The document discusses the emergence of dominant designs in technology standards and mobile payments. It describes how in 2015 there was a battle among competing mobile payment systems, with Apple, Samsung and a joint venture between Google, AT&T, T-Mobile and Verizon developing systems based on Near Field Communication (NFC) technology. Industries often select a single dominant design for a technology due to increasing returns to adoption, where a technology becomes more valuable as more adopt it. This can create self-reinforcing network effects that reinforce the dominance of a technology.
Standards Battles and Design DominanceFadli Luthfi
2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones
The document discusses standards battles in mobile payments and the emergence of a dominant design. It describes how in 2015 there was no single dominant mobile payment system, and Apple, Samsung, and a joint venture called Softcard were developing competing systems using near-field communication (NFC) technology. These systems allowed contactless payments using existing credit card networks. However, the lack of one dominant standard led to an ongoing battle among different mobile payment mechanisms.
The document discusses standards battles in mobile payments. It notes that in 2015 there was no dominant mobile payment system, as different companies like Apple, Samsung, and a joint venture between Google, AT&T, T-Mobile, and Verizon were developing competing systems using near-field communication (NFC) technology. While these systems functioned similarly to existing credit card transactions, they allowed completing purchases from mobile devices without physical contact.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Standarts battles and design dominancehidayatriski
The document discusses standards battles in mobile payments and the emergence of a dominant design. It describes how in 2015 there was no single dominant mobile payment system, and Apple, Samsung, and a joint venture between other companies were developing competing systems using near-field communication (NFC) technology. These systems allowed contactless payments using existing credit card networks. However, the lack of one dominant standard led to a battle among the different mobile payment mechanisms.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Standards Battles and Design Dominance
There was no dominant mobile payment system in 2015 and a battle was unfolding among competing standards in the US. Apple, Samsung, and a joint venture between Google, AT&T, T-Mobile, and Verizon had developed mobile payment systems using Near Field Communication (NFC) chips that transferred payment information wirelessly using existing credit card networks. However, no single standard had emerged as dominant.
By early 2015, mobile payments represented a major new opportunity but there was no dominant system and competing standards posed issues. Mobile payments accounted for $52 billion in 2014 and were expected to reach $67 billion in 2015. However, lack of compatibility between systems and uncertainty over which might dominate created obstacles to adoption. Industries with network effects like mobile payments often coalesce around a single dominant design, as the more a technology is adopted, the more valuable it becomes through learning and network effects. This can create self-reinforcing dominance regardless of a technology's initial quality.
Standards Battles and Design DominanceFadli Luthfi
2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones
The document discusses standards battles in mobile payments and the emergence of a dominant design. It describes how in 2015 there was no single dominant mobile payment system, and Apple, Samsung, and a joint venture called Softcard were developing competing systems using near-field communication (NFC) technology. These systems allowed contactless payments using existing credit card networks. However, the lack of one dominant standard led to an ongoing battle among different mobile payment mechanisms.
The document discusses standards battles in mobile payments. It notes that in 2015 there was no dominant mobile payment system, as different companies like Apple, Samsung, and a joint venture between Google, AT&T, T-Mobile, and Verizon were developing competing systems using near-field communication (NFC) technology. While these systems functioned similarly to existing credit card transactions, they allowed completing purchases from mobile devices without physical contact.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Standarts battles and design dominancehidayatriski
The document discusses standards battles in mobile payments and the emergence of a dominant design. It describes how in 2015 there was no single dominant mobile payment system, and Apple, Samsung, and a joint venture between other companies were developing competing systems using near-field communication (NFC) technology. These systems allowed contactless payments using existing credit card networks. However, the lack of one dominant standard led to a battle among the different mobile payment mechanisms.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Standards Battles and Design Dominance
There was no dominant mobile payment system in 2015 and a battle was unfolding among competing standards in the US. Apple, Samsung, and a joint venture between Google, AT&T, T-Mobile, and Verizon had developed mobile payment systems using Near Field Communication (NFC) chips that transferred payment information wirelessly using existing credit card networks. However, no single standard had emerged as dominant.
By early 2015, mobile payments represented a major new opportunity but there was no dominant system and competing standards posed issues. Mobile payments accounted for $52 billion in 2014 and were expected to reach $67 billion in 2015. However, lack of compatibility between systems and uncertainty over which might dominate created obstacles to adoption. Industries with network effects like mobile payments often coalesce around a single dominant design, as the more a technology is adopted, the more valuable it becomes through learning and network effects. This can create self-reinforcing dominance regardless of a technology's initial quality.
This document discusses standards battles in mobile payments in 2015. It notes that while there were over 6 billion mobile subscriptions worldwide in 2014, there was no dominant mobile payment system. It describes some of the competing mobile payment mechanisms at the time, including NFC-based systems like Apple Pay and non-NFC systems like Square Wallet. The document also discusses factors influencing consumer adoption like convenience and risk of fraud. It highlights growing mobile banking alternatives in developing regions like India and Africa, where a larger portion of the population is unbanked or underbanked compared to credit card ownership but mobile phone penetration is higher. The leading mobile banking systems in India and Kenya, called Inter-bank Mobile Payment Service and M-Pesa respectively
There was no dominant mobile payment system in 2015 and different companies were developing competing standards using near-field communication (NFC) technology. Systems developed by Apple, Samsung, and a Softcard joint venture used NFC chips in smartphones to enable contactless payments at stores using existing credit card networks. Industries often converge on a single dominant design due to increasing returns to adoption, where a technology becomes more valuable as more people use it due to network effects, learning effects, and complementary assets. Government regulation can also promote compatibility and a dominant standard.
This document discusses how dominant designs emerge in industries. It explains that many industries experience increasing returns to adoption, where the more a technology is used, the more valuable it becomes through improvements and complementary assets. Two primary sources of increasing returns are learning effects, where more usage enables greater development and efficiency, and network externalities, where a technology becomes more useful and valuable as more people use the same or compatible technology. The value of a new technology comes from its standalone benefits as well as the value added by the size of its user base and availability of complementary goods and services. However, in 2015 there was no single dominant mobile payment system as different technologies and standards were competing for adoption.
