Skip to main content
SpringerLink
Log in

Java and object standardization in the Internet – A way to more competition in the software industry?

  • Published:
NETNOMICS Aims and scope Submit manuscript

Abstract

The computer software market is a textbook example of network externalities: if a user decides to work with a specific program, the utility of all other users of the same product increases. This increase in utility is not compensated for by the market; thus one speaks of network externalities. Such network externalities lead to a natural tendency towards quasi standardization, favoring a high market concentration on the supply side.

This article demonstrates that Java programs combined with an appropriate object standardization may reduce the influence of the network externalities, giving smaller companies a better chance to compete successfully.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. K.C. Baseman, F.R. Warren-Boulton and G.A. Woroch, Microsoft plays hardball: The use of exclusionary pricing and technical incompatibility to maintain monopoly power in markets for operating system software, The Antitrust Bulletin (1995) 265–315.

  2. K.C. Baseman, F.R. Warren-Boulton and G.A. Woroch, The economics of intellectual property protection for software: The proper role for copyright (1995). http://elsa.Berkeley.EDU/ users/woroch/ (6 June, 1997).

  3. R.D. Blair and A.K. Esquibel, Some remarks on monopoly leveraging, The Antitrust Bulletin (1995) 371–396.

  4. R.D. Blair and A.K. Esquibel, The microsoft muddle: a caveat, The Antitrust Bulletin (1995) 257–264.

  5. W. Blundon, Sun makes “The Big Move”, JavaWorld 11 (1997). http://www.javaworld.com (19 October, 1997).

  6. D. Braun, All Sun forces on the Microsoft front, TechWeb News (October 1997). http:// www.techweb.com/wire/news/1997/10/1009sunpredict.htm (31 October, 1997).

  7. Y.M. Braunstein and L.J. White, Setting technical compatibility standards: An economic analysis, The Antitrust Bulletin 30 (1985) 337–355.

    Google Scholar 

  8. T. Busse, Microsoft does not violate Java contract, Ballmer says, JavaWorld 11 (1997). http: //www.javaworld.com (22 October, 1997).

  9. B. Büttgenbach, Eine Einführung in die OOP-Grundbegriffe - Paradigmenwechsel erfordert die Kenntnis der neuen Terminologie (An introduction to the basic terms of OOP - Change of paradigm requires knowledge of new terminology), Computerwoche 45 (November 1992).

  10. Alles andere als kalter Kaffee - Java: Eine Programmiersprache macht Microsoft Konkurrenz (Everything but an old hat - Java: A programming language competes with Microsoft), Computerwoche 8 (February 1996) 22–24.

  11. Beta-version freigegeben - Office 97 soll dem schlanken Client Paroli bieten (Beta version released - Office 97 is to resist the thin client), Computerwoche 41 (October 1996) 17–19.

  12. Niedrigpreis-Offensive mit Smartsuite 97 - Lotus sagt Microsoft den Kampf im Markt für Office-Software an (Low price offensive with Smartsuite 97 - Lotus attacks Microsoft in the market for office software), Computerwoche 47(5) (November 1996).

  13. Novell beteiligt sich mit 20 Prozent am kanadischen Grafikspezialisten - Corel will mit Wordperfect Microsoft das Fürchten lehren (Novell acquires 20 percent of Canadian graphics expert - Corel wants to threaten Microsoft with Wordperfect), Computerwoche 6(4) (February 1996).

  14. Preiskampf bei monolithischen Büroanwendungen - Modularisierung bringt Office-Markt in Bewegung (Price war in the market for monolithic office applications - modularization shakes up the office market), Computerwoche 46 (November 1996) 17–18.

  15. Windows 95 soll Dampf gemacht haben - Westeuropäischer Markt für PC-Software zieht wieder an (Windows 95 gave a push? - Western European software market attracts again), Computerwoche 15(4) (1996).

  16. R. Cornes and T. Sandler, The Theory of Externalities, Public Goods, and Club Goods (Cambridge Univ. Press, Cambridge, 1996).

    Google Scholar 

  17. B. Day, The impact of Java standardization, JavaWorld 12 (December 1997). http://www. javaworld.com (17 November, 1997).

  18. N. Economides, Network externalities, complementarities, and invitations to enter (1996). http: //raven.stern.nyu.edu/networks/ (12 June, 1997).

  19. N. Economides, The economics of networks (1996). http://raven.stern.nyu.edu/ networks/ (12 June, 1997).

  20. J. Farrell and G. Saloner, Standardization, compatibility, and innovation, Rand J. Economics 16(1) (1985) 70–83.

    Google Scholar 

  21. J. Farrell and G. Saloner, Economic issues in standardization, in: Telecommunications and Equity: Policy Research Issues, ed. J. Miller (Elsevier, Amsterdam, 1986) pp. 165–177.

    Google Scholar 

  22. H.L. Gabel, Competitive Strategies for Product Standards - The Strategic Use of Compatibility Standards for Competitive Advantage (McGraw-Hill, New York, 1991).

    Google Scholar 

  23. R.J. Gilbert, Symposium on compatibility: Incentives and market structure, J. Industrial Economics 40(1) (1992) 1–35.

    Article  Google Scholar 

  24. C. Haag, Hamburger Softwareschmiede Star Division auf USA Programmiert (Star Division, a Hamburg-based software company, aims at the USA), Welt am Sonntag 4(43) (January 1998).

