How Intellectual Property Reinforces Inequality

The IP referred to by Stiglitz here is about the licensing of monopolies through the granting of patents. He argues that this type of activity amounts to rent-seeking (economic rent). Rent seeking does not in itself create wealth. Instead it adds to the burden of cost in entrepreneurship. Rent-seeking activities, if not controlled, will lead to monopolies of resources needed for economic activities.

When we use the term IP, we are referring to the knowledge base of social-economic architecture and management for sustainable development.

This is our unique contribution to a communal enterprise. It is not a cost factor. It is a provision to be ‘invested’ to create wealth.

— Simon Pang | Society of Antioch’s

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How Intellectual Property Reinforces Inequality

By JOSEPH E. STIGLITZ

In the war against inequality, we’ve become so used to bad news that we’re almost taken aback when something positive happens. And with the Supreme Court having affirmed that wealthy people and corporations have a constitutional right to buy American elections, who would have expected it to bring good news? But a decision in the term that just ended gave ordinary Americans something that is more precious than money alone — the right to live.

At first glance, the case, Association for Molecular Pathology v. Myriad Genetics, might seem like scientific arcana: the court ruled, unanimously, that human genes cannot be patented, though synthetic DNA, created in the laboratory, can be. But the real stakes were much higher, and the issues much more fundamental, than is commonly understood. The case was a battle between those who would privatize good health, making it a privilege to be enjoyed in proportion to wealth, and those who see it as a right for all — and a central component of a fair society and well-functioning economy. Even more deeply, it was about the way inequality is shaping our politics, legal institutions and the health of our population.

Unlike the bitter battles between Samsung and Apple, in which the referees (American courts), while making a pretense at balance, seem to consistently favor the home team, this was a case that was more than just a battle between corporate giants. It is a lens through which we can see the pernicious and far-reaching effects of inequality, what a victory over self-serving corporate behavior looks like and — just as important — how much we still risk losing in such fights.

Of course, the court and the parties didn’t frame the issues that way in their arguments and decision. A Utah firm, Myriad Genetics, had isolated two human genes, BRCA1 and BRCA2, that can contain mutations that predispose women who carry them to breast cancer — crucial knowledge for early detection and prevention. The company had successfully obtained patents for the genes. “Owning” the genes gave it the right to prevent others from testing for them. The core question of the case was seemingly technical: Are isolated, naturally occurring genes something that can be patented?

But the patents had devastating real-world implications, because they kept the prices for the diagnostics artificially high. Gene tests can actually be administered at low cost — a person can in fact have all 20,000 of her genes sequenced for about $1,000, to say nothing of much cheaper tests for a variety of specific pathologies. Myriad, however, charged about$4,000 for comprehensive testing on just two genes. Scientists have argued that there was nothing inherently special or superior about Myriad’s methods — it simply tested for genes that the company claimed to own, and did so by relying on data that was not available to others because of the patents.

Hours after the Supreme Court’s ruling in favor of the plaintiffs — a group of universities, researchers and patient advocates, represented by theAmerican Civil Liberties Union and the Public Patent Foundation — other laboratories quickly announced that they would also begin offering tests for the breast cancer genes, underlining the fact that Myriad’s “innovation” was identifying existing genes, not developing the test for them. (Myriad is not done fighting, though, having filed two new lawsuits this month that seek to block the companies Ambry Genetics and Gene by Gene from administering their own BRCA tests, on the grounds that they violate other patents that Myriad holds.)

It should not be very surprising that Myriad has done everything it can to prevent its tests’ revenue stream from facing competition — indeed, after recovering somewhat from a 30 percent drop in the wake of the court ruling, its share price is still nearly 20 percent below what it wasbeforehand. It owned the genes, and didn’t want anybody trespassing on its property. In obtaining the patent, Myriad, like most corporations, seemed motivated more by maximizing profits than by saving lives — if it really cared about the latter, it could and would have done better at providing tests at lower costs and encourage others to develop better, more accurate and cheaper tests. Not surprisingly, it made labored arguments that its patents, which allowed monopolistic prices and exclusionary practices, were essential to incentivize future research. But when the devastating effects of its patents became apparent, and it remained adamant in exerting its full monopoly rights, these pretensions of interest in the greater good were woefully unconvincing.

