Professional Reading: Apple, IBM and Their Business Models

Two recent papers available from SSRN:

Case Study of Apple, Inc.: How Apple Executes its Business Model to Control Digital Content through Legal and Technological Means, by Margo E.K. Reder (Boston College):

This article explores how Apple's business model makes use of content licensed from third-party music labels that is in digital format, and how it delivers the service to consumers over the internet. Control of content and profits are the two top goals of the music labels - yet the goals of the music labels' customers are in stark opposition to those goals, since users wish to use the content in different ways and formats, and they have become very averse to paying for content, which becomes easy when content is digital. Since the music labels have in effect conceded distribution of their products to Apple, for one, Apple has found itself in the middle, at once adhering to its contractual duties under agreements with the music labels, while enticing customers and profiting from its user-friendly interface and platform. Apple must both control content - to avoid lawsuits, and sell the content - to continue its iTunes service.

Pragmatism Not Ideology: IBM's Love Affair with Open Source Software by M. Campbell-Kelly (Warwick) and Daniel D. Garcia-Swartz (Law and Economics Consulting Group, LLC):

Today IBM is perceived as being in the vanguard of open source software and a leading participant in the free software community. Paradoxically, IBM is also the world's second largest vendor of proprietary software products. In this paper we argue that IBM's embrace of open source software comes not from a new-found ideology, but from its history of pragmatism. Simply put, IBM is a survivor. It has dominated the IT landscape for most of its history not because of any deep-seated ideology, but because it has been fleet-footed and practical. Its adoption of open source software is in exactly this spirit. In the half century that IBM has been making software, it has delivered all combinations of free vs. proprietary software and open vs. closed code, dictated entirely by the technological constraints, the political realities, and the business opportunities of the day.