Reference : Schilling, Melissa A. 2017. Strategic Management Of Technological Innovation. New York : McGraw-Hill Education.
http://sif.uin-suska.ac.id/
http://uin-suska.ac.id/
Technological innovation is now a key driver of competition for many firms. The document discusses several chapters about the importance and sources of innovation. Chapter 1 notes that innovation fosters economic and social benefits but may also create negatives. Chapter 2 outlines various sources of innovation, including individual inventors, users, research collaborations, and government efforts. Chapter 3 describes different types of innovation and typical patterns of technological change and adoption over time.
Second slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of two-sided platform markets and discusses their underlying economics, which have proven Nobel prize worthy.
More info: http://www.strategyguide.nl/teaching/
The document discusses strategies for deploying technological innovations, including:
1. Timing product launches can be an important deployment strategy, as illustrated by video game companies releasing new consoles in time for the Christmas season.
2. Pricing is also crucial, with objectives like maximizing profits or ensuring survival through covering costs.
3. Distribution methods like selling directly, using intermediaries, or partnering with distributors can accelerate adoption of an innovation. Building alliances and bundling with existing popular products helps the new technology gain traction.
4. Marketing must consider the target market and innovation's benefits, employing methods like advertising, promotions, and generating publicity to educate customers and shape perceptions of the
IBM Watson strives to be the leader in advancing information technologies to assist companies in keeping up with big data. Its core values include client success, innovation leadership, and trust. Its strategic direction is to pioneer future technologies at the forefront. It aims to differentiate itself through being first to market with new technologies. Its target markets include older generations through references to Jeopardy, younger generations through social media, and large companies through demonstrations of its customer service capabilities.
This document discusses strategies for deploying technological innovations. It addresses timing a product launch to take advantage of business cycles or seasons. It also discusses pricing strategies like maximizing profits or ensuring survival. The document also covers distribution strategies like forging alliances with distributors, creating bundling relationships, and sponsoring large customer groups to accelerate adoption of the technology. Marketing strategies are also important to consider based on the target market and innovation characteristics.
Telecom companies are facing declining revenues as data revenues shift to online players like Google and Apple. To retain their share of the data market, telcos must (1) improve their networks and offer high-value multimedia services, (2) focus on enabling accessible content across all devices, (3) exploit advertising through their subscriber base, and (4) adopt innovative content models focused on customer experience.
- There are three categories of market entry: first movers (pioneers), early followers, and late entrants. Research on which is better yields conflicting results.
- First movers may gain advantages like brand loyalty, technological leadership, securing scarce resources, and exploiting buyer switching costs. However, first movers also face higher risks of failure.
- Whether it is better to be a first mover or follower depends on factors like network effects, switching costs, resource scarcity, and ability to establish standards in the industry. The optimal timing strategy varies by market.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning using internet is growing, and many universities and colleges may not survive without transforming their traditional classrooms. The e-learning market is expected to grow substantially in coming years. It also provides statistics on internet users growth in Asia and discusses how education delivery and teaching aids will change with greater adoption of e-learning.
The document discusses the rise of e-learning and its impact on education. It notes that internet technologies can deliver a broad array of learning solutions to enhance knowledge and performance. E-learning using internet technologies is poised to transform education by making it more flexible and accessible. The growth of internet users worldwide and corporate investment in e-learning mean the online education market is expected to experience rapid growth in the coming years.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning is still new, with only 1% of the population having taken an online course, but it is growing rapidly and is expected to significantly impact how education is delivered. The needs of a knowledge-based economy and lifelong learning require new learning models that effectively integrate e-learning.
The document discusses the rise of e-learning and its impact on education. It notes that internet technologies can deliver a broad array of learning solutions to enhance knowledge and performance. E-learning using internet technologies is poised to transform education by making it more flexible and accessible. The growth of internet users worldwide and corporate investment in e-learning mean the online education market is expected to experience rapid growth in the coming years.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning is still new, with only 1% of the population having taken an online course, but it is growing rapidly and will transform education. The market for e-learning is expected to increase dramatically in coming years. It also discusses how multimedia university is preparing for these changes through its e-learning initiatives and framework.
The document discusses the growth of e-learning and its impact on education. It notes that internet technologies have started reshaping education and that traditional classrooms will need to be transformed. E-learning usage and online education is expected to significantly increase over the coming years. The document also outlines Multimedia University's framework and objectives in utilizing e-learning technologies to prepare students for lifelong learning in the digital age.
Chapter 4 - Standards Battles and Design DominanceWahyu Yudistira
Dominant design A single product or process architecture that dominates a product category—usually 50 percent or more of the market. A dominant design is a “de facto standard,” meaning that while it may not be officially enforced or acknowledged, it has become a standard for the industry.
Mobile payment systems using near field communication (NFC) chips in smartphones were being developed by several large players like Apple, Samsung, and Google to enable contactless payments. These systems transferred payment information wirelessly between devices near each other to complete transactions using existing credit card networks. A dominant design often emerges in an industry as the more widely adopted solution becomes more valuable and generates network effects from learning improvements and a larger user base that supports complementary products and services. These self-reinforcing network effects can result in one technology achieving dominance regardless of its technical superiority due to path dependency in the adoption process.
Standards battles and design dominanceRohanaDaulay
In 2015 there was no dominant mobile payment system and a battle was unfolding among competing standards. One reason dominant designs emerge is due to network effects where the value of a good increases as more people use it, like a telephone network. Government regulation has also contributed to dominant designs in industries like telecommunications by mandating compatibility standards. The value of new technologies depends on factors like customer productivity, simplicity, and image. Whether winner-take-all markets are good for consumers is debated, as compatibility has benefits but limits competition.
there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.
