Ralph,

Thanks for sharing your insights from the MAP era. I was there as well plus, as you know, I attempted to herd the cats behind the IEC Fieldbus 8-headed monster. You are right - the users don't really care enough about a single
standard. Vendors are in charge, they pay the freight and hire the experts.

Dick Caro
============================================
Richard H. Caro, CEO
CMC Associates
2 Beth Circle, Acton, MA 01720
Tel: +1.978.635.9449 Mobile: +.978.764.4728
Fax: +1.978.246.1270
E-mail: [email protected]
Web: http://www.CMC.us
Buy my book: Automation Network Selection
http://www.isa.org/rd.cfm?id=3573
============================================

 

On February 13, 2004, Jiri Baum wrote:
> > However, classical market theory makes certain assumptions, which are
> > not necessarily true in the automation market. This may give rise to a
> > situation where one or another side has an advantage, while the total
> > sum of profit is lower - a suboptimal situation.

On February 17, 2004, Ralph Mackiewicz wrote:
> I think it is debatable that the automation market is subject to
> non-classical economics due to market-distorting monopolistic-like
> companies. <

Well, hence the debate

> In fact, IMHO (not necessarily Adam Smith's opinion) the
> tower of babel in industrial automation protocols is partly due
> because there is no market-distorting monopoly. If there was such a
> company in IA with such market power we would all be using only
> their protocol. <

Actually, I would argue that the vendors attempt to split the market into fragments, with moderate success, each of which is subject to a monopoly.

Like you wrote, most users standardize on vendors. However, once a user has standardized on a particular vendor, they're in a market fragment which is pretty much dominated by that vendor.

The effect is somewhat moderated by the existence of other fragments dominated by other vendors, but:
(a) the major fragments are all pretty much identical, each with a single dominant vendor, so there is little to recommend one over another on this count; and
(b) there are significant barriers to migration between the fragments.

Thus, while they are not true monopolies, they exhibit monopoly-like features.

> > You seemed to be implying that this suboptimality is small, so that it
> > can be reasonably ignored; I was interested in your reasons for this
> > belief.
>
> Actually, I was not trying to make any implication regarding the
> optimality or sub-optimality of the industrial automation
> marketplace. I think that any such observation about what is optimal
> and what is not is strictly a matter of opinion. <

There are objective measures that the economists use, regarding the allocation of resources and the like. These are sufficiently-well accepted to be the basis of legislation in many places around the world, including the US. There's no need to invoke subjective criteria here.

> The fact that the market participants are
> commercially motivated is only one factor among many and, IMHO, not
> the most signficant factor. <

Agreed. I would posit that network effects and barriers to migration and interoperation, both intentional and unintentional, are the more significant.

The question remains, of course, what to do about it. Nobody wants government regulation, and most of the proposals I've seen rely on altruism rather than rational self-interest, thus making limited progress.

Things like OPC and DAIS help a lot, in the domains where they're applicable. Perhaps that is the most promising angle of approach.

Jiri
--
Jiri Baum <[email protected]> http://www.csse.monash.edu.au/~jirib
MAT LinuxPLC project --- http://mat.sf.net --- Machine Automation Tools

 

Ralph, you are 100% correct. Bottom line for 99.9% of the IA users is "Can I buy something that will do the job and not embarrass me." In other words, it is their job to get production working, but not to spend time becoming a computer tweaker.

These guys who think somehow Rockwell or Microsoft can decide exactly what people buy are delusional. If the product don't do the job, people would buy AutomationDirect or OpenOffice instead. But most do not, so Rockwell and Microsoft must be able to do the job.

best regards - LynnL

 

> Actually, I would argue that the vendors attempt to split the market
> into fragments, with moderate success, each of which is subject to a
> monopoly.
>
> Like you wrote, most users standardize on vendors. However, once a
> user has standardized on a particular vendor, they're in a market
> fragment which is pretty much dominated by that vendor.

