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IT Confidential

I don't think about Adam Smith's invisible hand all that often--economics was never my forte. But a couple of developments last week made me ponder the mysterious ways of the market. First, Sony said it was discontinuing production of the Betamax video machine. Second, Dell and Hewlett-Packard said they would provide Corel's WordPerfect productivity suite on their home and small-office PCs. Sony was first to market with its Beta-format video-recording technology in 1975, but the VHS format dominated the marketplace despite conventional wisdom that Sony's was far superior. This lesson was often cited--still is--during the Microsoft monopoly hearings, along with one about the Dvorak keyboard's performance advantages over the more common Qwerty keyboard layout. A theory of economics called "path dependence" was supposed to explain why Betamax lost out to VHS, why Qwerty beat Dvorak, and why Microsoft's clearly inferior Windows technology overpowered Apple's Macintosh. Path dependence postulates that people's herd mentality may have more sway in the marketplace than old Mr. Smith's invisible hand. What I didn't realize was that Sony produced 18 million Betamax machines over the lifetime of the product--not too shabby in anybody's business book. Add in the fact that Betamax was consistently more expensive than VHS, and maybe it wasn't a victim of market manipulation or stupid consumers not knowing what's good for them. The same goes for Apple. As for WordPerfect, I thought that technology was dead and gone. Maybe there's an invisible hand guiding the marketplace after all, and it isn't necessarily from Seattle or Japan.

Family Dollar Stores, the discount retail chain, last week named Joshua Jewett to the newly created position of senior VP and CIO. Jewett was most recently a senior director at AnswerThink, a $300 million management consulting firm with 13 offices in the United States and Europe. Family Dollar's senior VP of IT, Albert Rorie, who's been with the company for 25 years, will share IT management duties with Jewett until Rorie's retirement, the date for which hasn't been announced, according to a spokeswoman for the company. Family Dollar has 4,500 stores in 40 states.

DoubleClick, the embattled Web marketer, last week settled the last major legal action against it, a 30-month investigation by 10 states, led by the New York Attorney General's Office. DoubleClick promised to give consumers more information about how and where it collects and shares online data and agreed to pay the states $450,000 to cover investigative costs and consumer education. The agreement "will not change the services DoubleClick performs for its clients," the company said in a statement. DoubleClick (which has a business relationship with InformationWeek) had already agreed to disclosure rules and paid $1.8 million in May to settle a similar Federal Trade Commission lawsuit. "DoubleClick is to be commended for its cooperation in setting an industry standard for promoting consumer privacy in the data collection and tracking taking place across networked Web sites," New York Attorney General Eliot Spitzer said. Still, privacy advocates weren't satisfied. Jason Catlett, president of Junkbusters, says the settlement includes significant concessions from DoubleClick in the area of disclosure but comes up short in addressing how the marketer collects data.

Classes began last week at Case Western Reserve University's Weatherhead School of Business in Cleveland. The school boasts a brand-spanking new $62 million building designed by flamboyant architect Frank Gehry, known for his sweeping stainless-steel structures. The Peter B. Lewis building also boasts the fastest academic broadband network, a 1-billion-bits-per-second switched gigabit network that can be accessed from any desk in the 10 classrooms in the five-level, 150,000-square-foot building. All 10 classrooms are designed to enable students to communicate material from their laptops to overhead projectors, and support multimedia and video conferencing with other schools and organizations worldwide.

Makes me want to go back to school. Wait--do they have detention in graduate school? I'm sure they have homework, which nixes that idea. Educate me with an industry tip to jsoat@cmp.com or phone 516-562-5326. If you want to talk about the invisible hand, privacy, or your business-school experiences, meet me at InformationWeek .com's Listening Post: informationweek.com/forum/johnsoat.


To discuss this column with other readers, please visit John Soat's forum on the Listening Post.

To find out more about John Soat, please visit his page on the Listening Post.

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