Course description

Number: MBA 290C.1, EECS 201, IS 224, E298A

Title: Strategic Computing and Communications Technology

Course cross-listing or room share: Electrical Engineering and Computer Science (listed as an EE course, but intended for both CS and EE graduate students), Information Systems, Business Administration, Engineering. Satisfies core course requirement for the Management of Technology Program, although enrollment in MOT is not required.

Units: Three, taught each fall semester

Prerequisites: Graduate standing in the College of Engineering, Haas School of Business, School of Information Management and Systems. Space permitting, graduate students from other units, or advanced undergraduate students, may be admitted.

Time and place: 202 South Hall, TTh 2-3:30



David G. Messerschmitt

Roger A. Strauch Professor of Electrical Engineering and Computer Sciences


Office hours: Tu 10-11 and Thur 11-12


Hal Varian

Dean, School of Information Management and Systems, Professor, Haas School of Business, Professor of Economics


Office hours: by appointment

Catalog description

Factors strongly impacting the success of new computing and communications products and services (based on underlying technologies such as electronics and software) in commercial applications. Technology trends and limits, economics, standardization, intellectual property, government policy, and industrial organization. Strategies to manage the design and marketing of successful products and services.

Extended description

The course will enumerate and discuss factors relevant to the successful deployment and assimilation of new computing (equipment and software) and communications (telecommunications and networking) products and services in commercial applications. Factors covered include technological trends and limits, economics, legal and intellectual property, government regulation, standardization, and relevant industrial organizational issues. The objectives are to understand the impact of these factors on the commercial success of products and services, business strategies for designing and marketing products and services, all with the goal of enhancing their commercial success.

The course will be of interest to students expecting to develop or market new computing and communications products based on electronics and software technologies in a multi-vendor environment, as well as those expecting to manage such organizations.


More than ever, many non-technical factors impact the success or failure of new products and services in the computing and communications industries. There are a number of factors contributing to this, including:

  • An increasing focus on end-user applications, rather than advancing core technologies
  • A shift in the computer and telecommunications and networking industries away from stovepipe stand-alone solutions and toward integrated-application layered infrastructures, with the result that a system solution increasingly requires the integration of complementary products from different companies
  • An increasingly competitive environment in the telecommunications industry
  • The importance of pricing and related product line and versioning strategies in these increasingly competitive industries
  • Distributed applications in a networked computing environment, placing interoperability and portability constraints, increasing the importance of standardization, and exposing the computer industry to government regulation
  • An trend toward fragmentation of these industries into smaller companies (driven by venture capital and the decreasing popularity of vertical integration), with the result that many products and services require a collaboration among companies, and the management of intellectual property rights is increasingly important
  • An increasingly rapid evolution of technologies, products, and services, with many opportunities to succeed or fail based on the quality of strategic decisions in product and service design and positioning
  • Unusual economics in these industries relating to lockin and network effects that have the impact of magnifying success or failure, leading to winner-take-all effects and resulting in an increasing frequency of "standards wars"

As a result of these and other factors, product design is increasingly impacted by various external factors. Both strategic and tactical decision making in the design and marketing of products and services are complicated. The goal of the course is to position the students to be better informed strategic decision makers in the definition, design, and marketing of new products and services in the computing and communications space.

In addition, service and manufacturing companies, government, and non profits are strongly impacted by technological change in computing and communications. Often these organizations make decisions based on a retrospective view of technology. This course should prepare students to better anticipate the course of technological change, improving their technological decision making in organizations of all types.

In summary, this course is motivated by changes occurring in the computing and communications industry, resulting in fundamental shifts in the engineering design process, the need for greater awareness of non-technical issues on the part of engineers, more understanding of technology on the part of managers, and a stronger partnership between engineers and managers. An important dynamic will be the mixture of disciplines represented by the students, so that they may learn from one another.

Course summary

See the “schedule” for specifics on classroom topics and readings.