Users that voluntarily decide to standardize on vendors are indeed volunteering to be dominated by that vendor. This is not an unusual situation. Some users think they have very good reasons for this behavior based on training, spare parts, union issues, whatever. It is the user behavior, and the vendors responding to the behavior, that reduces the pressure on vendors to standardize for interoperability. I have an opinion about whether this is good or bad, but my real point is to make the observation as to why we have the tower of babel in IA comms. The alternative view is that vendors have been able to deftly manipulate users into making decisions against their own self interest and thereby gain dominance. I have worked for IA vendors. I don't think that vendors are that smart or that the users are that stupid.

> The effect is somewhat moderated by the existence of other fragments
> dominated by other vendors, but:
> (a) the major fragments are all pretty much identical, each with a
> single
> dominant vendor, so there is little to recommend one over another on
> this count; and
> (b) there are significant barriers to migration between the
> fragments.
>
> Thus, while they are not true monopolies, they exhibit
> monopoly-like features.

You are looking at the fragments based on the user base of a particular vendor. In that case, the user is dominated by that vendor (by choice) and I suppose the vendor could/would behave in a somewhat monopolistic manner in that limited sense.

When I spoke of fragments, I was thinking more along the lines of application spaces such as: material handling, motion control, food packaging, petroleum refining, paper, chemicals, etc. etc. (and, with numerous fragments within these fragments). My original point is that many users in a particular fragment consider their own requirements too important to compromise by demanding a generic solution. Instead, they choose technology that is specifically designed for their unique niche/fragment and that results in a fragemented market when taking the entire IA industry into consideration. When viewed across the entire spectrum of the IA industry, I don't see any vendor dominating. Any vendor that tries to behave like a monopoly outside of the mini-monopoly any individual user voluntarily grants them will have their lunch eaten by their competitors.

> > Actually, I was not trying to make any implication regarding the
> > optimality or sub-optimality of the industrial automation
> > marketplace. I think that any such observation about what is optimal
> > and what is not is strictly a matter of opinion.


> There are objective measures that the economists use, regarding the
> allocation of resources and the like. These are sufficiently-well
> accepted to be the basis of legislation in many places around the
> world, including the US. There's no need to invoke subjective criteria
> here.

Call me a cynic, but claiming that determinations of "optimality", by economists or not, are objective because legislators believe them to be is not very compelling. The modern legislator is the least likely person to have a good understanding of real world concepts outside of the concept of political power and how to gain it and use it. I also have not seen anything that would lead me to believe that the IA market somehow doesn't follow generally accepted economic prinicples. I will admit that I have not sought out such information either. If you know of some of this I would be interested to see it.

> The question remains, of course, what to do about it. Nobody wants
> government regulation, and most of the proposals I've seen rely on
> altruism rather than rational self-interest, thus making limited
> progress.

I don't think there is a need to do anything about it. If users think this is important, then they could easily change this pretty quickly. Right now, I don't think that users really care about it very much. If they don't care about anything other than the purchase price, why should some outside force care?

> Things like OPC and DAIS help a lot, in the domains where they're
> applicable. Perhaps that is the most promising angle of approach.

I agree that OPC has helped a lot. OPC has helped hide the fragmentation of the protocols for users and has dramatically lowered the cost to do application integration on the plant floor, albeit primarily for Windows only so far. The OPC Foundation is actively pursuing activities to broaden the aplicability of their technology to be suitable outside of a strictly Windows environment. Some third parties already provide this capability. Standardization is inevitable, particularly as the differences between the proprietary technologies gets smaller and smaller and as the ability for a single solution to address multiple market niches without big tradeoffs increases due to technology.

Regards,

Ralph Mackiewicz
SISCO, Inc.