The drug industry, as always, claimed that without patent protection, there would be no incentives for research and all would suffer. I filed an expert declaration with the court (pro bono), explaining why the industry’s arguments were wrong, and why this and similar patents actually impeded rather than fostered innovation. Other groups that filed amicus briefs supporting the plaintiffs, like AARP, pointed out that Myriad’s patents prevented patients from obtaining second opinions and confirmatory tests. Recently, Myriad pledged it would not block such tests — a pledge it made even as it filed the lawsuits against Ambry Genetics, and Gene by Gene.

Myriad denied the test to two women in the case by rejecting their Medicaid insurance — according to the plaintiffs, because thereimbursement was too low. Other women, after one round of Myriad’s testing, had to make agonizing decisions about whether to have a single or double mastectomy, or whether to have their ovaries removed, with severely incomplete information — either Myriad’s testing for additional BRCA mutations was unaffordable (Myriad charges $700 extra for information that national guidelines say should be provided to patients), or second opinions were unattainable because of Myriad’s patents.

The good news coming from the Supreme Court was that in the United States, genes could not be patented. In a sense, the court gave back to women something they thought they already owned. This had two enormous practical implications: one is it meant that there could now be competition to develop better, more accurate, less expensive tests for the gene. We could once again have competitive markets driving innovation. And the second is that poor women would have a more equal chance to live — in this case, to conquer breast cancer.

But as important a victory as this is, it is ultimately only one corner of a global intellectual property landscape that is heavily shaped by corporate interests — usually American. And America has attempted to foist its intellectual property regime on others, through the World Trade Organization and bilateral and other multilateral trade regimes. It is doing so now in negotiations as part of the so-called trans-Pacific Partnership. Trade agreements are supposed to be an important instrument of diplomacy: closer trade integration brings closer ties in other dimensions. But attempts by the office of the United States Trade Representative to persuade others that, in effect, corporate profits are more important than human lives undermines America’s international standing: if anything, it reinforces the stereotype of the crass American.

Economic power often speaks louder, though, than moral values; and in the many instances in which American corporate interests prevail in intellectual property rights, our policies help increase inequality abroad. In most countries, it’s much the same as in the United States: the lives of the poor are sacrificed at the altar of corporate profits. But even in those where, say, the government would provide a test like Myriad’s at affordable prices for all, there is a cost: when a government pays monopoly prices for a medical test, it takes money away that could be spent for other lifesaving health expenditures.


The Myriad case was an embodiment of three key messages in my book “The Price of Inequality.” First, I argued that societal inequality was a result not just of the laws of economics, but also of how we shape the economy — through politics, including through almost every aspect of our legal system. Here, it’s our intellectual property regime that contributes needlessly to the gravest form of inequality. The right to life should not be contingent on the ability to pay.

The second is that some of the most iniquitous aspects of inequality creation within our economic system are a result of “rent-seeking”: profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie. And the most iniquitous aspect of this wealth appropriation arises when the wealth that goes to the top comes at the expense of the bottom. Myriad’s efforts satisfied both these conditions: the profits the company gained from charging for its test added nothing to the size and dynamism of the economy, and simultaneously decreased the welfare of those who could not afford it.

While all of the insured contributed to Myriad’s profits — premiums had to go up to offset its fees, and millions of uninsured middle-income Americans who had to pay Myriad’s monopoly prices were on the hook for even more if they chose to get the test — it was the uninsured at the bottom who paid the highest price. With the test unaffordable, they faced a higher risk of early death.

Advocates of tough intellectual property rights say that this is simply the price we have to pay to get the innovation that, in the long run, will save lives. It’s a trade-off: the lives of a relatively few poor women today, versus the lives of many more women sometime in the future. But this claim is wrong in many ways. In this particular case, it is especially wrong, because the two genes would likely have been isolated (“discovered,” in Myriad’s terminology) soon anyway, as part of the global Human Genome Project. But it is wrong on other counts, as well. Genetic researchers have argued that the patent actually prevented the development of better tests, and so interfered with the advancement of science. All knowledge is based on prior knowledge, and by making prior knowledge less available, innovation is impeded. Myriad’s own discovery — like any in science — used technologies and ideas that were developed by others. Had that prior knowledge not been publicly available, Myriad could not have done what it did.