This document discusses standards battles in mobile payments in 2015. It notes that while there were over 6 billion mobile subscriptions worldwide in 2014, there was no dominant mobile payment system. It describes some of the competing mobile payment mechanisms at the time, including NFC-based systems like Apple Pay and non-NFC systems like Square Wallet. The document also discusses factors influencing consumer adoption like convenience and risk of fraud. It highlights growing mobile banking alternatives in developing regions like India and Africa, where a larger portion of the population is unbanked or underbanked compared to credit card ownership but mobile phone penetration is higher. The leading mobile banking systems in India and Kenya, called Inter-bank Mobile Payment Service and M-Pesa respectively
There was no dominant mobile payment system in 2015 and different companies were developing competing standards using near-field communication (NFC) technology. Systems developed by Apple, Samsung, and a Softcard joint venture used NFC chips in smartphones to enable contactless payments at stores using existing credit card networks. Industries often converge on a single dominant design due to increasing returns to adoption, where a technology becomes more valuable as more people use it due to network effects, learning effects, and complementary assets. Government regulation can also promote compatibility and a dominant standard.
This document discusses how dominant designs emerge in industries. It explains that many industries experience increasing returns to adoption, where the more a technology is used, the more valuable it becomes through improvements and complementary assets. Two primary sources of increasing returns are learning effects, where more usage enables greater development and efficiency, and network externalities, where a technology becomes more useful and valuable as more people use the same or compatible technology. The value of a new technology comes from its standalone benefits as well as the value added by the size of its user base and availability of complementary goods and services. However, in 2015 there was no single dominant mobile payment system as different technologies and standards were competing for adoption.
Reference : Schilling, Melissa A. 2017. Strategic Management Of Technological Innovation. New York : McGraw-Hill Education.
http://sif.uin-suska.ac.id/
http://uin-suska.ac.id/
Technological innovation is now a key driver of competition for many firms. The document discusses several chapters about the importance and sources of innovation. Chapter 1 notes that innovation fosters economic and social benefits but may also create negatives. Chapter 2 outlines various sources of innovation, including individual inventors, users, research collaborations, and government efforts. Chapter 3 describes different types of innovation and typical patterns of technological change and adoption over time.
Second slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of two-sided platform markets and discusses their underlying economics, which have proven Nobel prize worthy.
More info: http://www.strategyguide.nl/teaching/
The document discusses strategies for deploying technological innovations, including:
1. Timing product launches can be an important deployment strategy, as illustrated by video game companies releasing new consoles in time for the Christmas season.
2. Pricing is also crucial, with objectives like maximizing profits or ensuring survival through covering costs.
3. Distribution methods like selling directly, using intermediaries, or partnering with distributors can accelerate adoption of an innovation. Building alliances and bundling with existing popular products helps the new technology gain traction.
4. Marketing must consider the target market and innovation's benefits, employing methods like advertising, promotions, and generating publicity to educate customers and shape perceptions of the
IBM Watson strives to be the leader in advancing information technologies to assist companies in keeping up with big data. Its core values include client success, innovation leadership, and trust. Its strategic direction is to pioneer future technologies at the forefront. It aims to differentiate itself through being first to market with new technologies. Its target markets include older generations through references to Jeopardy, younger generations through social media, and large companies through demonstrations of its customer service capabilities.
This document discusses strategies for deploying technological innovations. It addresses timing a product launch to take advantage of business cycles or seasons. It also discusses pricing strategies like maximizing profits or ensuring survival. The document also covers distribution strategies like forging alliances with distributors, creating bundling relationships, and sponsoring large customer groups to accelerate adoption of the technology. Marketing strategies are also important to consider based on the target market and innovation characteristics.
Telecom companies are facing declining revenues as data revenues shift to online players like Google and Apple. To retain their share of the data market, telcos must (1) improve their networks and offer high-value multimedia services, (2) focus on enabling accessible content across all devices, (3) exploit advertising through their subscriber base, and (4) adopt innovative content models focused on customer experience.
- There are three categories of market entry: first movers (pioneers), early followers, and late entrants. Research on which is better yields conflicting results.
- First movers may gain advantages like brand loyalty, technological leadership, securing scarce resources, and exploiting buyer switching costs. However, first movers also face higher risks of failure.
- Whether it is better to be a first mover or follower depends on factors like network effects, switching costs, resource scarcity, and ability to establish standards in the industry. The optimal timing strategy varies by market.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning using internet is growing, and many universities and colleges may not survive without transforming their traditional classrooms. The e-learning market is expected to grow substantially in coming years. It also provides statistics on internet users growth in Asia and discusses how education delivery and teaching aids will change with greater adoption of e-learning.
The document discusses the rise of e-learning and its impact on education. It notes that internet technologies can deliver a broad array of learning solutions to enhance knowledge and performance. E-learning using internet technologies is poised to transform education by making it more flexible and accessible. The growth of internet users worldwide and corporate investment in e-learning mean the online education market is expected to experience rapid growth in the coming years.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning is still new, with only 1% of the population having taken an online course, but it is growing rapidly and is expected to significantly impact how education is delivered. The needs of a knowledge-based economy and lifelong learning require new learning models that effectively integrate e-learning.
The document discusses the rise of e-learning and its impact on education. It notes that internet technologies can deliver a broad array of learning solutions to enhance knowledge and performance. E-learning using internet technologies is poised to transform education by making it more flexible and accessible. The growth of internet users worldwide and corporate investment in e-learning mean the online education market is expected to experience rapid growth in the coming years.
The document discusses the growth of e-learning and its impact on education. It states that internet technologies are being used to deliver broad solutions that enhance knowledge and performance. E-learning is still new, with only 1% of the population having taken an online course, but it is growing rapidly and will transform education. The market for e-learning is expected to increase dramatically in coming years. It also discusses how multimedia university is preparing for these changes through its e-learning initiatives and framework.
The document discusses the growth of e-learning and its impact on education. It notes that internet technologies have started reshaping education and that traditional classrooms will need to be transformed. E-learning usage and online education is expected to significantly increase over the coming years. The document also outlines Multimedia University's framework and objectives in utilizing e-learning technologies to prepare students for lifelong learning in the digital age.
