Information Technologies and Global Politics: The Changing Scope of Power and Governance

6. THE GLOBAL POLITICAL ECONOMY OF WINTELISM: A NEW MODE OF POWER AND GOVERNANCE IN THE GLOBAL COMPUTER INDUSTRY

CHAPTER SIX THE GLOBAL POLITICAL ECONOMY OF WINTELISM: A NEW MODE OF POWER AND GOVERNANCE IN THE GLOBAL COMPUTER INDUSTRY SANGBAE KIM AND JEFFREY A. HART INTRODUCTION Technological competition in the global information industries—the leading sector in the contemporary global political economy—is currently moving beyond competition over technological innovation per se. The technological winner is now the one who manages to control de facto market standards while at the same time protecting intellectual property rights. Moreover, the new mode of technological competition puts pressure on firms and governments everywhere not only to adjust to the new principles of competition, but also to adopt new forms of industrial governance and state-societal arrangements. In the global personal computer (PC) industry, two American companies, Microsoft and Intel, typify this new mode of technological competition. Together, Microsoft and Intel have defined the architecture for IBM-compatible PCs by setting and controlling de facto market standards and protecting those standards as the world’s most valuable form of intellectual property. Scholars in International Political Economy (IPE) understand that the resurgence of the U.S. international competitiveness is closely related to its relative strength in this new leading sector. This is in a sharp contrast to the debates of the 1980s and early 1990s over the relative decline of the U.S. international competitiveness in previous leading sectors —steel, autos, consumer electronics, and semiconductors. Building on Borrus and Zysman’s work (1997), we attempt to understand the new mode of technological competition and subsequent changes in industrial governance and state-societal arrangements by using the concept of Wintelism. Wintelism 143 writ small is a new mode of competition mainly in the personal computer industry, in which the Wintel (Windows + Intel) coalition represents the combined power of Microsoft and Intel over the architectural standards of PCs. In the PC industry, Microsoft ’s operating system and Intel’s microprocessors are not just superior pieces of equipment that the competition might hope to match or surpass with a reasonable effort. Rather, for some years now, they have served as structural constraints—the rules of the game—that every firm entering the industry has had to accept. Wintelism writ large is a new form of industrial governance that originated from the computer industry, but can be applied to all information industries. It is our view that there is a close fit between Wintelism writ large and horizontal industrial governance. In the Wintelist era, large firms that are vertically integrated no longer dominate because they cannot compete adequately with horizontally focused , specialized firms. We will be arguing below that recent changes in U.S. state-societal arrangements are well suited to an era of architectural competition.1 We use the term modified regulatory state to refer to U.S. government policies and institutional arrangements. Other countries have not been so fortunate in this regard , including the country that was the main source of foreign competition for U.S. high technology firms in the 1980s, i.e., Japan. THE TECHNOLOGICAL BASIS OF WINTELISM The rise of Wintelism is connected with the growing prominence of a technological sector that we call software electronics technology. Software electronics technology includes computer software, microcode, semiconductor chip designs, and technical standards in products and services. Software electronics does not include the hardware aspects of electronics or information technologies. We will call these excluded technologies hardware electronics. Although both hardware and software electronics belong to the broader category of information technology, our definition of Wintelism begins with the distinction between the two technological sectors. COMPUTER ARCHITECTURE TECHNOLOGIES Among software electronics technologies, we will focus on technologies associated with computer architecture. Computer technology is comprised of hardware (all the physical equipment of computers), firmware (embedded software in programmable microchips) and software (a set of instructions that tells the electronics system how to perform tasks). There are also published and unpublished standards and interface protocols that allow designers to make sure that hardware and software work together. As Morris and Ferguson hold, 144 INFORMATION TECHNOLOGIES AND GLOBAL POLITICS The standards define how programs and commands will work and how data will move around the system—the communication protocols and formats that hardware components must adhere to, the rules for exchanging signals between applications software and the operating system , the processor’s command structure, the allowable font descriptions for a printer, and so forth. (Morris and Ferguson 1993, 88) Morris and Ferguson call this complex of...