And that’s the third major theme. I titled my book to emphasize that inequality is not just morally repugnant but also has material costs. When the legal regime governing intellectual property rights is designed poorly, it facilitates rent-seeking — and ours is poorly designed, though this and other recent Supreme Court decisions have led to one that is better than it otherwise would have been. And the result is that there is actually less innovation and more inequality.

Indeed, one of the important insights of Robert W. Fogel, a Nobel Prize-winning economic historian who died last month, was that a synergy between improved health and technology accounts for a good part of the explosive economic growth since the 19th century. So it stands to reason that intellectual property regimes that create monopoly rents that impede access to health both create inequality and hamper growth more generally.

There are alternatives. Advocates of intellectual property rights have overemphasized their role in promoting innovation. Most of the key innovations — from the basic ideas underlying the computer, to transistors, to lasers, to the discovery of DNA — were not motivated by pecuniary gain. They were motivated by the quest for knowledge. Of course, resources have to be made available. But the patent system is only one way, and often not the best way, of providing these resources. Government-financed research, foundations, and the prize system (which offers a prize to whoever makes a discovery, and then makes the knowledge widely available, using the power of the market to reap the benefits) are alternatives, with major advantages, and without the inequality-increasing disadvantages of the current intellectual property rights system.

Myriad’s effort to patent human DNA was one of the worst manifestations of the inequality in access to health, which in turn is one of the worst manifestations of the country’s economic inequality. That the court decision has upheld our cherished rights and values is a cause for a sigh of relief. But it is only one victory in the bigger struggle for a more egalitarian society and economy.

Source:

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Repositioning Asean in new world order

Feb 24, 2011
By Susilo Bambang Yudhoyono, For The Straits Times

AS PUNDITS debate the imminence of the Asian Century, and the impact of the rise of China and India, one phenomenon continues to evolve steadily: the remarkable geopolitical transformation of South-east Asia.

In the past, South-east Asia had been bled and torn apart by some of the 20th century’s nastiest protracted wars.

Today, there is no war between the major powers in South-east Asia, no proxy war involving countries in the region, and no war between South-east Asian countries. What was once a painfully divided region is now a cohesive grouping of Asean 10, with an Asean Free Trade Area, and a dynamic Asean Community in the making.

Asean still has plenty of internal and external challenges, of course. But a fresh forward-looking charter is guiding Asean to adapt in meeting these challenges.

A key part of that transformation is how to reposition Asean in the 21st century world order.

The Asean region now has a population of more than 600 million citizens, with a combined gross domestic product of US$1.5 trillion (S$1.9 trillion) marked by high growth and political stability, a growing middle class, endowed by enormous natural resources, including some of the world’s largest tracts of rainforests. With these considerable assets, Asean can grow internally as well as externally.

Asean has thus become a regional organisation with global significance. There are, however, responsibilities that go with this hard-earned status.

There are several ways in which Asean can contribute to the community of nations.

# First, in its own neighbourhood, Asean can continue to realise the vision of a region becoming ‘a concert of South-east Asian nations, outward-looking, living in peace, stability and prosperity’. This means realising the Asean Community by 2015 in all its politico-security, economic and socio-cultural dimensions; closing the development gap; managing or resolving some of the outstanding conflicts and disputes in the region where possible; bringing Asean to the grassroots; promoting interdependence – all the necessary tools of community-building.

In a volatile world, a resilient and dynamic South-east Asia at the heart of Asia makes a big difference.

# Second, Asean can help shape and evolve the larger regional architecture in the Asia-Pacific. Asean is in the best position to carry out this task: With its dialogue partners, the East Asia Summit, the Asean Regional Forum and the Asean Plus Three forum, Asean is already the hub of the region’s key diplomatic processes. But it should not make the mistake of taking the notion of Asean centrality for granted.

Asean must continue to ensure that dynamic shifts in power relations do not lead to strategic tension but rather result in a dynamic equilibrium, and to a state of regional affairs marked not by geostrategic clash but by growing confluence.

