When you are establishing your business model, do you opt for open or close standards?

In the technology arena, it has always been conventional wisdom that money can be made by establishing your own standards, and you do it if you can.  See how much HP or Lexmark makes from making consumers buy its ink cartridges. Or how Nintendo or Sony loses money in selling their game consoles, but makes money for every software sold for its systems.

Yet, sometimes, there is a race for supremacy, and you cannot be too ‘closed’.  Sony Betamax lost out in its Betamax format and probably its own memory stick format by being too closed.  It is trying to get as many manufacturers to adopt its Blu-Ray Standard.

Sun for a moment made lots of money on its proprietary Sparc processors and Sun Solaris.  It did not quite made money on its Java, but for now, Java is now its most valuable intellectual brand.  It is now open sourcing Sun Solaris, and making sure it runs in competitor machines, and it is also putting AMD processors in its own servers, and horror of horrors, it is allowing it to OEM Windows Server Operating Systems.  I still don’t quite get Sun’s strategy, but I’m sure they know a lot of things I don’t.

Microsoft is putting a lot of resources and branding now to interoperate with Linux systems, and it is making the effort for instance to establish Open XML standards for its Office formats.

Maybe in the short run, it hits short term profits, but maybe in the long run, it also is a good business decision.  I guess consumers are now smarter, and would be less reluctant to go for your products if they see the hint that they might be held hostage to your technology.  I know vendors go through a lot of effort to convince customers their adherence to ‘open’ standards.

I guess the all encompassing ‘it depends’ on the situation is still the answer ….