 

The same was said of the all the monopolies the world over. No one could say that ATT wasn't doing the job. But I can remember when a long distance call was a pretty big deal and you had to ask permission and pay to attach a modem. And DEC certainly did the job, we just do it differently and a lot cheaper now. Those are a couple of examples of a post proprietary world being better for the consumer. Yes, we do have more decisions to make now in some areas of our lives. I think automation would be a great place to be able to do things differently and cheaper these days.Without the artificial barriers that comprise the Tower of Babel. Someday, hopefully soon, the status quo will seem as strange as $100,000 dollars a year for a 1 MIPS Vax and $50.00 a minute long distance. And XXs Ethernet will be the same YYs Ethernet and both will work with the Ethernet the rest of the world uses and expects to work. We'll remain in this holding pattern until things work together as expected. Then we'll see rapid progress. Just like all the other industries where this has happened. Or we'll see PLCs beside the Vaxen.

Regards

cww

 

"split, fragment, and monopoly" don't go together.

jk

 

Some change to existing legislation is probably needed since existing laws are broken in two areas:

1. Software/business process patents
2. International standardization

First let's deal with patents. The lawsuits related to patented business processes are a disgrace to intelligence. Particularly the lawsuits by Solaia against end users of Rockwell PLCs for violation of the '318 patent. This patent specifically relates to the use of PLC data directly into spreadsheets on a Personal Computer, but is being stretched by Solaia into application of OPC with PLC data that is not mentioned in the patent. In the
US, a patent holder may sue anyone for patent infringement at any time, even if the allegation is totally false. The hazard is that the patent holder may lose in the courtroom and be subject to the countersuit by the defendant. The way that the Solaia suits have been going, is that the defendants are all end users who have no taste for prolonged court battles, and typically settle for a fraction of the legal costs estimated for such a protracted battle. This is legal blackmail, and was never intended by the writers of our constitution. At this point, the valuable contribution of OPC is being threatened by Solaia and its nuisance lawsuits. Attempts by Rockwell to defend their customers have so far been unsuccessful. START Magazine has been following this issue very well.

The international standards process is very different from the US Standards process. In the US, standards are explicitly designed to promote interoperability in order to increase competition. The Fieldbus standard ANS/ISA 50.02 was designed to provide just one protocol that all suppliers could implement so that their products would interoperate. The European Common Market changed all of this. In the European Economic Community (EEC), national standards were being used to build fences to protect products of local manufacturers with a result that cross-border commerce was being inhibited. European standards were designed to remove such barriers to trade
within Europe. A European standard is designed to ALLOW multiple solutions for any problem since the development of a single solution was viewed as too difficult. This solution has been sold by the EEC to the international
standards bodies such as the ISO, IEC, and ITU. This is what happened to the carefully crafted 50.02 Fieldbus standard. The European suppliers viewed it as an American solution to which they wanted to ADD the German, French,
Danish, and other common European solutions. As a result, IEC 61158 became an 8-headed monster. In the rush to free and open competition across European borders, the needs of the end-user were lost. This would not have happened if the international standards bodies used weighted voting based on the Gross Domestic Product (GDP) of their member nations, or even an approximation of it. IN the IEC, the US has but one vote, the same as all other nations. The US Constitution writers know the problems of equal voting when they divided our legislative branch into two houses, one based on population, and the other based on one vote per state. Standards committees cannot correct this situation.

Dick Caro
============================================
Richard H. Caro, CEO
CMC Associates
2 Beth Circle, Acton, MA 01720
Tel: +1.978.635.9449 Mobile: +.978.764.4728
Fax: +1.978.246.1270
E-mail: [email protected]
Web: http://www.CMC.us
Buy my book: Automation Network Selection
http://www.isa.org/rd.cfm?id=3573
============================================

 

And when everything is so simple to do and no specialties needed, we all can be replaced by Pakistani, russian or Indian programmers (not that there I have anything against them or anyone else) because there is no specialties left... not that there really is today but at least we are holding on to some things.

I know the old arguement, we will be doing other things, but in this day and age... I wonder.