Chapter 4 - Standards Battles and Design DominanceWahyu Yudistira
Dominant design A single product or process architecture that dominates a product category—usually 50 percent or more of the market. A dominant design is a “de facto standard,” meaning that while it may not be officially enforced or acknowledged, it has become a standard for the industry.
Mobile payment systems using near field communication (NFC) chips in smartphones were being developed by several large players like Apple, Samsung, and Google to enable contactless payments. These systems transferred payment information wirelessly between devices near each other to complete transactions using existing credit card networks. A dominant design often emerges in an industry as the more widely adopted solution becomes more valuable and generates network effects from learning improvements and a larger user base that supports complementary products and services. These self-reinforcing network effects can result in one technology achieving dominance regardless of its technical superiority due to path dependency in the adoption process.
Standards battles and design dominanceRohanaDaulay
In 2015 there was no dominant mobile payment system and a battle was unfolding among competing standards. One reason dominant designs emerge is due to network effects where the value of a good increases as more people use it, like a telephone network. Government regulation has also contributed to dominant designs in industries like telecommunications by mandating compatibility standards. The value of new technologies depends on factors like customer productivity, simplicity, and image. Whether winner-take-all markets are good for consumers is debated, as compatibility has benefits but limits competition.
there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.
This chapter discusses how certain technologies experience increasing returns to adoption, meaning they become more valuable as more people adopt them. This can be due to learning effects, where the technology improves over time, and network effects, where a technology becomes more useful the more others also use it. These forces can lead to "winner-take-all" markets where one design dominates. Whether a single design dominates depends on how much network effects increase utility and at what market share level those maximum network effects are reached.
The document discusses standards battles in mobile payments between Apple, Samsung, and a joint venture called Softcard. It describes how these companies developed mobile payment systems using Near Field Communication (NFC) chips in smartphones to enable contactless payments. The systems transferred payment information wirelessly using existing credit card networks like Visa or MasterCard to complete transactions without physical card contact. The document then discusses why dominant designs are selected in markets and how network effects can lead to a self-reinforcing mechanism that increases the dominance of the leading technology standard.
The document discusses competing mobile payment systems using near field communication (NFC) chips in smartphones. Major players like Apple, Samsung, and a joint venture between Google, AT&T, T-Mobile, and Verizon had developed systems to enable contactless payments at point-of-sale by transferring payment credentials from mobile devices. These systems functioned similarly to existing credit card payments. The document then discusses how dominant designs emerge in industries and how network effects can reinforce a technology's dominance as more users and complementary assets are adopted.
The document discusses how positive feedback effects can drive markets towards a single dominant technology or firm. It explains that in network markets, the value of a technology increases as more users adopt it. This can lead to tipping, where a small initial advantage accumulates into dominance. Firms must consider strategies around compatibility versus performance and openness versus control to leverage these network effects in their favor. The key tradeoffs are around ease of adoption versus technological leadership and industry cooperation versus proprietary control.
This document discusses increasing returns to adoption for technologies. It explains that as a technology is adopted more, it becomes more valuable due to learning effects and network externality effects. These increasing returns can lead to winner-take-all markets where one company dominates. The value of a technology depends both on its standalone qualities and how widely it is adopted. Customers consider both objective information and subjective perceptions, so managing perceptions is important for firms. Whether a technology dominates depends on the level of market share needed to realize network externality benefits.
1. A first mover may gain advantages like brand loyalty, technological leadership, and access to scarce resources, but also faces higher risks and costs from bearing R&D expenses and uncertainty over customer needs.
2. The optimal timing of entry depends on factors like the innovation advantage, availability of complements, customer expectations, competitive threats, and presence of increasing returns.
3. Managing entry timing well is complex, as first movers may establish dominance but also face higher failure rates than followers capitalizing on their efforts.
The value of any technological innovation is only partly determined by what the tech-nology can do. A large part of the value of an innovation is determined by the degree to which people can understand it, access it, and integrate it within their lives. Effective deployment strategies can reduce uncertainty about the product, lower resistance to switching from competing or substitute goods, and accelerate adoption.
In the 1960s, Stanley Milgram addressed a number of letters to a friend of his, a stockbroker in Boston. Milgram then distributed these letters to a random selection of people in Nebraska. He instructed the individuals to pass the letters to the addressee by sending them to a person they knew on a first-name basis who seemed in some way closer (socially, geographically, etc.) to the stockbroker. This person would then do the same, until the letters reached their final destination
PLM 2018 - Is Openness really free? A critical analysis of switching costs fo...Karan Menon
Paper Presentation in PLM 2018
Authors:
Karan Menon, Hannu Kärkkäinen, Thorsten Wuest & Timo Seppälä
Tampere University of Technology; West Virginia University; ETLA, Finland.
Several large tech companies had developed mobile payment systems using near field communication (NFC) chips in smartphones to enable contactless payments. These systems allowed customers to complete purchases using credit cards or other payment methods without physical contact by transferring payment details wirelessly. However, the document discusses how network effects and complementary assets can lead to a dominant design becoming widely adopted in a market over competing technologies due to self-reinforcing mechanisms, regardless of a technology's inherent superiority.
The document discusses the evolution of Energy Trading and Risk Management (ETRM) systems over the past 20 years. It highlights how newer ETRM solutions focus more on system architecture and design compared to older solutions. The document then summarizes Contigo's approach to ETRM system design, which emphasizes principles like modularity, integration capabilities, and a time-series data architecture to enable rapid implementation and flexibility.
CTRM - The Next Generation - ComTechAdvisory Vendor Technical UpdateCTRM Center
There is no doubt that technology has undergone a sea-change over the last decade or so potentially making it possible to build and deploy software faster and more cost-effectively while offering a host of features that help users to work smarter, faster and with less opportunity for error. Additionally, the way that applications are designed and built has also changed to take better advantage of these technologies. While arguably there is no single technology that facilitates a paradigm shift in Commodity Trading and Risk Management (CTRM) software, when you combine advances in all areas of solution development and deployment technology, then such a leap forward is both likely and desirable.
