I read an interesting article from the NYT, “Collaborating for Profits in Nanotechnology” by James Flanigan. The article explains that

… nanotechnology companies do not produce finished products in any one industry. Rather, nano particles improve performance and open new possibilities in activities as varied as water purification, biomedicine, battery power, environmental repair and agriculture.

The Institute of Nanotechnology describes nanotech as follows:

Nanotechnology is an exciting area of scientific development which promises ‘more for less’. It offers ways to create smaller, cheaper, lighter and faster devices that can do more and cleverer things, use less raw materials and consume less energy. There are many examples of the application of nanotechnology from the simple to the complex. For example, there are nano coatings which can repel dirt and reduce the need for harmful cleaning agents, or prevent the spread of hospital-borne infections. New-generation hip implants can be made more ‘body friendly’ because they have a nanoscale topography that encourages acceptance by the cells in their vicinity.

 

The NYT article made it clear that successful ventures in nanotech require “interdisciplinary collaboration” between (1) nanotech experts, and (2) experts in the area to which nanotech is applied, such as materials or medical devices. At this point in the article, I thought “Aha! A perfect example of a Hardware-Software Game!” You have the nanotech players, which are akin to the hardware players, and you have the field of application players (e.g., materials, medical devices, etc.), which are akin to the software players.

When we move on to the users, though, the likeness of the nanotech situation to a Hardware-Software Game breaks down.

Specifically, in a Hardware-Software Game, there are direct network effects; that is, as more users adopt, existing users benefit from being able to interact with more other users. Take the classic example of cellphones. When only a few people have cellphones, the value to those users is moderate. Sure, a cellphone user can call someone from wherever he is, but if the person he’s trying to reach doesn’t also have a cellphone and is not within reach of his landline phone, then the connection will not be made. However, when more people have cellphones, there’s a greater probability that the person being contacted also has a cellphone, and there’s thus a higher probability the connection will actually be made.

Now try to apply this same reasoning to nanotech. A guy who gets a more successful hip replacement doesn’t benefit from having a bunch of other people out there with hip replacements (other than by the fact that the doctors can perform the procedure better, and perhaps cheaper, after they’ve done it enough times). So the parallel doesn't work.

In a Hardware-Software Game, there are also indirect network effects; that is, as more users adopt, existing users benefit from a larger supply of content that is attracted to the larger base of users.

Does this apply to someone with a nanotech hip replacement or someone with a specially coated device that resists stains? I don’t think so.

So if nanotech isn’t a Hardware-Software Game, what is it?

It’s simply a case of a traditional collaboration between two parties that provides a product offering that is technologically superior to the previous offerings. A nanotech hip replacement is qualitatively superior to its precedent for being a better fit to the recipient, more comfortable, less likely to be rejected by the body, and perhaps longer-lived, and whatever else. The value of the nanotech is more easily defined than Hardware-Software Game content that enhances the value of the hardware: it’s value is simply the incremental value to users above and beyond what a traditional hip replacement would have provided.