I. The industry structure

The industry structure consists of many types of suppliers and customers, including products and services, software and hardware, applications and infrastructure. The industry is trending away from large vertically integrated suppliers to a fragmented structure with many more specialized suppliers coordinating themselves through open interface standards, consortia, technology alliances, etc. Both the computer and communications industries are evolving away from stovepipe products based on a single application to integrated layers that service all applications. The merger of the telecommunications, networking, and computing industry, results in massive changes to both industries, increasing the role of standardization and computing and reorganizing telecommunications around global end-to-end networked services. Whole new industries are emerging around enterprise applications and electronic commerce.

II. Buyers and sellers

The economics of software and information content involve large economies of scale through low cost of reproduction. The result is a need for unusual market strategies, including value pricing and versioning. Semiconductor design and manufacturing faces unique challenges of large capital investments, international competition, and government support.

III. Obstacles to change

A large number of complementary products must interoperate for successful applications in network computing. The result is that both customers and suppliers experience lock-in to existing products and solutions. Many products in this industry have the characteristic that they offer more value as more people adopt them (called network effects), resulting in positive feedback that rewards successful products and punishes unsuccessful ones. Together, these effects result in winner-take-all tendencies, and draw the attention of the antitrust law enforcers. Much of the current industry structure demonstrates the imprint of these effects.

IV. Standardization, alliances, consortia

Because no one company provides a complete solution, and many software and equipment products must interoperate to achieve a successful application, industry coordination mechanisms like standardization, alliances and consortia are increasingly important. Individual companies face difficult decisions as to proprietary technology vs open, de facto, and de jure standards. In view of winner-take-all effects, waging standardization battles are critical to success, and require special strategies.

V. Intellectual property

Copyright laws enable software developers and content producers to maintain ownership and control of their products, and patents allow companies to prevent others from copying their innovative ideas. Managing intellectual property is a key strategic issue for companies, with many contradictory considerations. Networks and digitization introduce many new challenges for information suppliers, with the need for revisiting the laws as well as new technologies like trusted systems. The patenting of software is a major issue for the industry and government. Often industry cooperation and standardization run directly counter to enforcing patent protection.

VI. Government intervention

Government-sanctioned monopolies and regulation have been a fixture of the telecommunications industry for many years. There are many issues relating to the winner-take-all effects in this industry, and the balance between free enterprise, regulation, and antitrust laws is difficult to manage. Government national security and law enforcement concerns have led to major tension with the software industry over security and encryption. Companies must keep in mind these issues in setting their strategic direction.

VII. Case studies (integrate the above)

Most real-world industry initiatives involve some mix of the issues above. Some broad case studies will be used to study the interrelationship of these issues.

Group projects

The major portion of the grade will be determined by two group projects, the first studying some specific industry, company, product category, or patent portfolio illustrating the principles of this course and the second studying both sides of some relevant controversial issue and participating in a classroom debate.

Discussion forum

The class discussion forum will be available to discuss these issues offline or ask questions of the instructors. This is generally better than sending email to the instructors or to other students, because the subsequent answers and discussion are available for all students to see. Of course, email is also available for private communication.

Textbooks and readings

Required textbooks

C. Shapiro and H. Varian, Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, 1998.


D.G. Messerschmitt and Clemens Syzperski, Industrial and Economic Properties of Software  (placeholder title). This is a manuscript of a book to be published by MIT Press in 2002. Xerox copy will be provided at no cost to the students.

Optional textbooks

If you are not very familiar with some of the technical underpinnings of the course, the following text will be helpful:

D.G. Messerschmitt, Understanding Networked Applications: A First Course, Morgan Kaufmann Publishers, 1999.

Here is a shorter (and cheaper) version of the book:

D.G. Messerschmitt, Networked Applications: A Guide to the New Computing Infrastructure, Morgan Kaufmann Publishers, 1999.


Individual readings will be provided on the course website.