498 SE CTION B , CHAPTER 9

Equipment Chipmakers
THE COM PU TE R IN DU S TR Y: HIS TOR Y , C A RE ERS, AN D E TH IC S
Manufacturers 498
IT Service
Companies Product
Computer Development
Retailers
Sectors
Product
Announcements
Computer
Hardware Life
Industry Cycle

VAR
Marketing Introduction
Channels
Mail Retirement
Maintenance
Order
Retail
Manufacturer
Direct

The Computer and IT Industries

SECTION B
BEFORE YOU VENTURE OUT to buy computers, handheld
devices, peripheral devices, or software; before you commit yourself to
a computer career; or before you buy stock in computer companies, you
should arm yourself with some basic knowledge about the computer and
information technology industries. In this section of the chapter, you’ll learn
about the scope and economics of these dynamic industries.

INDUSTRY OVERVIEW
 Is there a difference between the computer industry FIGURE 9-17
and the information technology industry? The term com- Manufacturers such as Apple,
puter industry is used in a variety of ways. Narrowly defined, the computer Dell, Hewlett-Packard, IBM, and
industry encompasses those companies that manufacture computers and Intel are representative of com-
computer components (Figure 9-17). panies in the computer industry.
The term computer industry is also used more
broadly to include software publishers and periph-
eral device manufacturers.
An even broader term, information technology
industry (or IT industry), is used to refer to the
companies that develop, produce, sell, or sup-
port computers, software, and computer-related
products. It includes companies in the computer
industry, software publishers, communications ser-
Haruyoshi Yamaguchi/Bloomberg via Getty Images

vice vendors such as AT&T, information services

such as the LexisNexis online law library, and ser-
vice companies such as HP Enterprise Services.
The terms computer industry and IT industry are
sometimes used interchangeably in news reports
and publications, leaving the reader to decide
whether the subject is limited to computer manu-
facturers and distributors.

498
 TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 499

 Is every company that uses computers part of the IT TERMINOLOGY NOTE

industry? No. A bank uses computers to track money flowing into and
In this textbook, the term com-
out of accounts, but it is classified as part of the banking industry. A clothing
puter industry is used in its
store might use computers to monitor inventory, but it is classified as part of
more limited sense, and IT
the apparel industry. Such businesses make use of information technology,
industry refers to the broader
but they are definitely not part of the computer industry and are not consid-
group of companies that
ered part of the IT industry either.
provide computer, telecom-
 What kinds of companies are included in the IT indus-
try? Companies in the IT industry can be separated into several broad
munications, and software
equipment and services. 9
categories, sometimes referred to as sectors or segments, including equip-
ment manufacturers, chipmakers, software publishers, service companies,
and computer retailers.
Equipment manufacturers design and manu-
facture computer hardware and communications
products, such as personal computers, mainframes,
mice, monitors, storage devices, routers, scanners,
© iStockphoto.com/JasonDoiy © Bob Daemmrich/Alamy

and printers. Examples of these companies include

computer manufacturers IBM, Dell, Lenovo, and
Hewlett-Packard. Network hardware companies,
such as Cisco and its subsidiary Linksys, are also
examples of equipment manufacturers.
Chipmakers design and manufacture computer
chips and circuit boards, including microprocessors,
RAM, system boards, sound cards, and graphics
cards. Intel, Texas Instruments, AMD, and Taiwan
Semiconductor are examples of chipmakers.
Software publishers create computer software,
including applications, operating systems, and
Ron Wurzer/Getty Images

programming languages. Examples of software

companies include Microsoft, Adobe Systems,
Oracle Corporation, Electronic Arts, and Computer
Associates (CA).
IT service companies provide computer-related
services, including business consulting, Web site
design, Web hosting, Internet connections, com-
AP Photo/LM Otero, file

puter equipment repair, network security, and

product support. Classic examples of service com-
panies include AOL, Google, and the computer
consulting giant Accenture.
Computer retailers (sometimes called resellers)
© iStockphoto.com/Eliza Snow

include companies that sell computer products

through retail stores, direct sales representatives,
mail-order catalogs, and Web sites. Well-known
computer resellers include CompUSA, which
operates retail stores, and mail-order retailers PC
Connection and CDW.
Although some companies fit neatly into one of the above categories, other
companies operate in two or more areas. For example, Dell manufactures
hardware but also resells that hardware directly to individuals and busi-
nesses. The IT industry also encompasses large conglomerates with one or
more divisions devoted to computer hardware, software, or services.
500 SE CTION B , CHAPTER 9

 What about dot-coms? The 1990s spawned a group of Internet-

based companies that came to be called dot-coms. The dot-com moniker
came from the companies’ domain names, which inevitably ended with
.com; many of the companies even incorporated .com into their official
company names.
Amazon.com was one of the first Internet-based companies. Founded in
1995, the company’s original mission statement was to “use the Internet to
transform book buying into the fastest, easiest, and most enjoyable shop-
ping experience possible.” To transform book buying, Amazon.com set up
a Web site where customers can buy books online without walking into a
store located in a mall or shopping center.
Unless a dot-com sells computers, peripherals, or software online, it is prob-
ably not considered part of the computer industry; but experts disagree on
whether dot-coms rightfully belong to the IT industry. Some experts group
dot-coms under the IT umbrella because they make extensive use of com-
puter equipment and have developed key e-commerce technologies. Other
analysts classify dot-coms by their core businesses. For example, dot-coms FIGURE 9-18
that sell clothing would be in the apparel industry, music vendors would be Silicon Valley is home to many
in the entertainment industry, and an online stock broker would be in the companies in the IT industry.
financial industry.
 What is the significance of Silicon
Valley? The area of California called Silicon Valley
that stretches south and east from San Francisco’s
Golden Gate Bridge was the birthplace of integrated
circuits, microprocessors, and personal computers.
Today, well-known companies, such as Cisco
Systems, Sun Microsystems, Google, Apple,
Symantec, AMD, Oracle, and Hewlett-Packard, all
have headquarters in or near California’s Silicon
Valley (Figure 9-18).
Although Silicon Valley has a reputation as the home
of the IT industry, many top IT players are located
elsewhere. Microsoft is located near Seattle, and
Dell is just outside Austin.
North Carolina’s Research Triangle (Raleigh-
Durham-Chapel Hill) is home base for IBM’s largest
hardware lab and several small research startups.
Software publisher Computer Associates is based in
New York. Unisys, a high-end server manufacturer,
has its headquarters near Philadelphia. Outsourcing
and offshoring spread the computer industry to addi-
© Silicon Maps, Inc.

tional locations both in the United States and abroad.

 What are outsourcing and offshoring?
Like companies in many industries, computer
companies make significant use of outsourcing to
reduce the price of materials and labor.
Outsourcing is defined as the use of components or labor from out-
side suppliers. Most computer companies do not manufacture all the
components used to assemble their computers. Instead they depend on
components from other companies, such as microprocessors from Intel,
TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 501

hard drives from Seagate, and LCD panels from Samsung. Software pub-
lishers also make use of outsourcing by hiring outside firms to develop
products and manufacture packaging. Outsourcing offers economies
of scale and expertise to companies in the highly competitive computer
industry.
Offshoring is another technique used by companies to help keep product
prices competitive. Offshoring is defined as relocating business processes,
such as development and production, to lower-cost locations in other
countries. 9
U.S. computer companies have established manufacturing and develop-
ment facilities in countries such as China, India, Malaysia, Thailand, and
Mexico, where labor is inexpensive but reliable. Computer manufacturer
Dell Inc. maintains a team of offshore technicians to staff customer call
centers. It is common now to dial technical support and be connected to a
technician on the other side of the world.
Companies such as Microsoft and Oracle make extensive use of program-
mers based in India, who telecommute, when necessary, using the Internet
(Figure 9-19).
FIGURE 9-19

The IT industry reaches globally

for programmers, call center
staffers, and manufacturing
facilities.

AP Photo/CHINATOPIX

 Where can I find information about the IT industry?

Whether you are planning to purchase a computer, embark on a computing
career, or invest in a computer company, you can dig up lots of information
on IT and computer companies from a wide variety of computer and busi-
ness publications (Figure 9-20).
FIGURE 9-20
In Print On the Web
IT Information Sources
PCWorld PC Magazine
Macworld CNET News
Wired InformationWeek
CPU InfoWorld
Mac|Life Wired
Smart Computing ZDNet
TechWeb
Dr. Dobb’s News
Forbes.com/technology
502 SE CTION B , CHAPTER 9

ECONOMIC FACTORS FIGURE 9-21

 How has the IT industry affected the global economy? Dot-com Bubble Timeline
The IT industry has been described as the most dynamic, most prosper-
ous, most economically beneficial industry the world has ever known. That
statement might be a bit of an exaggeration, but the IT industry unquestion-
ably has fueled the economies of many countries. Worldwide, consumers
spend more than $1 trillion on information technology each year. May 1997 Amazon.com stock
initial public offering (IPO) kicks
 What about the U.S. IT industry? In the U.S., the IT industry off the dot-com frenzy.
has had its ups and downs. IBM stock, once a staple of retirement portfo- November 1998 theglobe.com
lios, was all but abandoned during a dot-com bubble that began in the late earns $100 million during its IPO,
1990s. making it the most successful
stock offering in history.
A stock market bubble refers to a sharp rise in stock values, which is later
followed by a sudden decline. The so-called “dot-com bubble” was fueled by March 2000 NASDAQ reaches
its all-time high of 5,048; stocks
a frenzy of online business startups. Entrepreneurs seemed to believe that
are trading for an average of
any Internet-based business was destined for success. Investors believed
$55.92 per share.
that dot-coms were the key to quick profits. Stock sold like hotcakes on the
December 2000 By year’s end,
technology-specialized NASDAQ stock exchange (Figure 9-21).
venture capitalists have invested
Dot-com stock values soared as investors poured money into online busi- an estimated $20 billion in
nesses. These businesses needed equipment and employees, which had 12,450 dot-com startups.
a positive effect on other sectors of the IT industry by boosting computer January 2001 17 dot-coms
sales, networking equipment sales, and IT employment. Unfortunately, each spend over $2 million for a
many dot-coms lacked experienced management teams, failed to develop 30-second ad during the Super
realistic business plans, burned through startup capital without making a Bowl.
profit, and then went bankrupt. June 2001 By mid-year, 345 dot-
coms have closed their doors or
The high rate of dot-com business failures during 2001 and 2002 was a filed for bankruptcy protection.
tough jolt of reality for many stockholders. It affected a wide swath of the
August 2001 theglobe.com goes
economy. The end of the dot-com bubble meant a decline in equipment
out of business.
orders, Web site hosting contracts, and IT sector job openings.
September 2002 NASDAQ bot-
Nonetheless, strength in worldwide markets for IT equipment and services toms out at 1,184, much lower
continued to buoy up the industry, and tech stocks eventually re-emerged than its 5,048 peak. Average
as attractive investments. Analysts believe that well-conceived and pro- price per share is $14.07.
fessionally managed online businesses can be a profitable part of the IT August 2004 Google has a
industry. successful IPO—a sign that con-
sumers are regaining confidence
 What does the future hold for the IT industry? As with many in dot-com stocks.
situations involving the economy, the IT industry’s future cannot be pre-
dicted with certainty. Population growth and business globalization are two
important factors that have contributed to past investments in information
technology.
The worldwide population more than doubled over the past 50 years, and
an International Institute for Applied Systems Analysis study predicts that
the population will peak at 9 billion by 2070. Keeping track of the information
relating to all these people—births, deaths, marriages, property ownership,
taxes, purchases, banking records, and licenses—certainly seems impos-
sible without the use of computers.
Intense global competitive pressure keeps companies looking for ways to
cut costs and raise productivity. As businesses globalize, they encoun-
ter new competitors that may use more advanced technological tools.
Obtaining competitive tools can be a requirement for success, so infor-
mation technology would appear to have many potential customers in the
expanding global business market.
TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 503

