David Canton – for the London Free Press – April 29, 2006

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When Sony introduced the Playstation Portable (PSP) in Canada in 2005, it also launched the Universal Media Disc (UMD).

Sony began releasing movies on these alongside videogames to be played on the PSP. However, its proprietary format appears to have contributed to its demise.

Early movie releases were a success, but those quickly tapered off. Several studios, including Sony Home Pictures Entertainment, announced they were cutting back on movie releases for the PSP due to disappointing sales.

The UMD’s proprietary format is one reason for this market failure. Sony took this approach partly to prevent pirating of its games and movies for use on the PSP. Sony was also attempting to corner the market on portable video games and movies.

Sony designed the product so the consumer would have to keep buying from Sony and UMDs would only work in Sony devices. This approach is known as vendor lock-in.

Consumers always have had a problem with proprietary formats. The alternative is open standards or a format available to the public to use and implement.

Others may create it at either no cost or a small fee to the format owner. Any manufacturer can build products that work with the format and the resulting competition leads to greater diversity and pricing for the consumer.

It used to be common for software products to store information in their own unique format.

However, if information is stored in a format that is proprietary to the manufacturer, it becomes a concern. You may have no way of retrieving your information without using the protected software. The software manufacturer has practical control of your data and you are locked in to buying future releases of the software.

If the manufacturer ceases to manufacture the software, you may no longer be able to access your information.

A recent report of the Committee for Economic Development entitled Open Standards, Open Source and Open Innovation: Harnessing the Benefits of Openness (www.ced.org) finds openness in the creation of digital products is an important element in fostering innovation and economic growth.

The World Bank recently urged countries to move toward open-information technology to accelerate economic growth, efficiency and innovation. Many countries and state governments are taking steps to rely less on proprietary formats and moving toward free, open-source formats.

In other words, it is best to compete on features, price, branding, support and other things consumers or business value — not by using technology to force the buyer to deal with you.