Standards and diversity

Mike Masnick's TechDirt article explored and important issue: Which is more important for innovation: A standard platform or competition? He evaluated with respect to gaming systems, but the arguments can be easily applied to many ecosystems - e.g., standardisation vs. diversity for OSs, Telcos, RIAs, etc.

IMHO the heart of the issue is:

… where the biggest economic contribution comes from: the platform or the applications on top of the platform. If it’s the platform, then competition makes sense. If it’s really the applications on top of the platform then it’s going to make sense for there to be a standard to let the competition occur on top of the standardized platform.

That said, I view innovation through the lens of what problem it aims to solve? As in other posts, I make it clear that innovation in isolation ends up in the vault, for engineers to prop their egos, but a very low ROI. :-) The question of standards and diversity is a cyclical one. Standards and platform hit the mark when they enable the business models which consumers seek (and for which they are willing to pay. The tendency is for the standards owners to dictate terms once standard becomes dominant, which is a cross-purposes to enabling business models. There is little-to-no profit motive in enabling new business models, and yet focussing elsewhere (e.g. operational efficiency) leaves the door open to competition in this arena. This drives the development of competing standards, which then triggers a new cycle of diversity, which eventually will result in another cycle of standardisation, and so forth.