The New Rules Of The Game

The advent of ''free'' technology is forcing companies to master some slippery concepts. Warning: Not every rule is appropriate for every business.

Products are most valuable when they're cheapest. The niche for high-priced products gets ever smaller. Low prices and high volumes are the way to go. Just ask Compaq Computer.

Make money by giving things away. High tech loves shaving economics--giving away the razor to sell more blades. Mosaic software for the Internet started out free. Now, its creators sell it as Netscape.

Teamwork conquers all. The complexity of the latest electronics gadgets--such as digital satellite TV--requires the kind of collaborative systems design that used to be the province of general contractors on aircraft, ships, and moon shots.

Mass-customize. To avoid the me-too commodity trap, use agile manufacturing techniques to make each product off the line unique. That's how Dell sells PCs and Matsushita sells mountain bikes.

Hurry up and waste. Engineering efficiency in product design may be nice, but with computing and communication resources so cheap and speed to market so essential, quick-and-dirty is often the best route.

Don't fear gluts. Demand for individual products rises and falls, but hunger for such things as computing power is, in the long term, insatiable. Memory chips are fantastically profitable despite being lowly ''commodities.''