Subject: Re: Washington Post: Rumor: AOL, RH, in aquisition talks
From: Frank Hecker <>
Date: Sun, 20 Jan 2002 22:45:11 -0500

Tom Lord wrote:

>I'm puzzled as to why AOL/TW would need to or want to *buy* RH for
>such a play.  It seems to me that RHs customer relations should be
>efficient and effective enough that there'd be no gain in service from
>such a purchase.

To quote from the New York Times article referenced in Ian Taylor's 
earlier message "Varian on Coase": "Oliver Williamson, a significant 
contributor to transaction cost economics, argues that the temptation to 
be opportunistic is a major component of transaction costs, and hence a 
major determinant of the boundaries of the company. If certain suppliers 
are critical to your success, you want them inside, under your control, 
not outside, where their objectives may differ from yours."

>AOL/TWs behavior around chat clients suggests that they may be a
>little schizo regarding the value of open standards and
>implementations to their business, though.

AOL TW is motivated to retain proprietary advantages and lock out 
competitors in areas where it has market share superiority (e.g., with 
instant messaging); on the other hand it is motivated to pursue a more 
open strategy and to cooperate with others in areas where it faces a 
major competitor who has market dominance (e.g., with web browsers and 
operating systems).

You're right, this is a "little schizo", but IMO it is not necessarily 
irrational as a business strategy.


Frank Hecker            work:        home: