Getting sued, laying off most of your workforce, losing your third chief executive and then being bought out doesn't sound like the history of a successful company that could teach Internet businesses a key lesson. But Napster's problems make it one of the best examples of the value of "network effects" and how you can make your users build your service for you. \nThe Internet and the open source movement have made huge changes to businesses in recent years, but the jury is still out on how those changes add up to a new way of doing business. Speaking at BEA's recent eWorld conference, Tim O'Reilly, chief executive of computer book publisher O'Reilly & Associates, suggested that the licensing question that exercises many open source advocates -- and the companies that see open source as a way of saving money by switching away from Microsoft -- is actually irrelevant. \nThe most popular Linux applications aren't databases or office tools, he points out: They're services such as Google, Amazon and PayPal, which run on servers running open source tools such as Linux, FreeBSD, Apache, MySQL, PHP and Perl. Just saving money on software licenses is not what makes them successful. Also, they don't need to let anyone see the source code because they don't distribute them. \n"These are all fiercely proprietary companies, so something is wrong with the idea that once we have open source software, there will be no intellectual property," says O'Reilly. "We have people like Jim Allchin [of Microsoft] saying that open source is an intellectual property destroyer. It's just not true. Here you have these companies with huge amounts of intellectual property but it's sitting somewhere else in the business." \nWhen tools and services get more valuable as more people use them, that's known as the network effect. Telephones, fax machines and email are the most obvious examples, but network effects drive many successful businesses. New users pick Microsoft Office because it is what most employers want you to know, and the more people who use the Office file formats, the easier it is to share documents. Thus, network effects don't just bring you new customers, they make what you sell more valuable to old and new customers alike. \nO'Reilly thinks that is the key for open source and internet businesses. \n"What really matters is the architecture of systems: open source is ultimately about systems that create and manage and magnify network effects," he said. \nThat means if you design the system right, you won't need to do the hard work yourself: your users and partners will do it for you. \nNot because you are paying them (like Yahoo's editors) or out of the goodness of their hearts (like the volunteers who compile the Open Directory or the Wikipedia), but as a side effect of what they're doing for their own self-interested reasons. \nNapster and other file-swapping services didn't spend time building a complex network for their users: they gave users the tools and the incentive to do it. They are not the only services to take advantage of their users. EBay's customers don't just provide the products and content on the auction site, they police each other by giving feedback. Google's search tools help users find information on the web, but the PageRank algorithm exploits the millions of links that individual web developers create to pages they think are interesting. \nAmazon uses customers' searching and spending habits to suggest relevant products: When you search, you don't get the newest or cheapest books unless you specifically ask for them, you get the ones that are most popular in terms of reviews and sales. Look for information on Microsoft's support site and, as well as official resources, you will find links to relevant discussions in public newsgroups, so you can see if someone has already found a solution. \nThese are ideas any company can use on its site or in a service, so you need to make sure you own the user-generated data and metadata that give your service the network effect.
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
Merck Group Taiwan yesterday said that it plans to invest substantially on expanding its fab in Kaohsiung’s Lujhu District (路竹) to better serve its local customers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The company said it plans to expand its production space by 50 percent in the next five years and its workforce by about 40 percent, Merck Group Taiwan managing director Dick Hsieh (謝志宏) told a media briefing in Taipei. Hsieh declined to disclose investment details, but said that the latest investment would exceed the total amount Merck has invested in Taiwan over the past few years. Those investments would be
Yageo Corp (國巨), the world’s third-largest supplier of multilayer ceramic capacitors, has formed a strategic alliance with Hon Hai Precision Industry Co (鴻海精密) to develop key electronic components for electric vehicles and digital healthcare, it said yesterday. The alliance is to help Yageo boost its revenue from high-end components for vehicles and industrial, medical and aerospace devices, as well as those used in 5G and Internet-of-Things devices, the company said. The companies signed the strategic alliance agreement at Yageo’s headquarters in New Taipei City’s Sindian District (新店). Their cooperation is to start this quarter, the companies said in a joint statement. “Through the cooperation
SUPPLY CONSTRAINTS: The transferred orders might not provide an immediate revenue boost given local chipmakers’ high utilization rates, a senior analyst said Shares of local contract chipmakers yesterday rose as much as the 10 percent daily limit, as investors bet on orders being transferred from Semiconductor Manufacturing International Corp (SMIC, 中芯國際) after the US imposed export restrictions on the Chinese chipmaker. United Microelectronics Corp (UMC, 聯電) shares soared 10 percent to close at NT$27.5 as 380 million shares changed hands on the Taiwan Stock Exchange. UMC is the world’s No. 3 foundry by revenue, followed by SMIC, according to data from market researcher TrendForce Corp (集邦科技). UMC has product and customer portfolios similar to those of SMIC, TrendForce said, adding that UMC offers 14-nanometer and