# Third, Asean can help advance cooperation on global issues. Asean will not assume European Union-like common foreign and security policy. But Asean can work towards a more coordinated position to provide a collective push on issues such as climate change, forestry, global financial crisis, transnational crimes and terrorism. Rather than resisting or pushing them away, Asean finds it better to engage all the major and emerging powers to find a common solution. This is why Asean, represented by its rotating chairman, has taken active part in recent G-20 summits.

Asean is said to be among the world’s most successful regional organisations. Not too long from now, an Asean Community will emerge, and it will be confronted with the daunting task to find its rightful place in a still elusive and turbulent world order.

It is a challenge that Asean is ready to meet.

The writer is President of the Republic of Indonesia, and the current chairman of Asean.

Counting the World’s Unbanked

SIGN OF THE TIMES

Counting the world’s unbanked
McKinsey Quarterly | MARCH 2010
• Alberto Chaia, Tony Goland, and Robert Schiff
Fully 2.5 billion of the world’s adults don’t use banks or microfinance institutions to save or borrow money, but unserved doesn’t mean unservable.

Pointers:
• Fully 2.5 billion of the world’s adults don’t use formal banks or semiformal microfinance institutions to save or borrow money.
• Nearly 2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East.
• Unserved, however, does not mean unservable.
• The microfinance movement, for example, has long helped expand credit use among the world’s poor—reaching more than 150 million clients in 2008 alone.
• Approximately 1.2 billion adults in Africa, Asia, and the Middle East who use formal or semiformal credit or savings products, about 800 million live on less than $5 a day.
• Large unserved populations represent opportunities for institutions that are able to offer an innovative range of high-quality, affordable financial products and services.
• With the right financial education and support to make good choices, lower-income consumers will benefit from credit, savings, insurance, and payments products that help them invest in economic opportunities, better manage their money, reduce risks, and plan for the future.

It’s about time – The New Glass-Steagall

The first time I heard about the “Glass-Steagle Act” was in year 2002 when an ex-banker told me about it. Well Simon, you were right. You said that the repeal of this one act was the factor that changed the character of the banking industry altogether and the cause of it sliding down a slippery path of compromises. It was a road of no return, well, until now, that is. See article below “New Glass-Steagall Will Shake Private Equity” by Toby Lewis, The Wall Street Journal|Business, 22 Jan 2009.

The Biggest Cause of the Financial Crisis
Interestingly, when the Motley Fool team “set out to determine who deserved the most blame” for the financial mess out of sixteen contenders, their conclusion was the repealers of the Glass-Steagall act. If you are interested to read about the other 15 culprits, the Motley Fools have it for you packed in 125 words. Here’s their explanation on the Glass-Steagall Act:

“The Glass-Steagall Act required the separation of commercial and investment banks. After it was repealed, one-stop-shops such as Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM), and Bank of America (NYSE: BAC) were allowed to supplement their regular deposit and lending businesses with all the bells and whistles of Wall Street — helping to lead them into too-big-to-fail territory.” (Motley Fools)

The financial crisis has brought to light the wisdom of the Glass-Steagall Act. So it is with a sigh of relief that we see politicians coming round to see the real reason and that one thing that has caused the failure of banks.

Financial News: New Glass-Steagall Will Shake Private Equity
By Toby Lewis Of FINANCIAL NEWS
JANUARY 22, 2010, 9:20 A.M. ET

Following President Obama’s shock announcement yesterday of plans to strip banks of their private equity interests, Financial News looks at the U.S. and European banks’ exposure to the asset class.

The White House issued a statement yesterday, in which it said: “No bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund.”

The rule in its present wording could potentially force banks to dispose of both their direct private equity arms and also their substantial fund investments in the asset class.

Should European politicians decide to follow the U.S.’s lead, as some expect, there could be a big impact on the powerful investment houses in the banks based in the region.

Tim Syder, deputy managing partner of U.K. mid-market buyout firm Electra, said a similar move in Europe would have a greater affect at the top end of the private equity market. He said: “There is going to be less private equity competition in the market as capital will be more expensive. Where it is going to have an effect is that banks are not going to be investors in funds. Funds will be harder to raise but I think that would have happened anyway.”

The move is likely to further precipitate a decline in banks’ holdings in private equity, which made up about 50% of the asset class in the 1980s, according to industry insiders. Bank investments in private equity now make up 9% of fund investments, according to data provider Preqin.

Bruce Ettelson, a partner at law firm Kirkland & Ellis, said: “In a world where there is less capital available for private equity and hedge funds, this will take out another source of funding.

“Banks unloading their stakes into the secondary market could cause a decline in prices and have an adverse affect on the very institutions that government is trying to buttress.”

The following data has largely been taken from the banks’ websites, the banks themselves and Preqin, where stated.

In Europe
Credit Suisse (CS) has more than $33 billion of private equity managed assets, which are held in operations such as its fund of funds division and a direct arm, DLJ Merchant Banking.

Lloyds Banking Group (LYG) owns Lloyds Development Capital, which manages GBP2 billion of investments, and Bank of Scotland Integrated Finance, which is running an ongoing sale process handled by UBS (UBS). It has deployed more than GBP10 billion since 2000.

Barclays Private Equity is also considering a spin out. Its latest buyout fund raised EUR2.4 billion.

HSBC Private Equity has a large Asian business, HSBC Private Equity Asia, with $3.5 billion under management and a North American business with more than $1 billion, as well as a U.K. division with undisclosed assets.

BNP Paribas (BNP.FR) is the largest investor in the funds of PAI Partners, France’s largest buyout firm.

In the U.S.

The direct arms of the U.S. banks are large. Goldman Sachs (GS), across its eight private equity units, has $27.2 billion (EUR19.2 billion) of dry powder ready to deploy in private equity deals, the most of any firm globally. U.S. firm Blackstone Group holds the second-highest amount of un-deployed capital with $25.2 billion.

Citigroup (C) owns highly-regarded direct division Metalmark, which has invested $7.6 billion since 1986, and also through alternative asset arm Citi Alternative Investments, which has long been a large player in private equity.

JP Morgan’s (JPM) direct investment arm, One Equity Partners, manages $8 billion of investments and commitments. The bank also has $6.8 billion invested in other private equity funds, according to Preqin.

Bank of America Merrill Lynch’s (BAC) private equity arm BAML Capital Partners has more than $8 billion under management. It has $5.1 billion of fund investments, Preqin said.

Morgan Stanley’s (MS) private equity arm has invested $6 billion since 1985.

Web site: http://www.efinancialnews.com

MM Lee views on Political Leadership

Political leaders cannot be trained, but must be found, says MM Lee
By Asha Popatlal, Channel NewsAsia | Posted: 02 September 2009 2217 hrs

SINGAPORE: Political leaders cannot be trained, but must be found and be people with passion, says Minister Mentor Lee Kuan Yew.

And that’s one reason why, unlike corporate leaders, they are so much harder to get. Mr Lee was speaking on leadership transition and other issues in a wide-ranging dialogue session at the fifth anniversary of the Lee Kuan Yew School of Public Policy.

It was a mixed 800-strong crowd of corporate heads, policy analysts, international students and half the Cabinet.

They were all present to celebrate a school that has grown from just 40 students from a handful of countries, to over 300 students from 52 countries and territories.

At the dialogue session, when asked what he would do if there was a freak election result locally, Mr Lee said he had ensured safeguards were in place.

“Many voters now tell us openly – “my family, three of us vote for you but two of us voted against you”. Just to let you know we want an opposition voice and we don’t want you to be so overwhelming. So in that case you may have a freak result and that worries me. So we have a president with blocking powers,” said Mr Lee.

Which means a new party cannot raid the reserves or change top officials, such as the police commander, without the president’s consent.

Mr Lee said: “I spent 15 years thinking out these safeguards and finally persuaded my younger colleagues that we needed this because they can’t guarantee that they’ll each time provide a better team than the opposition, just because it has been done in the past. No problem in next election, but maybe after that – if we don’t find a good team in elections after that – we are at risk.”

But concerns about the global economy were also very much on people’s minds and questions were asked as to Mr Lee’s views on what could have led to the fallout.

Mr Lee believes the excesses of the liberal system and the belief that a completely free market will allow great benefits, were contributing factors.

“However we learn, whatever lesson we learnt, I believe that the free market system from time to time you must expect a glitch and a failure in the market. It happens regularly … you will learn the lesson from this ever after, no more crisis and I think certainly it will happen again. That’s the way of the free market economies,” he said.