  25. E. Heichler and R. McMillan, Sun-Microsoft dispute gets ugly, JavaWorld 10 (1997). http: //www.javaworld.com (22 October, 1997).

  26. OS/2 nicht länger für Consumer-Markt (OS/2 no longer for consumer market), iX - Magazin für professionelle Informationstechnik 9(21) (1997).

  27. M. Kane, IE 4: Is free worth the price?, ZDNN (September 1997). http://www.zdnet.com/ zdnn/content/zdnn/0929/zdnn0004.html (25 January, 1998).

  28. M.L. Katz and C. Shapiro, Network externalities, competition, and compatibility, Amer. Economic Rev. 75(3) (1985) 424–440.

    Google Scholar 

  29. M.L. Katz and C. Shapiro, Systems competition and network effects, J. Economic Perspectives 8(2) (1994) 93–115.

    Google Scholar 

  30. P. Kraemer, Die Grundidee der Modularisierung (The basic idea of modularization). http://www. uni-wuppertal.de/hrz/kurse/fortran/node69.html (16 September, 1997).

  31. S. Krempl, Eine unendliche Geschichte: Microsoft und die Gerichte (A never-ending story: Microsoft and the courts), TELEPOLIS - Das Magazin der Netzkultur (1997). http://www.heise. de/tp/deutsch/inhalt/te/1360/1.html (25 January, 1998).

  32. M. Krochmal, Java delivering for developers: Zona study says, TechWeb News (October 1997). http://www.techweb.com/wire/news/1997/10/1014jva.html (19 October, 1997).

  33. J.E. Lopatka and W.H. Page, Microsoft, monopolization, and network externalities: Some uses and abuses of economic theory in antitrust decision making, The Antitrust Bulletin (1995) pp. 317–370.

  34. C. Mangione, Performance tests show Java as fast as C++, JavaWorld 2 (February 1998). http: //www.javaworld.com (26 January 1998).

  35. N. McKay, Java to be standardized by ISO, JavaWorld 12 (December 1997). http://www. javaworld.com (17 November 1997).

  36. R. McMillan, Sun's plan B for Java standardization: Change nothing, JavaWorld 10 (October 1997). http://www.javaworld.com (17 September, 1997).

  37. SunMicrosystems, The Java Language: An Overview (1994).http://java.sun.com/ (16 September, 1997).

  38. Sun Microsystems, Java Standardization. http://java.sun.com/aboutJava/standardization/ index.html (25 January, 1998).

  39. S. Middendorf and R. Singer, Java-applets - Programmierung und Einsatz im Intra-und Internet (Java-applets - programming and application in the Intra-and Internet). http://www.garos. de/dik/vortraege/Middendorf.html (16 September, 1997).

  40. M. Moeller, DOJ: Microsoft forced PC makers to license IE, PC Week Online (October 1997), http://www.zdnet.com/zdnn/content/pcwo/1020/163640.htm (22 October, 1997).

  41. B. Morgan, Corba meets Java, JavaWorld 10 (October 1997). http://www.javaworld.com (17 September, 1997).

  42. T. Parr, Why we care about Java, JavaWorld 11 (November 1997). http://www.javaworld. com (19 October, 1997).

  43. R.S. Pindyck and D.L. Rubinfeld, Microeconomics (Macmillan, New York, 1992).

    Google Scholar 

  44. J. Schwarte, Das WWW-Konsortium (The W3C), Internet World (German ed.) 9 (1997) 54–55.

  45. M. Seeboerger-Weichselbaum, Das Wintel-Imperium (The Wintel empire), DOS - Das PC-Magazin 5 (1996) 74–82.

    Google Scholar 

  46. M. Siddalingaiah, The future of Java - rhetoric or reality? JavaWorld 12 (1997). http://www. javaworld.com (19 November, 1997).

  47. B. Trott, Developers decry Sun-Microsoft war over Java, JavaWorld 11 (1997). http://www. javaworld.com (22 October, 1997).

  48. P.D. Varhol, Object Oriented Programming: The Software Development Revolution (Computer Technology Research Corp., 1993).

  49. H.R. Varian, Economic Incentives in Software Design (1993). http://info.Berkeley. EDU/~hal/people/hal/papers.html (10 June, 1997).

  50. M. Weyerhäuser, Echte Bohnen - Komponenten für Java: Beans (Genuine beans - components for Java: Beans), C'T - Magazin für Computer Technik 9 (1997) 300–308.

    Google Scholar 

  51. G.A. Woroch, F.R. Warren-Boulton and K.C. Basemann, Exclusionary behaviour in the market for operating system software: The case of Microsoft (1995). http://elsa.Berkeley.EDU/ users/woroch/ (3 June, 1997).

  52. ZDNN, ZDNN news special: Microsoft on trial, ZDNN. http://www.zdnet.com/zdnn/ special/msdoj4.html (25 January, 1998).

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Paderborn, Warburger Str. 100, D-33098, Paderborn, Germany

    Ralf Menkhoff

Authors
  1. Ralf Menkhoff
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Menkhoff, R. Java and object standardization in the Internet – A way to more competition in the software industry?. NETNOMICS: Economic Research and Electronic Networking 1, 107–126 (1999). https://doi.org/10.1023/A:1019185305465

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1019185305465

Search

Navigation