amid the ever advancing tide of miniaturization, the computer industry has periodically stabilized around a basic technological configuration involving standard components, logical design, and operating software. Each of these interludes has necessarily involved the same basic compromise. The potential for more rapid and more radical change at the technical frontiers of the industry has been sacrificed in exchange for the perceived benefits of standardization.

These critical compromises have typically been orchestrated by powerful firms that dominated the market for computing. For much of the industry's history, giant International Business Machines Company (IBM) performed this vital function. Capitalizing on abilities it had developed in the electromechanical era of data processing, IBM quickly garnered over 80% of the market for electronic computers, a position it held for over a quarter century [2]. With the advent of personal or desktop computing, IBM came to share the role with Apple Computer, an upstart that had introduced a measure of predictability into the chaotic realm of individualistic hackers. More recently, the mantel has passed to IBM's former suppliers, Intel and Microsoft. All of these businesses have consistently demonstrated an ability to assert a degree of order over computing technology without unduly stifling subsequent development. Their capacity to do so has made...