Mr Lee also fielded questions on his views on developments in India and China. But it wasn’t all serious as he refused to take one question.

One man asked: “I believe that Indonesia currently faces a situation you have often warned against. Which is when there are too many voices in the marketplace, it is too easily swayed by public opinion. How do you think a country like Indonesia should deal with this type of situation?”

“You expect me to endorse your statement? My business is to maintain friendly relations. I think I’ll pass that question,” he replied.

The school, also gave mementoes to donors. It had successfully raised $16.5 million, which with the government’s matching grant, would make it $33 million, far higher than the initial aim of $5 million. – CNA/de

Land Grabs – What’s the Issue?

ENSHROUDED IN THE ISSUE OF LAND GRABS is the dynamics of economics, politics and worldview. There are many dimensions to consider as poor nations struggle over this issue, one of which is how developing nations can positively engage globalization?

We have to re-look the entire economics in which poor nations are subjected to. Perhaps we need to look deeper at the architecture, one that is naturally connected to people and the environment. Perhaps we need to go back to some very basic principles behind the economics. To change the economy of poor nations, we have to change the economics.

“The world is flat” as Thomas Friedman espoused in his book on the inevitability of globalization and its impact. How can we create an architecture in a seamless global economy that provides a “home” to poor nations, a home that is a refuge from a world they can’t fully control and potentially threatening and also at the same time give them a view out over the economic landscape where they can partake as equal partners, where they can view the prospects?

Over the years a group of us in Singapore have researched into this area and have created economic models that can make this a possibility. It is a different paradigm but we believe it offers a sustainable solution to the “land grab” situation faced by the nations.

The world has shrunk and we have no choice but to engage with each other but will it be for poor nations on the basis of a disguised colonialism within a global economy or one where they are recognised as resource owners and accorded the status as such, not a source of cheap resource or labor. Thomas Friedman gave us his take on the three eras of globalization in the article below. The dynamic element in both eras of globalization was countries globalizing, for imperial reasons, for resources, markets and labor. Is that going to change in Globalization 3.0? I’d like to know what you think.

Excerpts from Nayan Chanda’s interview with Tom Friedman, YaleGlobal, 18 April 2005:

I would argue that there have been three great eras of globalization. One I would call, for shorthand, Globalization 1.0. That was from about 1492 till 1800 when we saw the beginning of global arbitrage… Columbus discovers America, so basically that era shrunk the world from a size large to a size medium. The dynamic element in globalization in that era, was countries globalizing, for imperial reasons, for resources.

The second great era was 1800 till the year 2000 – it just ended. And that era shrunk the world from a size medium to a size small. And that era was really spearheaded by companies globalizing, for markets and for labor. Now I would argue Lexus and the Olive Tree was really about the tail end of that era

“Olive Tree” was nation-states, and “Lexus” was technology, and the book was about the interaction between what was new, this form of globalization that was shrinking the world from size medium to size small, and at the same time these traditional, ethnic, national issues. Now, what I discovered by visiting India in 2004 was that we’d actually entered a whole new era of globalization. And Lexus was wonderful for what it was, but it was out of date! It couldn’t tell the whole story anymore, it couldn’t explain the world, because what I really found in going to India was that we’d entered Globalization 3.0. And it’s shrinking the world from size small to size tiny, and flattening the global economic playing field at the same time.

I’ve listed a few websites that gives thought to this and the implications for the people whose lands are involved in these “land grabs”.

http://farmlandgrab.org/5585
http://farmlandgrab.org/
http://www.fpif.org/fpiftxt/6201
http://farmlandgrab.org/6654
http://www.grain.org/nfg/?id=610
http://yaleglobal.yale.edu/display.article?id=12404
http://antilandgrab.wordpress.com/

Google Chrome OS: Web Platform To Rule Them All

I have just read a paper written on Business Models by the Sloan School of Management written in 2006. In a nutshell, a business model consist of two elements: What a business does and how the business creates value. They have found that there are different kinds of business models operating in the economy but some perform better than others, both in terms of higher profitability and market value.

