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Apple and the value of standards

Jan 23, 20063 mins
AppleEnterprise ApplicationsIntellectual Property

There has been a lot of whining in the press and the entertainment business about Apple these days. They’re whining about Apple refusing to add music encoded in Windows Media Player to its iTunes store, enable its iPod players to play such music and license its FairPlay digital rights management system to the makers of other portable music players. There is even legislation pending in France that would ban the sale of iPods and the use of iTunes if Apple does not relent. This controversy and Skype’s use of a propriety VoIP protocol are two good examples why standards are not always seen by companies as being in their best interest.

I’m a big fan of standards. I have worked in the IETF for more than 15 years trying to define Internet-related standards. I strongly believe that standards can vastly expand the market for a technology. A perfect example is twisted-pair Ethernet (aka 10Base-T). There was a minuscule market for Ethernet-over-copper-wires before the IEEE ratified the 10Base-T standard. That market exploded after the ratification.

Standards are also very good for consumers. They foster competition and can reduce prices. The price of twisted-pair interfaces dropped precipitously after the 10Base-T ratification because of competition and the cost savings from larger production runs, and integration and miniaturization of electronics. That did drive profit margins way down but, for the vendors that could adapt, raised sales and total profits.

Apple is a strong believer in standards. It is a significant participant in the IETF and quickly adopts IETF and other standards in most areas. So why not in DRM?

Voluntary standards work when multiple vendors decide to use them and there is a general balance in the marketplace for a product. Multiple vendors have decided to use the Microsoft DRM, but there is nowhere near a general balance in the current market for portable music players. Thus it is premature for Apple to consider adopting a standard or making its player interoperable with the DRM systems other players use. The fact that there is no generally accepted open DRM standard for use on music players complicates the picture still more.

There is a generally accepted open standard for VoIP, but Skype has chosen to not use it. The IETF’s Session Initiation Protocol is being used by almost all VoIP vendors and most standards organizations including the International Telecommunication Union’s telecommunications standards division. But there isn’t a general balance in the marketplace, because Skype has cornered the hype and mind-set in the peer-to-peer VoIP space.

I expect that both the mind share and market share of Apple music players and Skype VoIP will have to drop significantly before either adopts standards-based solutions. Regulations, such as the French legislation requiring that downloaded music be able to be played on any player, may speed things up. But I expect Apple might just be willing to call France’s bluff and agree to deprive the French of their iPods while neatly putting the blame on the French government.

Disclaimer: Harvard has been known to set the standard for the higher-ed industry in a number of areas, but the above exploration is my own.