Nowhere is the gap between the possibilities offered by these leaps in technology and what is available as commercial solutions more apparent than in the commodity trading and risk management software category. There are many aging, legacy, solutions still being utilized, marketed, and deployed and yet, this is an industry that is experiencing unprecedented demands and change, which in turn, are placing increasing demands on the software it utilizes. What most commodity firms are seeking is more agile software platforms that can allow them to adapt and evolve through these changes. This growing demand is also accentuated by the younger, more tech-savvy people entering the business whose expectations are not being met by many existing solutions.
Stanley Milgram conducted an experiment in the 1960s where he sent letters from Boston to random individuals in Nebraska with instructions to pass the letters along to the recipient through acquaintances. This experiment demonstrated the small world phenomenon where people are connected through just a few degrees of separation.
In the 1960s, Stanley Milgram addressed a number of letters to a friend of his, a stockbroker in Boston. Milgram then distributed these letters to a random selection of people in Nebraska. He instructed the individuals to pass the letters to the addressee by sending them to a person they knew on a first-name basis who seemed in some way closer (socially, geographically, etc.) to the stockbroker. This person would then do the same, until the letters reached their final destination.
1. The chapter discusses the advantages and disadvantages of being a first mover when introducing new technologies to the market. While first movers may build brand loyalty and capture scarce resources, they also bear high R&D costs and face uncertainty over customer needs.
2. Later entrants can benefit from the R&D and marketing of first movers. They also have the advantage of understanding customer preferences that evolved based on the first mover's experience.
3. The optimal timing of market entry depends on factors like the size of the technological advantage, availability of complementary goods, and uncertainty over customer requirements. Firms with fast development cycles have more flexibility in timing their market entry.
1. The document discusses the advantages and disadvantages of being a first mover when introducing new technologies to the market. It notes that first movers may be able to build brand loyalty and benefit from increasing returns to adoption, but also face higher R&D costs and uncertainty over customer needs.
2. Later entrants can learn from the mistakes of first movers and benefit from existing infrastructure like supplier networks, but risk the first mover gaining major advantages through early adoption.
3. The optimal timing depends on factors like customer preferences, the size of the innovation over previous solutions, and availability of complementary technologies.
1. The document discusses factors that firms consider when deciding whether to collaborate on innovation projects or go solo. Some reasons for collaboration include accessing needed capabilities from partners or combining complementary skills, while some reasons for going solo include protecting proprietary technologies or desiring full control.
2. Common collaboration models include strategic alliances, joint ventures, licensing, and outsourcing. Strategic alliances can vary in structure from informal to highly structured joint ventures. Partner selection and governance mechanisms also impact collaboration success.
3. In summary, the chapter analyzes reasons for and against collaboration, reviews collaboration models, and discusses keys to successful partnering like ensuring resource and strategic fit between firms and implementing monitoring.
1. Firms use both quantitative and qualitative methods to evaluate innovation projects for funding, as most projects fail and resources are limited. Commonly used quantitative methods like net present value (NPV) and internal rate of return (IRR) create financial estimates but rely on uncertain cash flow forecasts.
2. Qualitative methods structure discussions around screening questions from multiple perspectives. Combination methods incorporate quantitative and qualitative data, like conjoint analysis quantifying attribute importance or data envelopment analysis ranking projects on efficiency.
3. No single method is perfect, so firms balance quantitative financial analysis with qualitative strategic fit assessments in choosing the right innovation project portfolio.
These tools help managers assess a firm's strategic position by answering questions about threats and opportunities, strengths and weaknesses, sources of competitive advantage, core competencies, and capabilities needed to achieve long-term objectives. The outputs inform innovation project selection by leveraging the firm's position and directing future development. Managers first analyze the external environment using models like Porter's five forces and stakeholders. They then examine the internal value chain and identify core competencies to distinguish the firm and underlie business units. Dynamic capabilities and strategic intent can help firms adapt competencies in changing environments and stretch goals.
This document outlines key aspects of formulating a technological innovation strategy including assessing the firm's position and strategic direction, choosing innovation projects to invest in using both quantitative and qualitative methods, deciding whether and how the firm will collaborate with partners, and crafting a strategy to protect or diffuse technological innovations through methods such as patents and trademarks.
The document discusses the emergence of dominant designs in technology standards and mobile payments. It describes how in 2015 there was a battle among competing mobile payment systems, with Apple, Samsung and a joint venture between Google, AT&T, T-Mobile and Verizon developing systems based on Near Field Communication (NFC) technology. These systems allowed contactless payments using existing credit card networks. However, there was no single dominant mobile payment standard at that time.
This document summarizes different types and patterns of innovation. It discusses Tesla Motors as an example of a disruptive innovation that created electric vehicles. It describes Tesla's history from its founding in 2003 by Martin Eberhard to develop an electric sports car, to the development of its first vehicle, the Roadster, and its goal of a mass market sedan, the Model S. The document also discusses Tesla's future plans including the Model X SUV and Elon Musk's ambition to build a major US auto company through higher volume electric vehicles aimed at the mainstream market.
1. Creativity is the underlying process that enables innovation through the generation of new ideas. Innovation can originate from individuals, firms, universities, government research, and collaborative networks between these entities.
2. Firms are a primary driver of innovation through their research and development activities. However, firms often collaborate externally with customers, suppliers, universities, and other organizations to access a wider range of knowledge and resources.
3. The most significant source of innovation comes from collaborative networks that leverage the combined capabilities and resources across multiple individuals and organizations. These networks are especially important in high-technology fields.
This presentation, "The Morale Killers: 9 Ways Managers Unintentionally Demotivate Employees (and How to Fix It)," is a deep dive into the critical factors that can negatively impact employee morale and engagement. Based on extensive research and real-world experiences, this presentation reveals the nine most common mistakes managers make, often without even realizing it.
