It seems you still doubt whether profit motivates (I think you said Drucker
postulated fear of loss was the greater motivator). However, when it comes
to economic sustainability of new enterprises (as opposed to old monopolies
and oligopolies) and more importantly their ability to grow larger, profit
is essential to allow future investment. I think this is what iMode was
supposed to be all about: enabling new businesses and Japanese leadership
to be exported to the world...
1. If the company profits, it can invest to grow its current business and
build new business
2. If the company has healthy profit outlooks, even if it does not have
money to invest now, it can get outside investors to support its efforts.
3. If the company invests wisely, it will grow: hire more employees,
invest in more plant, produce more product at lower prices, and thereby have
a very positive effect on the economy.
No profits, and neither one nor two are possible in most cases. Moreover,
profits/investment/individual corporations growth have a multiplier effect
throughout the economy.
In contrast, in closed or monopoly or oligopoly-like situations, resources
do not go where they are necessarily most productive, but they go to areas
that will protect the position of the monopoly or oligopoly. This keeps a
lot of people busy, to keep their loyalty to the system and to keep costs
high to incent govt NOT to break up monopoly/oligopoly, but not does not
necessarily lead to the most productive use of resources.
This brings us back to cMode, which would seem like a great example. It
keeps a lot of people busy. I am sure alot of money was spent to keep the
various players happy. However, in the end of the day, the system does not
reduce costs nor increase productivity.
If the carrier networks in Japan were open, a Japanese company could have a
chance to wipe this behavior out AND build a business, just by building the
logically best system: one that increases productivity, reduces costs, and
meets the needs of its customers. In a proprietary closed network, the only
people that make a system are those who a selected by the controlling power.
So, you are right in saying that proprietary systems do lead to a lot of
economic activity. I would postulate that this is very sub-optimal
activity/allocation of resources and thereby is a drag on the economy.
-----Original Message-----
From: ext David Davies [mailto:david@intadev.com]
Sent: Tuesday, September 18, 2001 10:19 PM
To: keitai-l@appelsiini.net
Subject: (keitai-l) Re: Proprietary = BAD
On Tue 9/18/2001 9:29 PM drew.freyman@nokia.com
<mailto:drew.freyman@nokia.com> wrote
>> So, I would agree with your comments that the proprietary model works
very
>> well for Japanese carriers, and maybe even for the Japanese end user.
>> However, it may not be so good for the Japanese mobile technologies
>> ecosystem, or the economy as a whole.
Interesting point, Drew,
Thinking in terms of the economy as a whole, then…
Does it matter whether all (or even most) companies along the food chain
are making a profit for the model to be beneficial to the economy ?
I think not.
The individual profits of a few corporations has rather little influence
whereas the common measure of economic health is based primarily on
spending.
Spending or the transfer of funds from one entity to another is
simulative for the economy as a whole.
Even if certain companies in the chain are not profitable they will have
suppliers who have sub-contractors who have employees, etc etc. Mostly
the money ends up in some persons hands (mostly in the hands of salaried
employees actually) and they in turn spend it on their daughters 40,000
yen mobile phone bill.
So, apart from the (relatively few) shareholders of NEC who are likely
to be very selective spenders of their cash anyway (statistically much
more likely to re-invest any dividends/capital gains than a blue collar
worker) it doesn’t matter whether NEC are making a profit or not.
Thinking in those terms, the ecosystem spreads way beyond the companies
that are directly part of the chain and includes everything down to the
farmer that grows the rice for the bento shop that makes the lunch for
the factory worker who works at the factory that makes the carpet for
the advertising company that makes the TV commercials for the car
company that supplies trucks to the company that makes the little
speaker in your NEC keitai. Surely someone along the line benefits,
even if the speaker maker is being screwed down to unworkable margins by
NEC and can7t make a profit.
Regards,
David Davies
david@intadev.com <mailto:david@intadev.com>
PS. Of course your comments are purely as a forum member, only a dig.
PPS. I hear Bill Gates secretly contributes totally objective postings
on slashdot in his spare time. ;-)
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Received on Wed Sep 19 02:37:54 2001