The most common business model is one that involves selling ownership of assets to customers. Examples of these are manufacturers, they sell what they make and distributors, they sell what others make. The paper has discovered that business models involving selling the right to use without owning the asset, perform better than business models that involve selling the ownership of assets. This is the new paradigm of the future and Google understands this.

Though some may raise their eyebrows on Google’s plan to develop a “web platform to rule them all” as laughable, it is no laughing matter. Google is selling you the usefulness of something you want without ownership. The launch of Google Chrome OS signals this tectonic shift where even the mightiest will fall in the ensuing earthquake that will shake the business landscape. Google and Microsoft represent two different paradigms which is expressed in their business models. With the technological advances we have made, accessibility to cloud-based services and software will be increasingly valuable to consumers.

“Google has partners that share its vision says something about the shakiness of Microsoft’s position. Acer, Adobe, ASUS, Freescale, Hewlett-Packard, Lenovo, Qualcomm, Texas Instruments, and Toshiba are all working with Google to help it re-imagine the operating system. So too is Intel, as The Register reports.” (information Week, 10 July 2009)

My personal take is that Google’s plans for Chrome OS is an inevitable path of the future of business. Am I right? Your thoughts please.

Google Chrome OS: Web Platform To Rule Them All
With Chrome OS, Google aims to make the Web the primary platform for software development.
By Thomas Claburn, InformationWeek
July 10, 2009

Google’s plan to release its own operating system based on its Chrome browser is at once audacious and laughable. Microsoft Windows represents slightly less than 90% of the personal computer operating system market, a position it has held for years.

Google’s industry ally, Apple, has managed to steal a few percentage points of market share away from Microsoft in the past twelve years under the singular leadership of CEO Steve Jobs. But Windows remains the dominant operating system, more dominant even than Google is in search.

And with the forthcoming release of Windows 7, Microsoft appears to be well-prepared to defend its empire.

It’s hard to imagine a less promising business for Google to enter, especially given that Google plans to give Chrome OS away for free. And Google’s grand plan to shake up the operating system market isn’t made more credible by the absence of any actual programming code or substantive information about Chrome OS.

Yet, the fact that Google has partners that share its vision says something about the shakiness of Microsoft’s position. Acer, Adobe, ASUS, Freescale, Hewlett-Packard, Lenovo, Qualcomm, Texas Instruments, and Toshiba are all working with Google to help it re-imagine the operating system. So too is Intel, as The Register reports.

Google’s decision to target the netbook market may help the prospects of Chrome OS. Although Microsoft has made a concerted effort to push Windows on netbooks to fend off low-cost Linux-based challengers, Google may find it easier to compete in the netbook market because access to cloud-based services and software is more valuable on devices with constrained resources than on high-powered desktop computers.

Steve Andriole, professor of information technologies at the Villanova School of Business, observed in an e-mail that Google’s announcement comes at the right time, just as the industry is moving to smaller, more mobile devices.

He believes that both pricing and Google’s vendor relationships will play major roles in determining the acceptance of Chrome OS.

The fact that Chrome OS applications will be written using open Web standards like JavaScript, HTML, and CSS might seem like a liability because Web applications still aren’t as capable as applications written for specific devices and operating systems.

But Google is betting that will change and is working to effect the change on which its bet depends. Within a year or two, Web browsers will gain access to peripherals, through an infrastructure layer above the level of device drivers. Google’s work with standards bodies is making that happen.

According to Matt Womer, the “ubiquitous Web activity lead” for W3C, the Web standards consortium, Web protocol groups are working to codify ways to access peripherals like digital cameras, the messaging stack, calendar data, and contact data.

There’s now a JavaScript API that Web developers can use to get GPS information from mobile phones using the phone’s browser, he points out. What that means is that device drivers for Chrome OS will emerge as HTML 5 and related standards mature. Without these, consumers would never use Chrome OS because devices like digital cameras wouldn’t be able to transfer data.

Womer said the standardization work could move quite quickly, but won’t be done until there’s an actual implementation. That would be Chrome OS.

And as the long-foretold Internet of Things emerges — allowing everyday objects to be addressed via online queries — Chrome OS will be well positioned to help Google organize even more of the world’s information than the company already handles.

Chrome OS will sell itself to developers because, as Google puts it, writing applications for the Web gives “developers the largest user base of any platform.”