The last 20 years have witnessed the rise of disaggregated "clusters," "networks," or "ecosystems" of firms in a number of industries, including computers, telecommunications, and pharmaceuticals. In these clusters, different firms design and produce the various components of a complex artifact (such as the processor, peripherals, and software of a computer system), and different firms specialize in the various stages of a complex production process. This paper considers the pricing behavior and profitability of these so-called modular clusters. Baldwin and Woodard isolate the offsetting price effects in a model, and show how they might operate in large as well as in small clusters. Key concepts include:
* Clusters operating under open, public standards may have higher prices and profits than those operating under closed, proprietary standards. * Cluster forms of industrial organization may not be conducive to all kinds of innovation. In particular, innovations that add new layers of functionality to the system, and thus increase total demand, will not be adequately rewarded relative to the value they create. * It is important to learn how cluster configurations affect incentives to supply different forms of innovation, and how firms respond to these cross-layer dependencies in formulating their long-term strategies.
Recent polls of economists by leading financial publications have predicted a less than 50-percent chance that the U.S. economy will enter a recession in 2008. But the media’s coverage of “recession” makes it seem inevitable.
“Everyone’s talking about a recession,” Amy Robach reported on the “Today” show January 12.
The broadcast media mentioned the economy or a recession in 54 stories during the first two weeks of 2008. The segments predicted a recession or reported fears of a looming recession four times as often as they reported optimism about the New Year, even though recent surveys of economists put the chance of recession at 40 percent to 42 percent.
Mr. Bush’s “shot in the arm,” economists said, did not persuade the rest of the world that the United States will escape a recession, or that it will either.
A decade after a credit crisis in Southeast Asia triggered an “Asian contagion” of stock market declines around the world, the credit crisis in the United States is now producing an “American contagion” to which no stock market seems immune.
“There is indeed some panic,” said Thomas Mayer, the chief European economist at Deutsche Bank in London.
The Japanese stock market dropped 5.7 percent, for the worst two-day loss in 17 years, while the Australian stock market tumbled 7.05 percent, its worst single-day loss in nearly two decades. The Shanghai market lost 7.22 percent while the Hang Seng index in Hong Kong plummeted 8.65 percent.
European stock indexes opened with losses of 2 to 5 percent, extending a steep slump that pushed some indexes down more than 7 percent on Monday.
Trading on the Bombay Stock Exchange was halted for an hour on Tuesday after the Sensex index dropped 11.5 percent shortly after the opening.
On Monday, the Frankfurt Stock Exchange’s Dax index plummeted 7.2 percent, its steepest one-day decline since Sept. 11, 2001. The 7.4 percent drop in Bombay’s Sensex index was the second-worst single-day tumble in its history.
Readership will get another boost starting Tuesday, when TheAtlantic.com will abolish the fire wall that has allowed only subscribers to the print magazine to see most of its articles online. It will make its archive accessible, too.
Executives hope that a rise in traffic brings to The Atlantic, one of the nation’s oldest publications, something it hasn’t had in many years: a profit.
Like a slow-moving glacier, the Internet is relentlessly and inexorably pulverizing the beloved walled gardens of the telecommunications companies. In the past few days, there have been some exciting new developments on how the wireless carriers’ garden walls are starting to "come a tumblin' down."
Apple, Comcast, and others are making the Internet a much bigger pie where everyone can profit, rather than limiting themselves to decorative cup cakes. This is the future of the Internet. The carriers that try to buttress and reinforce their walled gardens are doomed to failure.
We have identified our six top Internet themes/events for 1H’08 that could create trading opportunities in the group.
Intensifying 3rd party seller competition (negative) As the industry giant ($57bn in TTM GMV) eBay’s anticipated listing fee changes could impact the 3rd party market. We think Amazon ($5bn in TTM GMV) might incorporate some of this uncertainty (and consumer uncertainty), into its ‘08 outlook, potentially creating a buying opportunity as we expect little actual impact.
A bump Online media spending (positive) We see two events that could build enthusiasm on the Internet advertising market into the summer: elections and the TV writers strike. Direct dollars won’t be that material ($150mn possible direct benefit to Online adverting in ‘08), but extensive political spend could crowd non-political spending to Online display markets, which could be a catalyst for Yahoo or Google (YouTube).
Increasing focus on mobile market initiatives (both) CES and the spectrum auction will provide greater clarity on Google’s and Yahoo’s mobile strategies, we expect each company to be aggressive in 2008. Difficult to handicap the risk of Google winning the spectrum auction, but losing could be a stock catalyst. Also, we expect Yahoo’s to renegotiate its AT&T contract with a mobile partnership component, potentially clearing an overhang.
Improving display ad targeting technology (positive) A Google/DCLK merger may highlight possibility for improved targeting technology to drive up the value of Online ad inventory. We think Online CPMsat around $2.50, which trail newspapers by 5-10x has room to grow, and targeting will make social networking sites more competitive, but also benefit Yahoo! in ‘08.
Asset value unlock speculation (positive) The InterActive split into five entities expected in mid-2008 will be the catalyst and, in addition to potentially creating value for Interactive, the split could be an industry catalyst highlighting the underlying asset value for Yahoo ($10-11/share) and potentially even eBay (we value PayPal ~$10bn) or Expedia (TripAdvisor).
Social networking revenue model emergence (negative) Audiences are moving to social networking sites and the “interest targeting” ad sales initiative by MySpace is just a first step in competitive audience monetization. We expect more display/sponsorship/ad network initiatives, followed by peer-to-peer eCommerce and possibly personalized search in a few years. All large cap. Internet stocks (eBay, Google, Yahoo) have some degree of risk, although AOL, MSN and Yahoo! could have most in ‘08.
Governments and regional authorities often express the belief that the key to prosperity and economic expansion is related to the ability of countries to sustain regional clusters of competitiveness and innovation. The book reviews the most important conceptual approaches to the analysis of the emergence, growth and evolution of clusters of innovation. Drawing from the different experiences of industrial districts and high-tech regions such as Silicon Valley, Boston's biotech region, and Hsinchu-Taipei, the contributions in this book offer a broad interpretative framework and policy implications for the creation and strengthening of competitive clusters.
Themes include:
* the wide variety of existing clusters and the diversity in their emergence and growth; * the international mobility of factors and demand linkages; * the role of different network types and the social setting; * the accumulation of capabilities in key large actors and the importance of spinoffs and new firm formation; * the role of different learning regimes and sectoral specificities; * the importance of social networks, labour mobility, and face-to-face contacts as vehicles of knowledge spillovers.
Broad implications are drawn for the design of policies to encourage successful economic clusters in developed and developing clusters.