The presentation begins by highlighting the alarming statistic that 70% of employees report feeling disengaged at work, underscoring the urgency of addressing this issue. It then delves into each of the nine "morale killers," providing clear explanations and illustrative examples.
1. Ignoring Achievements: The presentation emphasizes the importance of recognizing and rewarding employees' efforts, tailored to their individual preferences.
2. Bad Hiring/Promotions & Broken Promises: It reveals the detrimental effects of poor hiring and promotion decisions, along with the erosion of trust that results from broken promises.
3. Treating Everyone Equally & Tolerating Poor Performance: This section stresses the need for fair treatment while acknowledging that employees have different needs. It also emphasizes the importance of addressing poor performance promptly.
4. Stifling Growth & Lack of Interest: The presentation highlights the importance of providing opportunities for learning and growth, as well as showing genuine care for employees' well-being.
5. Unclear Communication & Micromanaging: It exposes the frustration and resentment caused by vague expectations and excessive control, advocating for clear communication and employee empowerment.
The presentation then shifts its focus to the power of recognition and empowerment, highlighting how a culture of appreciation can fuel engagement and motivation. It provides actionable takeaways for managers, emphasizing the need to stop demotivating behaviors and start actively fostering a positive workplace culture.
The presentation concludes with a strong call to action, encouraging viewers to explore the accompanying blog post, "9 Proven Ways to Crush Employee Morale (and How to Avoid Them)," for a more in-depth analysis and practical solutions.
Maximize Your Efficiency with This Comprehensive Project Management Platform ...SOFTTECHHUB
In today's work environment, staying organized and productive can be a daunting challenge. With multiple tasks, projects, and tools to juggle, it's easy to feel overwhelmed and lose focus. Fortunately, liftOS offers a comprehensive solution to streamline your workflow and boost your productivity. This innovative platform brings together all your essential tools, files, and tasks into a single, centralized workspace, allowing you to work smarter and more efficiently.
m249-saw PMI To familiarize the soldier with the M249 Squad Automatic Weapon ...LinghuaKong2
M249 Saw marksman PMIThe Squad Automatic Weapon (SAW), or 5.56mm M249 is an individually portable, gas operated, magazine or disintegrating metallic link-belt fed, light machine gun with fixed headspace and quick change barrel feature. The M249 engages point targets out to 800 meters, firing the improved NATO standard 5.56mm cartridge.The SAW forms the basis of firepower for the fire team. The gunner has the option of using 30-round M16 magazines or linked ammunition from pre-loaded 200-round plastic magazines. The gunner's basic load is 600 rounds of linked ammunition.The SAW was developed through an initially Army-led research and development effort and eventually a Joint NDO program in the late 1970s/early 1980s to restore sustained and accurate automatic weapons fire to the fire team and squad. When actually fielded in the mid-1980s, the SAW was issued as a one-for-one replacement for the designated "automatic rifle" (M16A1) in the Fire Team. In this regard, the SAW filled the void created by the retirement of the Browning Automatic Rifle (BAR) during the 1950s because interim automatic weapons (e.g. M-14E2/M16A1) had failed as viable "base of fire" weapons.
Early in the SAW's fielding, the Army identified the need for a Product Improvement Program (PIP) to enhance the weapon. This effort resulted in a "PIP kit" which modifies the barrel, handguard, stock, pistol grip, buffer, and sights.
The M249 machine gun is an ideal complementary weapon system for the infantry squad platoon. It is light enough to be carried and operated by one man, and can be fired from the hip in an assault, even when loaded with a 200-round ammunition box. The barrel change facility ensures that it can continue to fire for long periods. The US Army has conducted strenuous trials on the M249 MG, showing that this weapon has a reliability factor that is well above that of most other small arms weapon systems. Today, the US Army and Marine Corps utilize the license-produced M249 SAW.
Neal Elbaum Shares Top 5 Trends Shaping the Logistics Industry in 2024Neal Elbaum
In the ever-evolving world of logistics, staying ahead of the curve is crucial. Industry expert Neal Elbaum highlights the top five trends shaping the logistics industry in 2024, offering valuable insights into the future of supply chain management.
Small Business Management An Entrepreneur’s Guidebook 8th edition by Byrd tes...ssuserf63bd7
Small Business Management An Entrepreneur’s Guidebook 8th edition by Byrd test bank.docx
https://qidiantiku.com/test-bank-for-small-business-management-an-entrepreneurs-guidebook-8th-edition-by-mary-jane-byrd.shtml
Many companies have perceived CRM that accompanied by numerous
uncoordinated initiatives as a technological solution for problems in
individual areas. However, CRM should be considered as a strategy when
a company decides to implement it due to its humanitarian, technological
and process-related effects (Mendoza et al., 2007, p. 913). CRM is
evolving today as it should be seen as a strategy for maintaining a longterm relationship with customers.
A CRM business strategy includes the internet with the marketing,
sales, operations, customer services, human resources, R&D, finance, and
information technology departments to achieve the company’s purpose and
maximize the profitability of customer interactions (Chen and Popovich,
2003, p. 673).
After Corona Virus Disease-2019/Covid-19 (Coronavirus) first
appeared in Wuhan, China towards the end of 2019, its effects began to
be felt clearly all over the world. If the Coronavirus crisis is not managed
properly in business-to-business (B2B) and business-to-consumer
(B2C) sectors, it can have serious negative consequences. In this crisis,
companies can typically face significant losses in their sales performance,
existing customers and customer satisfaction, interruptions in operations
and accordingly bankruptcy
A comprehensive-study-of-biparjoy-cyclone-disaster-management-in-gujarat-a-ca...Samirsinh Parmar
Disaster management;
Cyclone Disaster Management;;
Biparjoy Cyclone Case Study;
Meteorological Observations;
Best practices in Disaster Management;
Synchronization of Agencies;
GSDMA in Cyclone disaster Management;
History of Cyclone in Arabian ocean;
Intensity of Cyclone in Gujarat;
Cyclone preparedness;
Miscellaneous observations - Biparjoy cyclone;
Role of social Media in Disaster Management;
Unique features of Biparjoy cyclone;
Role of IMD in Biparjoy Prediction;
Lessons Learned; Disaster Preparedness; published paper;
Case study; for disaster management agencies; for guideline to manage cyclone disaster; cyclone management; cyclone risks; rescue and rehabilitation for cyclone; timely evacuation during cyclone; port closure; tourism closure etc.