PRODUCT LIFE CYCLES

 How are new computer hardware products developed?
Two factors drive the development of new computer hardware products:
marketing and technology. Hardware manufacturers introduce new prod-
ucts for the same reasons as their counterparts in other industries: New
products are designed to attract customers and generate sales. New hard-
ware products can also generate sales of add-ons and accessories.
New technologies spur a flurry of development activity and generate new
hardware products. For example, the debut of Wi-Fi technology stimulated
9
development of Wi-Fi hubs and cards, Wi-Fi enabled notebook computers,
Internet access points in coffee shops and airports, as well as Wi-Fi access
plans from companies such as T-Mobile. Apple’s foray into tablet comput-
ers led to a slew of iPad-like products and accessories.
Technological breakthroughs do not necessarily adhere to a schedule,
however. Companies cannot always predict when a new technology will
appear, how it might be incorporated into new products, or how popular it
will become. As a result, the life cycle of some hardware products is short,
whereas others have a long life cycle.
 What are the stages in the life cycle of a typical hard-
ware product? In the computer industry, the life cycle of a new
hardware product usually includes five stages: product development, prod- FIGURE 9-22

uct announcement, introduction, maintenance, and retirement, as shown in Hardware Product Life Cycle
Figure 9-22.

Product Development
Product development often takes place under
wraps. Developers use fanciful code names, such
as Sawtooth and Portola, to refer to their products.
Inevitably, news of these products leaks out and
causes much speculation among industry analysts.

Product Announcement
Products are often announced at trade shows and press
conferences. As a consumer, you should be wary of mak-

Commercial Appeal/Landov, © Jupiterimages/Comstock Images/Getty Images, © Baloncici/Shutterstock

ing purchase or investment decisions based on product
announcements. A product announcement can precede the

© Masterfile (Royalty-Free Div.), © Monkey Business Images/Shutterstock, STAN CARROLL/The

actual launch by months or even years. Some products,
referred to as vaporware, are announced but never produced.

Introduction
When a new product becomes available, it is usually added
to the vendor’s product line and featured prominently in
advertisements. Initial supplies of the product generally
remain low while manufacturing capacity increases to meet
demand.

Maintenance
As supply and demand for a product reach an equilibrium,
the manufacturer might reduce the price to keep the prod-
uct attractive to buyers.

Retirement
As demand declines, a company’s old-
est products are discontinued. Eventually
product support is discontinued as well.
504 SE CTION B , CHAPTER 9

 How does the hardware life cycle affect me as a con-

sumer? Hardware manufacturers offer a range of products at various
price points. Less powerful devices containing older technology are gener-
ally less expensive than devices with the latest and greatest technology.
When considering a technology purchase, look for a balance between fea-
tures and price. Products at the top of the manufacturer’s line might offer
features and technology that are not worth the price, whereas products at FIGURE 9-23
the low end of the product line might not offer the features you’ll require A sample of computers in a
over the life of the device. For most consumers, mid-range products offer typical manufacturer’s product
the best value (Figure 9-23). line shows a range of prices
and features.

MTI MTI MTI

EDGE 2500 NETBOOK EDGE 4500 NETBOOK EDGE 8000 NETBOOK
Intel® Atom Processor® Intel® Atom Processor® Intel® Atom Processor®
1.66 GHz 2.00 GHz 2.13 GHz
10" widescreen display 12" widescreen display 12" widescreen display
1 GB DDR2 SDRAM 1 GB DDR2 SDRAM 4 GB DDR2 RAM
120 GB SATA HD 160 GB SATA HD 250 GB SATA HD
2.75 pounds 2.50 pounds 2.50 pounds
Wireless 802.11g Mini Card Wireless 802.11g Mini Card Wireless 802.11g Mini Card
1 year warranty 3 year warranty 3 year warranty