Although I do not necessarily believe in closed borders etc... just another thought.

Dave

 

This is one way of looking at the situation that was reached - perhaps rather partial. Another way of looking at things was that the Fieldbus standardisation was very late in producing anything at all, and favoured a distributed process model with a relatively slow physical layer.

This when de-facto protocols better suited to decentralised I/O were in common currency in Europe, principally Profibus DP and Interbus. It was indeed a US concern, not a perdidious EEC anti-competitive conspiracy that splintered this further with the introduction of DeviceNet and ControlNet. WorldFIP - the closest European bus to the international standardisation died from being unused, expensive and unloved by anyone.

It is simply not anything close to a clear cut European conspiracy against the US open standards. I'm afraid US concerns are just as guilty as any European commercial enterprise in attemting to stamp their own will on the marketplace.

 

Hi Dick

On February 23, 2004, Dick Caro wrote:
> Some change to existing legislation is probably needed since existing laws
> are broken in two areas:
>
> 1. Software/business process patents
> 2. International standardization
>
> First let's deal with patents. The lawsuits related to patented business
> processes are a disgrace to intelligence. Particularly the lawsuits by
> Solaia against end users of Rockwell PLCs for violation of the '318 patent.
> This patent specifically relates to the use of PLC data directly into
> spreadsheets on a Personal Computer, but is being stretched by Solaia into
> application of OPC with PLC data that is not mentioned in the patent. In the
> US, a patent holder may sue anyone for patent infringement at any time, even
> if the allegation is totally false. The hazard is that the patent holder may
> lose in the courtroom and be subject to the countersuit by the defendant.
> The way that the Solaia suits have been going, is that the defendants are
> all end users who have no taste for prolonged court battles, and typically
> settle for a fraction of the legal costs estimated for such a protracted
> battle. This is legal blackmail, and was never intended by the writers of
> our constitution. At this point, the valuable contribution of OPC is being
> threatened by Solaia and its nuisance lawsuits. Attempts by Rockwell to
> defend their customers have so far been unsuccessful. START Magazine has
> been following this issue very well. <

Hear, hear!

> The international standards process is very different from the US Standards
> process. In the US, standards are explicitly designed to promote
> interoperability in order to increase competition. The Fieldbus standard
> ANS/ISA 50.02 was designed to provide just one protocol that all suppliers
> could implement so that their products would interoperate. The European
> Common Market changed all of this. In the European Economic Community (EEC),
> national standards were being used to build fences to protect products of
> local manufacturers with a result that cross-border commerce was being
> inhibited. European standards were designed to remove such barriers to trade
> within Europe. A European standard is designed to ALLOW multiple solutions
> for any problem since the development of a single solution was viewed as too
> difficult. This solution has been sold by the EEC to the international
> standards bodies such as the ISO, IEC, and ITU. This is what happened to the
> carefully crafted 50.02 Fieldbus standard. The European suppliers viewed it
> as an American solution to which they wanted to ADD the German, French,
> Danish, and other common European solutions. As a result, IEC 61158 became
> an 8-headed monster. In the rush to free and open competition across
> European borders, the needs of the end-user were lost. This would not have
> happened if the international standards bodies used weighted voting based on
> the Gross Domestic Product (GDP) of their member nations, or even an
> approximation of it. IN the IEC, the US has but one vote, the same as all
> other nations. The US Constitution writers know the problems of equal voting
> when they divided our legislative branch into two houses, one based on
> population, and the other based on one vote per state. Standards committees
> cannot correct this situation. <

This seems to be the end result _whenever_ competing entities are pushed to standardize e.g. the rest of the automation business. The only solution that comes to mind is to extract a promise to support a standard and THEN have an objective, independant group develop one. That is where the OSS community could provide a great service to the automation community. And even then you'ld have to watch for vendors stacking the deck. And the standard would have to be rigorously protected to prevent "embrace, extend and destroy" tactics. Still, the benefits derived are ao huge that I see this as possible. If this community would pull together like the OSS community, it would be
possible very soon.