From Concept to reality : Implementing Lean Managements DMAIC Methodology for...Rokibul Hasan
The Ready-Made Garments (RMG) industry in Bangladesh is a cornerstone of the economy, but increasing costs and stagnant productivity pose significant challenges to profitability. This study explores the implementation of Lean Management in the Sampling Section of RMG factories to enhance productivity. Drawing from a comprehensive literature review, theoretical framework, and action research methodology, the study identifies key areas for improvement and proposes solutions.
Through the DMAIC approach (Define, Measure, Analyze, Improve, Control), the research identifies low productivity as the primary problem in the Sampling Section, with a PPH (Productivity per head) of only 4.0. Using Lean Management techniques such as 5S, Standardized work, PDCA/Kaizen, KANBAN, and Quick Changeover, the study addresses issues such as pre and post Quick Changeover (QCO) time, improper line balancing, and sudden plan changes.
The research employs regression analysis to test hypotheses, revealing a significant correlation between reducing QCO time and increasing productivity. With a regression equation of Y = -0.000501X + 6.72 and an R-squared value of 0.98, the study demonstrates a strong relationship between the independent variables (QCO downtime and improper line balancing downtime) and the dependent variable (productivity per head).
The findings suggest that by implementing Lean Management practices and addressing key productivity inhibitors, RMG factories can achieve substantial improvements in efficiency and profitability. The study provides valuable insights for practitioners, policymakers, and researchers seeking to enhance productivity in the RMG industry and similar manufacturing sectors.
2. A Battle
Emerging in
Mobile
Payments
By 2014, there were 6.6 billion mobile phone subscriptions in the world,
and of those, 2.3 billion had active mobile broadband subscriptions that
would enable users to access the mobile web.a Mobile payment systems
offered the potential of enabling all of these users to perform financial
transactions on their phones, similar to how they would perform those
transactions using personal computers. However, in 2015, there was no
dominant mobile payment system, and a battle among competing mobile
payment mechanisms and standards was unfolding. In the United States,
several large players, including Apple, Samsung, and a joint venture called
Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in
smartphones. NFC chips enable communication between a mobile device
and a point-of-sale system just by having the devices in close proximity.b
The systems being developed by Apple, Samsung, and Softcard
transferred the customer’s information wirelessly and then used merchant
banks and credit card systems such as Visa or MasterCard to complete the
transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
3. OVERVIEW
The previous chapter described recurrent patterns in technological innovation, and
one of those patterns was the emergence of a dominant design. As Anderson and
Tushman pointed out, the technology cycle almost invariably exhibits a stage in
which the industry selects a dominant design. Once this design is selected,
producers and customers focus their efforts on improving their efficiency in
manufacturing, delivering, marketing, or deploying this dominant design, rather
than continue to develop and consider alternative designs. In this chapter, we first
will examine why industries experience strong pressure to select a single
technology design as dominant. We then will consider the multiple dimensions of
value that will shape which technology designs rise to dominance.
4. WHY
DOMINANT
DESIGNSARE
SELECTED
Why do many markets coalesce around a single dominant design
rather than support a variety of technological options? One
primary reason is that many industries exhibit increasing returns
to adoption, meaning that the more a technology is adopted, the
more valuable it becomes.1 Complex technologies often exhibit
increasing returns to adoption in that the more they are used, the
more they are improved. A technology that is adopted usually
generates revenue that can be used to further develop and refine
the technology. Furthermore, as the technology is used, greater
knowledge and understanding of the technology accrue, which
may then enable improvements both in the technology itself and
in its applications. Finally, as a technology becomes more widely
adopted, complementary assets are often developed that are
specialized to operate with the technology. These effects can
result in a self-reinforcing mechanism that increases the
dominance of a technology regardless of its superiority or
inferiority to competing technologies. Two of the primary sources
of increasing returns are (1) learning effects and (2) network
externalities.
5. Learning
Effects
Ample empirical evidence shows that the more a technology is used, the more it is
developed and the more effective and efficient it becomes.2 As a technology is
adopted, it generates sales revenues that can be reinvested in further developing and
refining the technology. Furthermore, as firms accumulate experience with the
technology, they find ways to use the technology more productively, including
developing an organizational context that improves the implementation of the
technology. Thus, the more a technology is adopted, the better it should become.
One example of learning effects is manifest in the impact of cumulative production
on cost and productivity—otherwise known as the learning curve. As individuals
and producers repeat a process, they learn to make it more efficient, often producing
new technological solutions that may enable them to reduce input costs or waste
rates. Organizational learning scholars typically model the learning curve as a
function of cumulative output: Performance increases, or cost decreases, with the
number of units of production, usually at a decreasing rate (see Figure 4.3). For
example, in studies of industries as diverse as aircraft production and pizza
franchises, researchers have consistently found that the cost of producing a unit (for
example, a pizza or an airplane) falls as the number of units produced increases.
6. absorptive
capacity
The abilityof an
organization to
recognize,
assimilate,
and utilize
new knowledge.
Prior Learning and Absorptive Capacity A firm’s investment in
prior learning can accelerate its rate of future learning by building
the firm’s absorptive capacity.7 Absorptive capacity refers to the
phenomenon whereby as firms accumulate knowledge, they also
increase their future ability to assimilate information. A firm’s prior
related experience shapes its ability to recognize the value of new
information, and to utilize that information effectively. For example,
in developing a new technology, a firm will often try a number of
unsuccessful configurations or techniques before finding a solution
that works well. This experimentation builds a base of knowledge in
the firm about how key components behave, what alternatives are
more likely to be successful than others, what types of projects the
firm is most successful at, and so on. This knowledge base enables
the firm to more rapidly assess the value of related new materials,
technologies, and methods. The effects of absorptive capacity
suggest that firms that develop new technologies ahead of others
may have an advantage in staying ahead. Firms that forgo
investment in technology development may find it very difficult or
expensive to develop technology in a subsequent period. This
explains, in part, why firms that fall behind the technology frontier
find it so difficult to catch up.