$249 $399 $575

 Is the life cycle of a software product similar to that of

a hardware product? Software, like hardware, begins with an idea
that is shaped by a design team and marketing experts. A team of program-
mers then works to produce executable programs and support modules for
the new software product.
Most software products undergo extensive testing before they are
released. The first phase of testing, called an alpha test, is carried out
by the software publisher’s in-house testing team. Errors, or bugs, found
during the alpha test phase are fixed, and then the software enters a sec-
ond testing phase called a beta test. Typically, a beta test is conducted
by a team of off-site testers, such as a professional testing company.
Sometimes a software publisher releases a beta version of the software
to individuals and companies in the general public to expose the software
to the widest possible variety of computers and operating environments.
Although it can be exciting to test a yet-to-be-released software package,
beta versions are often “buggy” and can cause unexpected glitches in
your computer. Beta testing requires a high tolerance for frustration.
TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 505

Unlike computer hardware products, older versions of software normally do

not remain in the vendor’s product line. When a publisher offers a new ver-
sion of the software that you are using, it is a good idea to upgrade; but you
can wait to upgrade, however, for several months until the initial rush for
technical support on the new product subsides.
Upgrading your existing software is usually less expensive than replacing
it with a brand-new program. If you don’t upgrade, you might find that the
software publisher offers minimal technical support for older versions of
the program. Also, if you let several versions go by without upgrading, you 9
might lose your eligibility for special upgrade pricing.

MARKET SHARE
 How do computer companies stack up against each
other? Industry analysts often use market share as a gauge of a compa-
ny’s success. Market share refers to a company’s share, or percentage, of
the total market. For example, Microsoft’s share of the total personal com-
puter operating system market is about 90%. The remaining 10% share is
distributed among Apple and several Linux vendors.
In the U.S., Dell, Hewlett-Packard, and Apple have the most market share.
Worldwide, Hewlett-Packard leads the pack with more than 17% market
share, followed by Dell and Lenovo. Figure 9-24 illustrates market share for
PC vendors.
Market share graphs for personal computer manufacturers, software pub-
lishers, operating system developers, Internet service providers, and
handheld computer manufacturers provide a road map to the changing for-
tunes of companies in the computer industry. Competition is fierce in all
segments of the industry, and market share is one indicator of a compa-
ny’s ability to retain customers and acquire sales from its rivals. The top
companies are constantly challenged not only by their peers, but by startup
companies in lower tiers of the industry.

FIGURE 9-24
HP Worldwide Market Share for
17.5%
Other (includes Personal Computer Vendors in
Apple, Gateway, the Second Quarter of 2011
Sony, and other
Dell
vendors)
12.5%
36.7%

Lenovo
Toshiba
ASUS 12.0%
5.2% Acer
5.2% 10.9%

Data source: Gartner, Inc.

506 SE CTION B , CHAPTER 9

MARKETING CHANNELS
 Why are computer equipment and software sold
through so many outlets? Hardware manufacturers and software
publishers try to reach consumers by making their products available FIGURE 9-25

through a variety of sources. Computer hardware and software are sold Computer hardware and soft-
through marketing outlets called marketing channels. These channels, ware are sold through several
shown in Figure 9-25, include computer retail stores, mail-order/Internet marketing channels.
outlets, value-added resellers, and manufacturer direct.

Distribution centers stock Manufacturers produce products

products from many different and ship them to resellers, dis-

Konstantin Chagin/Shutterstock, © Samuel Acosta/Shutterstock, © LWA/Dann Tardit/Blend

© Comstock/Comstock Images/Getty Images, © Ken Davies/Radius Images/Masterfile, ©
manufacturers and then sell Distribution centers tribution centers, computer
the products to retailers. retailers, and mail-
order suppliers.
Computer retailers
stock products
from several

Images/JupiterImages Corporation, © Steve Rosset/Shutterstock

manufacturers
and sell these
Manufacturers
products to
customers. Retail stores

VARs
Customers Value-
added
Some manu- resellers
facturers ship Mail-order
generally
products directly to suppliers
modify prod-
customers. ucts or assemble
them into complete
hardware and soft-
ware solutions targeted at
specific businesses.
Mail-order suppliers specialize in taking phone orders and ship-
ping products to customers using U.S. mail or courier services.

