1. OME economics of standardisation OME economics of standardisation 30 th March 2007 Patrick Courtney Seer Green, UK

2. Page 1 Introduction  Background innovation + diffusioninnovation + diffusion literature in last 10 yearsliterature in last 10 years  Definition of 4 types of standards  Economic significance to producers and users macro-economic rolemacro-economic role micro-economic rolemicro-economic role  Trade competition and market size: evidence/data/attitudes  Function of market structure and product life cycle  Relevance to OME file format What’s missing, next stepsWhat’s missing, next steps

3. Page 2 Types of standards (1 of 4)   Interface standards eg VHS/betamax, Blu-ray/HD, XBOX/PS3   Economic effects Switching costs (learning, exchange) Reduces risks as perceived by producers & customers   Network effects: Metcalfe’s law Direct: eg mobile phones Indirect: eg car parts May be positive or nil Fairly weak for OME – –unless collaborations arise… Source: Swann, wikipedia

4. Page 3 Types of standards (2 of 4)   Minimum quality especially safety legal usability basic functionality etc   Economic effects Reduces risks that are hidden/hard to assess Helps to protect a market against Gresham's Law – –“bad drives out good” Reduces transactions costs between different producers, as well as between producers & customers   Not applicable to OME file format (but see later…) Source: Swann, wikipedia

5. Page 4 Types of standards (3 of 4)   Variety reduction eg clothing sizes very applicable to software   Economic effects Avoids wasteful profileration Provides economies of scale Helps to build cohesion & critical mass in the formative stages of a market Can focus technology trajectories   Applicable to OME file format ! Source: Swann, wikipedia

6. Page 5 Types of standards (4 of 4)   Information/measurement on product description eg screw thread eg mm vs inch (japan?)   Economic effects allows innovative producers to demonstrate to the satisfaction of the customer, that products are as innovative as they claim to be role of public bodies   Not directly applicable to OME file format (?) Source: Swann, wikipedia

7. Page 6 Linking types of standards to economic benefit   Four types Interface standards and network effectsInterface standards and network effects Minimum quality and hard-to-assess features Variety reduction and focus of effortVariety reduction and focus of effort Information/measurement   Economic significance to producers and users micro-economic and macro-economic role   For users Reduced transaction costs Reduced risk Increase market size and volume -> Increase competition Ability to absorb faster rate of change   In short, the existence and use of standards makes it easier to produce, sell and buy products and services. Standards enable a market. They are part of the infrastructure for innovation-led growth Codifies state of the art technology and best practice Role in diffusion of innovation… Source: THE ECONOMICS OF STANDARDIZATION: Final Report for Standards and Technical Regulations Directorate UK DTI, G M Peter Swann, Manchester Business School

8. Page 7 Economic benefit of standards: survey of attitudes   Gains to companies   Help in technological change   Export and new markets   Competitive advantage: be ahead of competition, assert interests participation offers insight, product opportunities, learning, networking   Reduce development costs, save on rework   Co-operation with suppliers and complementers   Hindering R&D: mixed but reduces risks & hinders less than administration   (Companies that use standards perform better)   Gains to economy   Used as trade barrier in 1970/1980, international standards increase trade   Mere existence is positive   Innovation (as patents) + diffusion (as standards)   Standards are at least as important as patents… Source: DIN (2000) Economic Benefits of Standardization: Summary of Results, Berlin: Beuth Verlag GmbH

9. Page 8 Data on German macroeconomic growth between 1961 and 1996   Output = growth of value added   Inputs – –Value of assetsNumber of employees – –Stock of patentsValue of licencesStock of standards   Importance of standards to support innovation+diffusion   Standards contribute more to economic growth than patents and licences Sources of growth in the business sector, 1961 - 1996 SourceAverage annual percentage changes 61 - 9061 - 6566 - 7071 – 7576 - 8081 - 8586 - 9092- 96 capital 1.62.62.0 1.71.3 0.81.1 labour 0.20.60.1-0.60.5-0.61.1-0.7 patents 0.10.2 -0.40.30.20.0-0.3 licenses 0.50.60.5 0.40.2 0.11.3 0.6 standards 0.91.51.2 0.91.1 0.40.2 0.3 Total: fitted3.35.74.1 2.13.5 1.03.71.0 realised3.35.24.4 1.73.6 1.13.81.5 Source: K Blind, H Grupp and A Jungmittag, 1999, The Influence of Innovation and Standardisation on the Macoreconomic Development in Germany, Paper to 1st IEEE Conference on Standardisation and Innovation in Information Technology, Aachen, September

10. Page 9 Role in product life cycle  Promote growth of supporting products and services Source: THE ECONOMICS OF STANDARDIZATION: Final Report for Standards and Technical Regulations Directorate UK DTI, G M Peter Swann, Manchester Business School

11. Page 10 Role of industry structure If market is concentrated de facto standard, closed or open standardde facto standard, closed or open standard  If market is fragmented Innovative – need to avoid waste of limited resourcesInnovative – need to avoid waste of limited resources Not innovative – doesn’t matterNot innovative – doesn’t matter  So is this relevant to microscopy/cell imaging for research/drug discovery ?

12. Page 11 Relevance to OME file format: what’s missing, next steps  Some suggestions for users and suppliers:  1. Make network effects direct Collaborative scienceCollaborative science  2. Harness benefits to users Encourage user pull (including publishing needs)Encourage user pull (including publishing needs)  3. Coordination of smaller suppliers Save resourcesSave resources Reduce riskReduce risk  4. User levels and profiles according to usage types (minimum quality effect) Screening: control, SOPsScreening: control, SOPs Core facilities: share dataCore facilities: share data Pharma: control, SOPsPharma: control, SOPs Bio/image informatics: control, SOPsBio/image informatics: control, SOPs  5. Continue promoting, meeting, sharing experiences

13. Page 12 …too many standards ?  MIACA - Minimum Information About a Cellular Assay (http://miaca.sourceforge.net/)(http://miaca.sourceforge.net/)  OME - Open Microscopy Environment (http://www.openmicroscopy.org/index.html)(http://www.openmicroscopy.org/index.html)  Libics - Image Cytometry Standard (http://libics.sourceforge.net)(http://libics.sourceforge.net)  MIAME - Minimum information about a microarray experiment (http://www.mged.org/Workgroups/MIAME/miame.html)(http://www.mged.org/Workgroups/MIAME/miame.html)  Bioinformatics Standards for Flow Cytometry (http://flowcyt.sourceforge.net/)(http://flowcyt.sourceforge.net/)  FCS - Flow Cytometry Standard  API's Standards (http://www.pathologyinformatics.org/standards.htm)(http://www.pathologyinformatics.org/standards.htm)  DICOM - Digital Imaging and COmmunications in Medicine (http://medical.nema.org/dicom/2003.html)(http://medical.nema.org/dicom/2003.html)  LDIP - Laboratory Digital Imaging Project (http://www.ldip.org/) Source: Ilya Ravkin 2007

14. Page 13 Source:  THE ECONOMICS OF STANDARDIZATION  Final Report for Standards and Technical Regulations Directorate  Department of Trade and Industry  G M Peter Swann  Manchester Business School  University of Manchester  11th December, 2000  http://www.dti.gov.uk/files/file11312.pdf  http://www.dti.gov.uk/files/file11316.pdf