Regards

cww

 

In reply to Jay Kirsch's comments on "split, fragment, and monopoly": I do not wish to get involved in the general subject you are discussing with Mr. Baum, but "split, fragment, and monopoly" go very well together. This is in fact how a successful monopoly works.

A monopolist (or oligopolist) will split the market into separate fragments, and then charge each fragment the maximum that it is prepared to pay. This allows a monopoly to extract the maximum total revenue from each market segment such that all the surplus value is delivered to the monopolist. This is what economists call "price discrimination", and is in fact one of the defining characteristics of a monopoly.

As to whether the automation market is subject to monopoly or oligopoly, I will leave to others to discuss.

--

************************
Michael Griffin
London, Ont. Canada
************************

 

Hi Dave

Actually I think this trend is better served by the status quo where the vendors are in complete control in conjunction with the monopoly, than by a model where people have options to do more things. The current products are even sold with the "anyone can do it" line. The shift I see will be to a broader range and more classes of tools, hardly a simplification, but a vast increase in power for the developer. And elimination of fighting with the platform allowing folks to concentrate more on the process. The more you can know about your tools, the less time you spend getting them to do what you want to do. And being able to pick and choose "best of class" solutions rather than only one vendor solutions is very powerful for complex projects as well. The specialties will be in solving industry problems rather than being the best at coping with a vendor's limitations and idiosyncracies.

Regards

cww

 

Tim,

I am not taking a US vs. Europe viewpoint here. My point is that the solution for European standards is not optimal for international standards. Namely, it does not benefit the end user, only suppliers. As long as end users accept this decision, then it will never change. My point was that end-users suffer in the hands of international standards committees.

By the way, the Fieldbus standard, type 1 of IEC 61158 was completed in 1993, long before Profibus began to dominate European networks. However, we in the US were novices at the standards game compared to European companies.

Dick Caro
============================================
Richard H. Caro, CEO
CMC Associates
2 Beth Circle, Acton, MA 01720
Tel: +1.978.635.9449 Mobile: +.978.764.4728
Fax: +1.978.246.1270
E-mail: [email protected]
Web: http://www.CMC.us
Buy my book: Automation Network Selection
http://www.isa.org/rd.cfm?id=3573
============================================

 

Dear Dave,

If you think that the only nation of great specialists is your nation... Well, in every nation there're ass...s.

Best regards,

Jacek Dobrowolski, M. Sc. E.E.
Product Eng.

 

Dick,

With respect, your post more or less directly accused Europe of playing some sort of standards game to do the US down. Indeed, in suggesting there is some sort of 'standards game' that the US 'plays less well' than others, you're perpetuating the same sort of argument. In fact US concerns - AB in particular - are just as good as creating unnecessarily competing standards as any perfidious European conspiracy.

Going back the history of this I think that the perception from the other direction was that Fieldbus Foundation had hijacked the IEC standardisation in an attempt to beat down the de facto standards that had already emerged and were in day to day use, highly effectively, for its own ends. The creation of a standard encompassing the actual protocols generally in use was a reasonable step in my view, because it prevented the risk of the very large investment made in establishing protocol usage from the dangers of suddenly being kicked outside the 'standard' at the expense, let us be quite honest, of FF.

Practitioners such as myself were also concerned that the nature of the beast emerging from the IEC was top heavy, process industry centric, and very unlikely to be economic in implementation. The great advantage of Profibus DP and DeviceNet was that they permitted almost any manufacturer to produce a device that fitted onto a mainstream PLC backplane. They were aimed squarely at doing the specific job of distributing PLC function on a wire, did (and do) it quickly and without fuss.

