Echelon in Europe

By David Baron, Michael Ting
1997 | Case No. P22
Focuses on the nonmarket strategy of a high technology company to influence European standard setting for control networks. Echelon Corp. is a small, privately-held company located in Palo Alto, CA that produces open architecture control networks—communications systems that integrate disparate pieces of electronic hardware over some distance. These systems have applications ranging from automated assembly lines, to patient monitoring in hospitals, to fly-by-wire systems. This case addresses standard setting in Europe. Echelon’s European competitors, led by Siemens, sought to establish application-specific standards that would limit the demand for Echelon’s open architecture technology. Echelon had followed a strategy of blocking Siemens’s attempts in the European Union standard-setting bodies by enlisting the support of its customers in countries such as the United Kingdom. The absence of standards caused by this blocking strategy was detrimental, however, to the development of the market for control network applications. Echelon had to determine whether it should continue with its current strategy, or work directly to have open architecture standards established, or initiate discussions with Siemens and other companies to develop open architecture standards jointly. Poses the strategy issue and asks how the strategy should be implemented.
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