 Isn’t a computer retail store the best channel for hard-

ware and software products? A computer retail store specializes
in the sale and support of microcomputer software and hardware. Computer
retail stores tend to be small local shops with knowledgeable employ-
ees. Many computer retail stores also offer classes and training sessions,
answer questions, provide technical support, and repair hardware products.
Computer retail stores primarily service business customers.
 What about office and electronics stores? Today, com-
puters, peripherals, and software are sold from a variety of retail outlets,
including electronics stores, such as Best Buy, CompUSA, and RadioShack.
Office superstores, such as Staples, OfficeMax, and Office Depot, also sell
computers and accessories.
Prices and employee expertise at these outlets vary. Some offer trouble-
shooting and repair services, such as Best Buy’s Geek Squad. Consumers
should ask about a store’s service facilities and policies when considering
a purchase.
TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 507

 How do mail-order channels compare to retail? Mail order

is a special type of retailing in which a vendor takes orders by telephone
or from an Internet site, and then ships the product directly to consumers.
Mail-order suppliers, such as TigerDirect.com and CDW, generally offer
low prices but might provide only limited service and support. A mail-order
supplier is often the best source of products for buyers who are unlikely to
need support or who can troubleshoot problems by calling a help desk.
Experienced computer users who can install components, set up software,
and do their own troubleshooting are often happy with mail-order suppliers. 9
Inexperienced computer users might not be satisfied with the assistance
they receive.
 Do computer manufacturers and software publishers
sell direct? Manufacturer direct refers to hardware manufacturers
that sell their products directly to consumers without a middleman, such
as a retail store. IBM has a long tradition of direct sales, and that model
has been emulated by several hardware manufacturers and some soft-
ware publishers. A company’s sales force usually targets large corporate
or educational customers, where large-volume sales can cover the sales
representative’s costs and commissions.
The obvious advantage of direct sales is that by cutting out the retailer, a
manufacturer can make more profit on each unit sold. The disadvantage
is that the manufacturer must provide customers with technical support—
a potentially costly service that requires large teams of technical support FIGURE 9-26
personnel. At Dell’s Web site, customers
For personal computer hardware, Dell pioneered Web-based direct sales can order a custom-built com-
to individual customers. Its innovative Web site allows customers to select puter by simply clicking to add
from a variety of standard models or configure their own custom builds various hardware options.
(Figure 9-26). A just-in-time inventory model allows Dell to build each cus- X Click for more information
tomer’s computer as it is ordered, which eliminates costly inventories of about creating and ordering a
computers that quickly become outdated. custom-built computer.
Web site © 2011 Dell Inc. All Rights Reserved
508 SE CTION B , CHAPTER 9

 What’s a VAR? VAR stands for value-added reseller. A value-added

reseller combines commercially available products with specialty hardware
or software to create a computer system designed to meet the needs of a
specific industry.
Although VARs charge for their expertise, they are often the only source for
specialized computer systems. For example, if you own a video rental store
and want to automate the rental process, the best type of vendor might be a
VAR that offers a complete hardware and software package tailored to the
video rental business. Otherwise, you must piece together the computer,
scanner, printer, and software components yourself.
VARs are often the most expensive channel for hardware and software,
but their expertise can be crucial to ensure that the hardware and software
work correctly in a specific environment.
 What’s the benefit of having so many channels? Vendors
from one channel often find that vendors from other channels pirate their
sales—a process referred to as channel conflict. In the early days of
the computer industry, some manufacturers attempted to reduce channel
conflict by granting exclusive territories to local computer retailers and by FIGURE 9-27

limiting online sales. IT Industry Regulation

This practice is no longer common; although some computer manufac-
turers attempt to limit channel conflict by restricting the way products are

Communications Commission
advertised and sold. For example, e-commerce sites might not be allowed
to advertise discount prices for some computer brands.