As such the status quo benefits end users NOT the big concerns, because it creates genuine competition. Siemens, believe me, are not pleased that customers of theirs are able to specify Eurotherm temperature controls in their systems, knowing that they will fit seamlessly into their control system architecture. The vast profusion of third party devices for Profibus, DeviceNet, Interbus, CanOpen, bears witness to how effective this has been; classifying this as a "tower of Babel" is a needlessly pejorative rhetorical metaphor (in any case strictly speaking the Tower of Babel was not a confusion of languages, but rather a monolithic and rather pointless structure created to try to touch heaven via universal co-operation; that it
failed may have been less to do with God's irritation that he might have visitors and rather more to do with it being an impossibly overblown and intrinsically doomed undertaking in the first place - perhaps the IEC would
have done it better...?).

Whereas FF, where it exists, is as a rule confined to homogenous product offerings from monolithic process vendors. Mix and match does not often happen. So which is better?

Best, Tim Linnell

 

For Dick,
"Hear, Hear"

Regards,
Phil Corso, PE {Boca Raton, FL, USA}
[[email protected]] ([email protected]) {[email protected]}

 

Just to make everyones day, it looks like Honeywell has joined the fray of "Gee, don't we have patents that kinda cover these common Industrial methods? Lets tell everyone to pony up". Keep your ears open. I think we may all have to move to China if we want to stay in the industrial field.

 

Referencing your favorite economics' theory is an appeal to authority. Show me the evidence.

"Price discrimination" occurs independently of monopolies. The same automation products are already sold at different prices to end-users,
integrators, and supplier partners. The same products are also sold at even more radically divergent prices among consumer, industrial, and military customers. "Price discrimination" has little or nothing to with the existence or non-existence of a monopoly.

Within the same few minutes I can get significantly different prices for the same automation products by pressing the redial button on my phone and talking to a different person at the same distributor or a different
distributor. Those with better interpersonal skills than me ( which would be most people ) can often get a better price for the same product than I could ever hope for.

Economics and the dynamics behind market pricing has not been established as a hard science. The 'monopolist' is a boogie-man. Any business concern that attempts to raise the price of its product beyond its market value will sooner or later be met with lower-priced
competition. The only way a static monopoly could sustain itself is by government force or on some widely recognized and false condition that just about everyone else is stupid and/or lazy.

Bring on the over-priced strawberry-picking robots and the super-hardened metal alloys. We'll see what the econometrists have to say about that.

joke

 

On March 6, 2004, Jay Kirsch wrote:
<clip>
> Referencing your favorite economics' theory is an appeal to authority.
> Show me the evidence.
<clip>

No, that's not what "appeal to authority" means. A theorist would be an "authority". A theory isn't. I don't need to independently prove a well accepted theory in order to make use of it. If you want to learn the basic theory about how monopolies work, then I suggest that you consult any introductory economics textbook.

> "Price discrimination" occurs independently of monopolies. The same
> automation products are already sold at different prices to end-users,
> integrators, and supplier partners. The same products are also sold at
> even more radically divergent prices among consumer, industrial, and
> military customers. "Price discrimination" has little or nothing to
> with the existence or non-existence of a monopoly.
<clip>

You are quite simply, begging the question. Your conclusion is simply a restatement of your assumptions. The original question was whether monopoly necessarily resulted in a uniform market. I pointed out that a successfull
monopoly (or oligopoly) will often practice price discrimination in order to maximise revenues. In other words, the existence of market segmentation and price differentials is not evidence of a competitive market.

As this is the "Automation List" and not the "Economics List", I won't attempt to deal with the rest of your argument. I have stated nothing that is not well accepted basic economic theory. If you wish to learn how markets work, there are many excellent books on the subject you can read.

As I stated in my original message "as to whether the automation market is subject to monopoly or oligopoly, I will leave to others to discuss".

--

************************
Michael Griffin
London, Ont. Canada
************************

 

"Well accepted" is argumentum ad popularum. I suggest you consult a basic textbook on logic.

jk