John Gruber’s recent critique of this piece  fails to address the error-cost theory just advanced.   Instead, he chooses to contest the idea that the choice of an open or closed ecosystem is relevant to determining the success of a product ecosystem.   He advances a rival hypothesis: “better and earlier tend to beat worse and later,” which comes close to being a truism.

Gruber is right about this:  no one factor can ever completely determine the success of a given product.   A million decisions go into product design, and reducing everything to one or two big factors is hazardous.  A badly built open product will never beat a good closed product, and vice-versa.   But the interesting  question is what happens when both are well-executed.

To deny the importance of a designer’s choice between a more open or closed system goes too far; saying that everything depends on timing and execution is to mistake tactics for strategy.   Perhaps we can best interpret Gruber as asserting that the relative importance of the choice can be exaggerated, and that execution — avoiding errors — matters as well (which puts him in agreement with my original piece).  He surely cannot be saying that the choice between open and closed doesn’t matter at all: that’s denialism.

The study of centralized and decentralized decision structures in an economic system is hardly my invention.   It goes back to classic economic debates between Oskar R. Lange and Fredrick Hayek in the 1940s.  Lange was an advocate of centralized planning and argued that closed / state-run economies would be more efficient than open / decentralized market economies.   Hayek, responding in 1945, argued that the advantage of an open system was largely informational.  A theoretically perfect central planner would, Hayek conceded, outperform an open system, but in a reality of imperfect information, the open market system could usually be expected to perform better.   There’s been much economic thought on the issue since that time, but I’ll skip it: the bottom line is simply that open and closed systems perform differently under different conditions and have differently strengths and weaknesses.  I should add that this kind of analysis is relevant for any system and any product ecosystem, not just tech — it is really the study of institutional design.

Fast forward to our present time and you can see the same open/closed dynamics that characterized the difference between planned and market economies reflected in tech markets.    iOS resembles a partially-planned economy.  It is a controlled ecosystem, which gives it certain advantages, but also greater rigidity and higher error costs.   In contrast, Android has some central planning as well, but exercises less total control.   Consequently Android is messier, but has certain advantages, like the ability to work on more devices.   Execution matters as well, and Apple’s products may be executed better, but both firms and the underlying device makers are all competent.   Android is ultimately  “worse and later” in Gruber’s terminology, yet, in defiance of his rule, successful nonetheless.  (Of course the final chapter on iOS v. Android isn’t written:  Android has more market share, but Apple makes much more profit).

While I’m an iPhone user, I actually don’t care so much whether Google and Apple wins; Gruber appears to have a more personal stake.  But the bottom line is that, as Michael Arrington points out, you really can’t pretend to understand what has happened over the last twenty years without some understanding of the relative advantages of open and closed systems  (or if you prefer, decentralized and centralized decision hierarchies.)  To maintain otherwise is an exercise in willful ignorance.

No updates while in gov.

The New York Times “AT&T is the star of Wu’s book, an intellectually ambitious history of modern communications….”

The Washington Post “My pick for economics book of the year”

The Atlantic “Fascinating … a ripping yarn… But also a serious history with a strong view about the pernicious effect of monopolies and oligopolies in technology.”

Salon “For Internet pundits Wu’s book is required reading, but the average citizen may find it even more revelatory and rewarding.”

Amazon.com, A top Business book of 2010

Nature “In his groundbreaking book, The Master Switch, Columbia University law professor Tim Wu weaves together these and other examples to examine how disruptive tech- nologies enter and develop within society.”

The New Yorker, Reviewer’s Favorites 2010 “Finding patterns in the fates of information empires.”

Publisher’s Weekly (Starred Review) “Wu’s engaging narrative and remarkable historical detail make this a compelling and galvanizing cry for sanity–and necessary deregulation–in the information age.”

Fortune Magazine, A top book of 2010

Inside Higher Education “The Best Book of 2010″

Dallas Morning News “A grim prospect indeed. But this time it’s different – maybe”

Forbes “[A] brilliant exploration of the oscillations of communications technologies between ‘open’ and ‘closed’ from the early days of telephone up through Hollywood and broadcast television up to the Internet era.”

Huffington Post “[M]asterful….fascinating…. a superstar in the telecommunications world…. Wu has a way of presenting complex and important concepts in a clear and understandable way….eminently readable…. a wealth of….fabulous anecdotes….a warning that we ignore at our peril.”

Toronto Star “His widely praised book charts the seemingly inexorable progress of this phenomenon through history, flattening one information industry after another — first telephones, then radio, film and TV.”

Kirkus Book Reviews (Starred Review) “Eye-opening reading, with implications for just about anyone….”