Courtesy of the Federal

Although vendors lose sales to channel conflict, consumers can benefit
from a variety of channels. Because the price of computer equipment and
software tends to vary by channel, consumers can shop for the best price
and the most appropriate level of support. Internet activity is affected by
policies of the U.S. Federal
INDUSTRY REGULATION Communications Commission
 Is the IT industry regulated in any way? Some aspects of the (FCC), which regulates
IT industry are regulated by government agencies, but many aspects are interstate and international
self-regulated. Unlike the airline industry, which is regulated by agencies communications by television,
such as the Federal Aviation Administration (FAA), most countries do not wire, radio, satellite, and cable.
have a single government agency dedicated to regulating the IT industry.
The IT industry encompasses many activities, however, and consequently
it is subject to regulation from a variety of broad-based government agen-
cies, such as the FCC and FTC (Figure 9-27).
Many governments are enacting laws that restrict access to particular
Internet activities and content. For example, several Caribbean countries
have enacted laws that regulate online casino operators.
In 1996, the U.S. Congress enacted the Communications Decency Act,
which made it illegal to put indecent material online where children might
© James Leynse/CORBIS

see it. Parts of this legislation were contested and ultimately nullified by the
U.S. Supreme Court, but the desire for decency without censorship has not
died among lawmakers.
In many countries, export restrictions affect the type of technology that
can be sold to foreign governments and individuals. For example, before The U.S. Federal Trade Com-
being exported from the United States, software and hardware products mission (FTC) and Department
that contain certain encryption algorithms must be registered with the U.S. of Justice police the business
government. Additional government regulations that pertain to law enforce- practices of the IT industry, just
ment, national security, e-commerce, and taxation can also affect the way as they police other industries.
the IT industry conducts its business and how it engineers products.
TH E C OMP UTER IN D U STR Y: HI S TOR Y , CA RE ERS, AND ETHIC S 509

 How does the IT industry perceive government regula-

tion? Most IT industry leaders oppose regulation. They remain skeptical
of government regulations that might limit their ability to explore new
technologies and offer them to the public. To avoid further government
intervention, the IT industry has taken steps toward self-regulation.
Several organizations provide a forum for the IT industry to examine issues,
express views, work out self-governing policies, and set standards. The
Information Technology Industry Council has become one of the major
trade associations for computer manufacturers, telecommunications sup- 9
pliers, business equipment dealers, software publishers, and IT service
providers. As part of its mission, this organization provides a powerful lob-
bying group, which works with lawmakers to minimize legislation that might
curtail technology innovation and use.
The Software & Information Industry Association, formerly known as the
Software Publishers Association, has 500 member companies and organi-
zations. This organization focuses on protecting the intellectual property of
members and lobbying for a legal and regulatory environment that benefits
the entire IT industry. Its anti-piracy program is instrumental in identifying
and prosecuting software and Internet piracy cases.
Organizations such as the IEEE Standards Association help the IT industry
standardize technology, such as microprocessor architecture and network
protocols, as well as programming languages and multimedia components.

S E C TI O N B
QuickCheck
1. IT companies offer busi- 4. Software publishers sometimes offer a public
ness consulting, Web site design, Web hosting, version of a product for
Internet connections, computer equipment widespread testing before the product is officially
repair, network security, and product support. released.

2. Many computer companies make significant 5. If a small business lacks the time or expertise
use of to obtain compo- to assemble a computer system customized for
nents and labor from other companies. a task such as professional video editing, a(n)

3. The life cycle of a new computer model typi- , might offer a turn-key

cally evolves through five stages: product solution. (Hint: Use the acronym.)

development, product ,
introduction, maintenance, and retirement. X CHECK ANSWERS