Daily Archives: September 11, 2006

Wriggling off the hook

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From Good Morning Silicon Valley on the growing HP bugging scandal…

In interviews Friday, [H.P. CEO] Dunn said she was “appalled” to learn that investigators retained by the company were posing as board members to obtain their personal information, adding she’d never heard this practice described as “pretexting” until August. “I had never heard the word before that,” Dunn said. “I found out shortly after that that pretexting could involve a form of fraud.” Could? How about often does? How else are you going to get these kinds of records without government subpoena or their owners’ consent?

Microsoft vs. Open Source

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Two Harvard economists have built a model to elucidate the battle between Windows and Linux. There’s an interesting interview with the authors in which they discuss their findings.

Their conclusion?

Our main result is that in the absence of cost asymmetries and as long as Windows has a first-mover advantage (a larger installed base at time zero), Linux never displaces Windows of its leadership position. This result holds true regardless of the strength of Linux’s demand-side learning. Furthermore, the result persists regardless of the intrinsically better design and potential differential value of Linux. In other words, harnessing demand-side learning more efficiently is not sufficient for Linux to win the competitive battle against Windows.

Having obtained this basic result, we investigate the conditions that will warrant that Linux ends up forcing Windows out. We do this by modifying the model in two ways. First of all, we look at the effect of having buyers such as governments and some large corporations committed to deployment of Linux in their organizations. We call such buyers strategic. In addition to cost-related reasons, governments back Linux because having access to the source code allows them to verify that sensitive data is treated securely. Binary code makes it hard to figure out who has access to information flowing in a network. Companies such as IBM, in contrast, back Linux because they see in OSS one way to diminish Microsoft’s dominance. We find that the presence of strategic buyers together with Linux’s sufficiently strong demand-side learning results in Windows being driven out of the market. This may be one main reason why Microsoft has been providing chunks of Windows’ source code to governments.

Second, we look at the role of cost asymmetries. In the base model we assume that the cost structures of Windows and Linux for the development, distribution, and support of software coincide. A natural question is then whether the central result that Windows survives in the long-run equilibrium regardless of the speed of Linux’s demand-side learning persists if there are cost asymmetries. We find that because OSS implies lower profits for Microsoft, the larger the cost differences are between Linux and Windows, the less able Microsoft is to guarantee the survival of Windows.

We also show that it is not all bad news to Microsoft. We analyze the effect of having forward-looking buyers and the presence of piracy, and conclude that both benefit Microsoft.

They also come to the counter-intuitive conclusion that piracy actually helps Microsoft!

n addition to this main result, we were also surprised to find that piracy may end up increasing Microsoft’s profits. To understand why, notice that there are two types of pirates: those who would not have bought Windows in the first place because it is too expensive, and those who would have bought Windows but now decide to pirate it. The first category increases Windows’ installed base without affecting sales. As a consequence, this group increases the value of Windows. And thanks to these pirates, Microsoft is able to set higher prices in the future (because the value of the system goes up). In addition, having these pirates means that Linux’s installed base does not grow as much as it would have if piracy weren’t there. The second type of pirates (those who in the absence of piracy would have bought Windows) reduces Windows’ sales and profit. Thus, if the proportion of first-type pirates is sufficiently large, Microsoft’s profits will increase with piracy…

One can almost hear the sighs of relief in Redmond. The only problem is that the entire hypothesis depends on the accuracy of a mathematical model.

The new Paris Hilton Sex Tape!!!

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Er, not exactly. Nice video satire.

Embarrassing disclosure: when the Paris Hilton video first hit the news, I was a bit baffled by all the fuss about it on the Web. Who would be interested, I wondered, in a sex orgy taking place in a Parisian hotel? Eventually, a friend took me aside and explained that Paris Hilton was a person. Sigh. I really should get out more.

Can you remember where you were when…?

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It’s such a cliche. And yet cliches express truths, even if they are sometimes banal. I’m of an age when I can remember where I was when Jack Kennedy was assassinated. (I was in my bedroom, dutifully doing school homework.) Maybe it made a deeper impression because I had earlier that year seen him in the flesh.

For the generation who are now in their twenties, 9/11 will have the same kind of memorability. According to the Pew Research Center’s national survey, conducted Aug. 9-13 among 1,506 adults,

nearly every American (95%) can still recall exactly where they were or what they were doing when they first heard the news of the Sept. 11 attacks, and roughly half (51%) say that the attacks changed life in America in a major way.

For me, September 11, 2001 has a special resonance. It was the day Sue underwent the operation that we hoped might give her a chance of beating her cancer. She was first on the surgeon’s list, due to go down to theatre at 10am. I got the kids to school early and set off for the hospital to see her before she went under the knife. The traffic that morning was indescribable. I had to invent a crazy, circuitous route to avoid the city. When I got to the hospital, I dumped the car and ran up to the ward. She was sitting up, quite composed. When she saw the state I was in, she told me to go home, do something to take my mind off the operation, and come back at lunchtime, when she would be coming out of the anaesthetic. “Stop making such a fuss” was the hidden message. So I obediently kissed her goodbye and went off to collect examination scripts for a Masters course for which I was then an External Examiner.

The strategy worked — for a while: marking the scripts took my mind off what was happening up at the hospital. I got back to the house at 12.30pm and rang the ward. No, Mrs Naughton wasn’t back from theatre yet. I rang again at 12.40. Still she wasn’t back. Stifling panic, I asked to speak to the senior nurse on the ward. She explained that there would probably be a simple, non-sinister explanation. She checked, and there was — an emergency operation that had taken precedence. “Come in around 2pm”, she said, “Sue should be back by then”. I put down the phone, choking with relief.

As I replaced the handset, it rang. It was an old friend who had recently gone to visit her son in his New York apartment. She was phoning to see how the operation had gone. I told her what had happened and we talked about the whole business. She told me she was standing by the window and that it was a beautiful morning. She had plans to visit a bookshop and then to buy food. She was going to cook that evening. Then the line went quiet. “Are you still there?” I asked. “I’ve just seen a plane fly into the World trade Centre”, she said.

While we talked, I launched a web browser. It took an age for the program to load. I typed “www.cnn.com” into the address bar. No response. The site was already buckling under the load. We continued talking — about the density of air traffic over New York, about the fact that a terrible accident like that was bound to happen, one day. Then my friend went quiet again. “I’ve just seen another plane fly into the tower”, she said. “I’m going to move away from the window”. We said muted goodbyes. I switched on the TV. The BBC had a news flash — and then cut to live footage of the two towers, smoking in the sunshine. My friend spent the rest of the day on the roof of the apartment building, watching the disaster unfold. The worst thing of all, she told me later, was seeing the people who jumped to avoid the flames.

At the time, another old friend had just taken up residence in New York, living in an apartment on Washington Square. I rang the number. He answered, sleepily — still jetlagged. “Do you know what’s going on?” I asked. “What’s going on?” he responded. “The Twin Towers have been attacked”. “Come off it”, he snorted. “Can you hear anything?” I asked. “Now that you mention it”, he replied, “I can hear a racket down on the street”.

At the same time, a third friend who is a professional colleague of Cherie Blair, was in a meeting with her. Her mobile rang. She picked it up, listened and then put it down. “What’s up?” said my friend. “There’s been a terrorist attack in New York”, she replied. “Is it bad?” “Must be”, she replied. “Tony was on his way to speak at the TUC Conference and he’s turned back”.