New York:
Nov. 3: Columbia Law School
Nov. 4: Launch Party  (drumming video )
Nov. 7: Asian-American Writers Workshop PAGE TURNER
Nov. 11:  TedxEAST
Nov. 11:  With Ken Auletta at the CORE Club
6:30pm-8:15pm
To RSVP, please contact Victoria Collins at (202) 986-2700

or via email at collinsv@newamerica.net
Nov. 22: New York Incubator event
Nov. 30: Columbia Journalism School with Nick Lehman & Richard John, 7pm

Boston:
Nov. 5, Book Talk and Q&A, Harvard bookstore, Cambridge, MA
Jan. 9, Berkman Center

Los Angeles
Nov. 16, Zocalo Public Square

Bay Area
Nov. 17 Google Mountain View (1pm)
Nov. 17  The Commonwealth Club (2pm)
Nov. 18  Slate dinner

Seattle
Nov. 19, Town Hall Seattle with University Books
Nov. 19, Microsoft

Toronto
Dec 2, Ramsay Breakfast at the Fairmount Hotel

Washington D.C.
Oct 26 Slate Panel
Nov. 9 Office of Science & Tech Policy, White House
Dec. 9 D.C. Book Party
Nov. 30 Google DC

London
April, TBA

Austin
TBA

Boston:
Nov. 5, Book Talk and Q&A, Harvard bookstore, Cambridge, MA
Jan ~9, Berkman Center

Los Angeles
Nov. 16, Zocalo Public Square

Bay Area
Nov. 17, The Commonwealth Club
Nov. 18, Google

Seattle
Nov. 19, Town Hall Seattle with University Books
Nov. 19, Microsoft

Toronto
Dec 2, Ramsay Luncheons at the Fairmount Hotel

Washington D.C.
Oct 26 Slate Panel
Dec 9 TBA

Austin
TBA

Buy it from one of these fine booksellers

Barnes & Noble

Indie-Bound

Amazon

* * *

I offer these comments to make three points.  First, there have been
tions in the media and elsewhere that the FCC’s proposed Net
Neutrality rules represent a radical departure in American federal
communications policy.  I’d suggest, from a historic perspective, that the
FCC’s Net Neutrality rule is rather mild.  In particular, it is far less
aggressive than the anti-discrimination laws imposed on carriers under the
Cleveland or Taft Administrations.

Second, many critics of the Proposed Rules have blurred the crucial
distinction between regulation of the Internet and the regulation of those
that carry Internet traffic.  I point out only that the latter, carriers, have
always been subject to regulation, as we shall, historically much stricter
regulation than that found in the Proposed Rules.

Third, I write to suggest that the FCC’s stated goal of protecting the
Internet as a platform for free speech will depend on how rigorously it
implements a ban on not only the blocking of content, but also on demands
for “Internet Payola.”

Why the iPhone Won’t Last Forever and
What the Government Should Do to Promote its Successor

Robert Hahn and Hal J. Singer

This paper argues that the iPhone, while popular, will be replaced, and therefore that “regulators should be very reluctant to intervene in the mobile handset market.”

What I don’t understand about this paper is that it takes an undeniably true fact — that the iPhone won’t last forever, and ties it to a conclusion that is much less clear, and, in fact, close to assumed.

The authors argue that exclusive contracts are efficient and promote market entry.  Why?   Essentially, because they exist.   They believe, based mainly on the evidence of the Apple – AT&T deal, that handset producers seek out exclusive contracts themselves.

I’m going to keep this comment brief, but my main comment is that it is hard to generalize from the fact that something exists to the idea that it is a good thing.  It is the same old problem with the efficient market hypothesis, and also goes by the name the naturalist fallacy.  This paper comes close to assuming its answer based on current conditions.

The fact that the carriers have a near-total lock on the retailing of phones, and that it can be hard even for a company like Palm to get a carrier to carry a new handset has an obvious effect on what handset manufacturers do.   What they do now isn’t necessarily what they want to do.  It is what they have to do to reach customers.

It is harder still to generalize from Apple-AT&T to anything.   Apple, or more precisely Jobs, has a preference for closed systems that is not shared by other device manufacturers.   The fact that he sought out an exclusive contract does not mean, by itself, that there are, as a general matter “significant efficiencies associated with exclusive agreements.”

I agree with the argument that the iPhone won’t last forever.   It is as vulnerable as the Mac was in about 1986 or so.   But that doesn’t tell us much about whether wireless carterphone is better or worse for consumers and the nation over the long run.

Satire is a purposeful art; it attempts to unmask folly that is posing as wisdom, or evil posing as good. Since false appearance is accepted as truth, satire must do something out of the ordinary to jar and upset the audience’s vision of things.

…

the real problem with the Court (in which it is only following a certain obtuse conventional idea) is in believing that satire is concerned with making only bitingly-negative (even vicious) attacks on society (what I have termed “the general”).* This is reflected, I think, in the Court’s statement that “society is lampooned” by satire. Thus, the Court has removed the specific (mild or harsh) attacks on a person’s inadequacy of style, language, dramatic range, etc. from their rightful places in the universe of satirical means and modes.