7. Network
Externalities
Many markets are characterized by network externalities, or positive consumption
externalities.8 In a market characterized by network externalities, the benefit from
using a good increases with the number of other users of the same good. The classic
examples of markets demonstrating network externality effects are those involving
physical networks, such as railroads or telecommunications. Railroads are more
valuable as the size of the railroad network (and therefore the number of available
destinations) increases. Similarly, a telephone is not much use if only a few people
can be called with it—the amount of utility the phone provides is directly related to
the size of the network. Network externalities can also arise in markets that do not
have physical networks. For example, a user’s benefit from using a good may
increase with the number of users of the same good when compatibility is
important. The number of users of a particular technology is often referred to as its
installed base. A user may choose a computer platform based on the number of
other users of that platform, rather than on the technological benefits of a particular
platform, because it increases the ease of exchanging files. For example, many
people choose a computer that uses the Windows operating system and an Intel
microprocessor because the “Wintel” (Windows and Intel) platform has the largest
installed base, thus maximizing the numberof people with which the user’s files will
be compatible. Furthermore, the user’s training in a particular platform becomes
more valuable as the size of the installed base of the platform increases. If the
user must invest considerable effort in learning to use a computer platform, the
user will probably choose to invest this effort in learning the format he or she
believes will be most widely used.
8. Government
Regulation
In some industries, the consumer welfare benefits of having compatibility among
technologies have prompted government regulation, and thus a legally induced
adherence to a dominant design.This has often been the case for the utilities,
telecommunications, and television industries, to name a few.10 For example, in
1953 the U.S. Federal Communications Commission (FCC) approved the National
Television Systems Committee (NTSC) color standard in television broadcasting
to ensure that individuals with monochrome television sets would be able to
receive the color television programs broadcast by networks (though they would
see them in black and white).That standard was still in place in 2003. Similarly, in
1998, while a battle was being fought in the United States over wireless
technology formats, the European Union (EU) adopted a single wireless
telephone standard (the general standard for mobile communications, or GSM).
By choosing a uniform standard, the EU could avoid the proliferation of
incompatible
9. The Result:
Winner-Take-
All Markets
All these forces can encourage the market toward natural monopolies. While
some alternative platforms may survive by focusing on niche markets, the
majority of the market may be dominated by a single (or few) design(s). A firm
that is able to lock in its technology as the dominant design of a market usually
earns huge rewards and may dominate the product category through several
product generations.
10. MULTIPLE
DIMENSIONS
OFVALUE
1. A Technology’s Stand-Alone Value
The value a new technology offers to customers can be driven by many
different things, such as the functions it enables the customer to perform, its
aesthetic qualities, and its ease of use. To help managers identify the different
aspects of utility a new technology offers customers, W. Chan Kim and Renee
Mauborgne developed a “Buyer Utility Map.”15 They argue that it is important to
consider six different utility levers, as well as six stages of the buyer experience
cycle, to understand a new technology’s utility to a buyer.
2. Network Externality Value
In industries characterized by network externalities, the value of a technological
innovation to users will be a function not only of its stand-alone benefits and cost,
but also of the value created by the size of its installed base and the availability of
complementary goods (see Figure 4.6(a)).
11. MULTIPLE
DIMENSIONS
OFVALUE
3. Competing for Design Dominance in Markets with Network Externalities
Graphs illustrate how differing technological utilities and network externality returns
to installed base or market share impact the competition for design dominance. The
following figures examine whether network externalities create pressure for a single
dominant design versus a few dominant designs by considering the rate at which
value increases with the size of the installed base, and how large of an installed base
is necessary before most of the network externality benefits are achieved. As
explained earlier, when an industry has network externalities, the value of a good to a
user increases with the number of other users of the same or similar good. However,
it is rare that the value goes up linearly—instead, the value is likely to increase in an
s-shape as shown
in Figure 4.8(a).
4Are Winner-Take-All Markets Good for Consumers?.
Traditionally, economics has emphasized the consumer welfare benefits of
competitive markets; however, increasing returns make this a complicated issue. This
is exemplified by the antitrust suits brought against Microsoft.
12. Summary
of
Chapter
1. Many technologies demonstrate increasing returns to adoption, meaning
that the more they are adopted, the more valuable they become.
2. One primary source of increasing returns is learning-curve effects.The more a
technology is produced and used, the better understood and developed it
becomes, leading to improved performance and reduced costs.
3. Another key factor creating increasing returns is network externality effects.
Network externality effects arise when the value of a good to a user increases
with the size of the installed base.This can be due to a number of reasons, such
as need for compatibility or the availability of complementary goods.
4. In some industries, the consumer welfare benefits of having a single standard
have prompted government regulation, such as the European Union’s mandate
to use the GSM cellular phone standard.
5. Increasing returns can lead to winner-take-all markets where one or a few
companies capture nearly all the market share.
13. Summary
of
Chapter
6.The value of a technology to buyers is multidimensional.The
stand-alone value of a technology can include many factors
(productivity, simplicity, etc.) and themtechnology’s cost. In
increasing returns industries, the value will also be significantly
affected by the technology’s installed base and availability of
complementary goods.
7. Customers weigh a combination of objective and subjective
information.Thus, a customer’s perceptions and expectations
of a technology can be as important as (or more important
than) the actual value offered by the technology.
8. Firms can try to manage customers’ perceptions and
expectations through advertising and public announcements
of preorders, distribution agreements, and so on.
9.The combination of network externality returns to market
share and technological utility will influence at what level of
market share one technology will dominate another. For some
industries, the full network externality benefits are attained at
a minority market share level; in these industries, multiple
designs are likely to coexist.
Editor's Notes
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